The Impact to Your Credit Score After Filing for Chapter 7 Bankruptcy

As the economy slowly begins to recover, it is more evident that returning to pre-Covid employment rates will be a long time coming. Unfortunately, that means that some individuals will have to contemplate bankruptcy. This is never something to rush into and takes careful legal guidance to make the correct choices and understand the appropriate risks. One of those risks is the credit impact. Undoubtedly, bankruptcy carries significant negative credit impacts. These negative remarks can make it difficult if not impossible to access credit for the purposes of acquiring a mortgage or auto financing for a period of time. In today’s installment, attorney, Jose Parra, explains credit implications related to a Chapter 7 bankruptcy.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing managing shareholder Keith Dunnagan at

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The Impact to Your Credit Score After Filing for Chapter 7 Bankruptcy
By: Jose L. Parra, Esq.

One of the key concerns for anyone considering filing for a Chapter 7 Bankruptcy is the following: what will happen to my credit? It is important for a debtor to understand that a bankruptcy filing brings many positive advantages; yet, it also brings certain negative consequences.

Ultimately, a bankruptcy will affect the creditworthiness of a debtor seeking the approval of a Chapter 7 Bankruptcy. According to 15 U.S.C. § 1681c(a)(1), a bankruptcy may appear on a credit report for a total of about ten (10) years from the date of entry of the order for relief.

Therefore, it is important for a debtor to recognize that the presence of a bankruptcy in the debtor’s credit report may bring negative consequences for future lending opportunities.

In a practical sense, the bankruptcy will dramatically affect the debtor’s credit score, especially in the short term. However, the ability for the debtor to repair his or her creditworthiness is still within grasp. For example, there are many methods by which a debtor may work on increasing their credit score. Some methods by which a debtor may increase his or her credit score after filing for a Chapter 7 Bankruptcy is obtaining a secured credit card, paying your bills on time, keeping a low credit utilization, and maintaining a proper budget that allows for payment of non-dischargeable debts such as student loans which demonstrates to lenders that you are still responsible in paying off certain debts.

In due time, a debtor that has filed for a Chapter 7 Bankruptcy can rebuild his or her credit score. If you are considering filing for a Chapter 7 Bankruptcy, it would be wise to visit other alternative methods before you decide to move forward with a petition. For example, there are credit counseling centers that can assist with creating a financial plan, creating a debt management plan through the guidance of a proper financial counselor, and considering a debt consolidation plan.

Nevertheless, when the debt seems unsurmountable, it may be necessary to proceed with a Bankruptcy filing. The attorneys at BPE Law Group, P.C. can assist with this and provide the best advice as you navigate the complex world of federal bankruptcy.

The information contained in this article is for informational purposes only and not to be construed as legal advice. If you have questions, you should seek competent legal representation to assist you.

Spanish Translation


El Impacto en su Puntaje de Crédito Después de Declararse en Bancarrota Según el Capítulo 7
Translated By; Jose L. Parra, Esq.

Una de las principales preocupaciones para cualquiera que esté considerando declararse en bancarrota según el Capítulo 7 es la siguiente: ¿qué pasará con mi crédito? Es importante que un deudor entienda que una declaración de quiebra trae muchas ventajas positivas; sin embargo, también trae ciertas consecuencias negativas.

Finalmente, una bancarrota afectará la solvencia de un deudor que busca la aprobación de una bancarrota del Capítulo 7. De acuerdo con 15 U.S.C. § 1681c (a) (1), una quiebra puede aparecer en un informe de crédito por un total de aproximadamente diez (10) años a partir de la fecha de entrada de la orden de alivio.

Por lo tanto, es importante que un deudor reconozca que la presencia de una quiebra en el informe de crédito del deudor puede traer consecuencias negativas para futuras oportunidades de préstamo.

En un sentido práctico, la bancarrota afectará dramáticamente la calificación crediticia del deudor, especialmente a corto plazo. Sin embargo, la capacidad del deudor para reparar su solvencia aún está al alcance. Por ejemplo, hay muchos métodos por los cuales un deudor puede trabajar para aumentar su puntaje de crédito. Algunos métodos por los cuales un deudor puede aumentar su puntaje de crédito después de declararse en bancarrota según el Capítulo 7 es obtener una tarjeta de crédito asegurada, pagar sus facturas a tiempo, mantener una baja utilización del crédito y mantener un presupuesto adecuado que permita el pago de deudas no-descargables, como préstamos estudiantiles, lo que demuestra a los prestamistas que usted todavía es responsable de pagar ciertas deudas.

A su debido tiempo, un deudor que se haya declarado en bancarrota según el Capítulo 7 puede reconstruir su puntaje de crédito. Si está considerando declararse en bancarrota conforme al Capítulo 7, sería aconsejable visitar otros métodos alternativos antes de decidir seguir adelante con una petición. Por ejemplo, hay centros de asesoría de crédito que pueden ayudarlo a crear un plan financiero, crear un plan de gestión de deuda a través de la orientación de un asesor financiero adecuado y considerar un plan de consolidación de deuda.

Sin embargo, cuando la deuda parece insuperable, puede ser necesario proceder con una declaración de quiebra. Los abogados de BPE Law Group, P.C. pueden ayudarlo y brindarle el mejor asesoramiento mientras navega por el complejo mundo de la bancarrota federal.

La información contenida en este articulo es solamente para propósitos informacionales y no puede ser interpretado como asesoría legal. Si tienes preguntas, deberías consultar con un representante legal para ayudarte.


The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in probate, business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.