If you are thinking of filing for either Chapter 13 Bankruptcy or Chapter 7 Bankruptcy, you may be wondering what kind of an impact it will have on your credit score. The answer greatly depends on the type of bankruptcy you file and on the current state of your credit. While there will be some effect no matter what, it is still possible to rebuild your credit and create a very strong financial future for yourself and your family.

When you file for Chapter 7 Bankruptcy, your assets will be seized in an effort to pay off your debts. Once the process is complete, the fact that you filed for bankruptcy will stay on your credit report for a period of ten years. During this time, you may find it difficult to secure housing, credit cards, loans, and, in some cases, employment. However, if you take small steps to rebuild your credit and make good decisions after the bankruptcy process is complete, you can actually improve your credit score. Having a bankruptcy on your score is less harmful than having several mounting and unpaid debts.

The same is true if you file for Chapter 13 Bankruptcy. However, in this case, your credit score will only be impacted for a period of seven years. When you file for Chapter 13 Bankruptcy instead of Chapter 7, this decision will look favorably on your credit report. This is because you will still be responsible for paying off all of your debts on your own. The only difference is that you will be working under the guidelines of a court approved bankruptcy plan to do so.

After all bankruptcy proceedings are completed, you can slowly but surely begin to repair your credit. Though you may, as mentioned above, have difficulty getting credit at first, making good decisions such as meeting all the terms of the bankruptcy agreement and paying your bills on time in the future can slowly begin to rebuild your credit. You may also be able to get loans and credit cards through specialty organizations or lenders that work specifically with high risk individuals and with people who have filed for bankruptcy in the past. These lenders and companies will often have higher interest rates than normal, so you’ll want to be careful when dealing with them. If you pay your bills on time and do not go over your credit limit, you will soon find that your credit is being built back up. Once this is done, you can begin to apply for better credit cards and loans in the future. To avoid getting yourself back into trouble, you’ll need to budget and be sure to never make late payments. If this is done, then you should enjoy a much improved credit score and a much better and brighter financial future.