Wisconsin residents who find themselves in over their heads with debt may consider filing for bankruptcy as a way to clear their debts and start fresh. However, one of the biggest concerns individuals considering bankruptcy have is how it will affect their credit.

Ultimately, a bankruptcy filing does affect a person’s credit for many years to come, which is why the decision to file is one that needs to be taken very seriously.

For example, a Chapter 7 bankruptcy filing can remain on your credit report for as long as 10 years and can lower your credit score between 160 and 220 points.

However, if you are even considering bankruptcy in the first place, chances are that your financial situation is already causing negative affects to your credit and has been doing so for some time.

Missed payments to creditors, repossessions and lawsuit judgments also negatively affect your credit and could be harder to explain to future lenders than a bankruptcy filing.

Additionally, the good news is that people are able to improve their credit scores with time. Slowly but surely, it is possible to bring up a credit score even while your bankruptcy is still listed on your credit report.

In order to start improving your credit after filing for bankruptcy, it’s important to apply for credit as soon as possible. Most people think that they will have to wait months or even years before qualifying for unsecured credit after a bankruptcy discharge takes place, but that’s not the case.

Our next post will provide tips on what types of credit you may qualify for after your bankruptcy discharge.

Source: Money Crashers, “How Does Bankruptcy Affect Your Credit Score?” Kira Botkin, April 29, 2014