Bankruptcy filing can significantly lower your credit score

Filing for bankruptcy can significantly lower your credit score, typically dropping it by 100 to 200 points. This impact varies based on your initial score and existing debt situation. A Chapter 7 bankruptcy remains on your report for 10 years, while Chapter 13 stays for seven years. While bankruptcy can help eliminate unmanageable debt, it can also make it harder to qualify for new credit. Lenders may view you as a high-risk borrower, leading to higher interest rates and stricter terms. Alternatives to bankruptcy, such as debt consolidation or management plans, may have less severe effects on your credit score. These options can help manage debt without the long-term damage associated with bankruptcy.