Bankruptcy can have a significant impact on your credit score in Michigan. It will appear on your credit report for several years, and during that time, it will lower your score by a significant amount. The exact impact will depend on the type of bankruptcy you file, your credit score before filing, and other factors.
Chapter 7 vs Chapter 13
A Chapter 7 bankruptcy is a liquidation bankruptcy, which means that your assets are sold to pay off your debts. This can have a more significant impact on your credit score than a Chapter 13 bankruptcy, which is a reorganization bankruptcy where you create a plan to repay your debts over time.
Your credit score will also be affected by the amount of debt you have and your payment history. If you have a lot of debt and have been making late payments, your credit score will be lower than if you have less debt and have been making on-time payments.
- Bankruptcy Resources for Michigan Residents
- What is Chapter 13 Bankruptcy
- What is Chapter 7 Bankruptcy
- Can I Keep my Car When I file Bankruptcy?
- Can I File Bankruptcy in Michigan Without a Lawyer?
Your credit score will recover
The good news is that your credit score will start to recover after you file for bankruptcy. The exact amount of time it takes will vary, but it can take several years to reach your pre-bankruptcy credit score.
Here are some things you can do to improve your credit score after bankruptcy:
- Make all of your payments on time, even if they are for small amounts.
- Keep your credit utilization low. This means using no more than 30% of your available credit.
- Get a secured credit card. A secured credit card is a credit card that requires you to make a deposit, which is used as collateral. This can help you rebuild your credit history.
- Be patient. It takes time to rebuild your credit score after bankruptcy. Don’t give up.
If you are considering filing for bankruptcy, it is important to speak with an experienced bankruptcy attorney to discuss your options and how bankruptcy will affect your credit score.
