Member-only story
Bankruptcy is a necessary evil for some Americans after a financial catastrophe, though recovery is possible.
A year after filing for bankruptcy, 43 percent of filers had a credit score of 640, says a study from loan marketplace website LendingTree. The next year 65 percent had a score over 640.
“While a prior bankruptcy can make it more expensive to borrow, it’s certainly not impossible to qualify for credit,” the study says. “And if borrowers wait to apply for new loans even just a few years after bankruptcy, they may find rates that aren’t too far off from what other borrowers are being offered.”
The costs of filing bankruptcy
Bankruptcy isn’t a decision that can be made easily, and should be consulted with a credit counselor.
Most people will file either Chapter 7 or Chapter 13, depending on their financial situation, and what assets they own prior to filing. Both require the filer to be assessed by a “means test” to find out whether or not they’re eligible to file bankruptcy. Filing Chapter 7 will leave a mark on your credit for 10 years, while Chapter 13 will for seven. But you can still revive your credit score along the way.
