Latest Posts
Home > Ask The Get Out of Debt Experts > How Much of a Hit Will Out Credit Score Take When We File Bankruptcy? – Larry

How Much of a Hit Will Out Credit Score Take When We File Bankruptcy? – Larry

“Dear Steve,

I have filed Chapter 7 that was discharged in oct 11, so my credit is still not good. My wife’s credit is good, around 800. We still have a few issues we are dealing with regarding banks, one the FDIC that took over a bank We are hoping to work something out so she does not have to file BK. We have some business financing we will need shortly on a new business venture that has a great return and 2 stores that already produce income. They would not be affected by the BK. Timing is everything for us. The amount that may force her into BK is a $29K note we had to take in a deed in leiu and $75K from FDIC to give back some property. It may be that 100K is not worth filing BK over and we hope to work something out.

Question one is if she had to file BK how much of a score drop would she have. She has never had a late pay or anything on public record. She has about 600K of debt on her credit report 99% is mortgage debt, a little student loan debt and really no cc debt?

Question 2 is if the business cash flows more than covers the debt that will be taken out on the business will a lower credit score play a factor if the only negative is a bk on her credit report?

any response would help. Thanks.


Dear Larry,

Depending on the persons situation going into bankruptcy the credit score sometimes go up if it’s already in the dumps. It sounds to me as if the problem issues are not on her credit report now so when she files she should notice some hit to her score. How much is really up to the scoring algorithm the creditor or credit bureau uses.

It’s a problem that she does not have any credit card debt. That’s actually the best to boost a score and a long history goes a long way to supporting a good score.

A lower credit score will only have a major impact if financing is required to purchase the new business and the lender relies on the credit score to make lending decisions.

Following a bankruptcy you can actually rebuild your credit relatively quickly. See How to Easily Rebuild and Repair Your Credit After Bankruptcy, Foreclosure, or Reposession.

Please post your responses and follow-up messages to me on this in the comments section below.

Get Out of Debt Free Hotline
debt settlement helpstudent loan help

About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • JayFleischman

    The good news is the student loan debt, oddly enough. Because the student loan debt will not be discharged in bankruptcy (unless other actions are taken to secure a discharge of those debts), it will continue to be reported on the wife’s credit report post-discharge. Timely post-bankruptcy payments on that student loan debt will show a positive payment history, leading to a quicker increase in credit score down the road.

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.


I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.

  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.