What will happen to my credit if I file for bankruptcy?

This is kind of a "case by case" question, because it really depends on your credit now. In most cases, people discover that their credit comes back and improves very quickly after bankruptcy. Here are a couple of scenarios to consider:

I Have Great Credit and Pay All my Bills On Time

If this is your case, you probably don't need to file for bankruptcy in the first place, unless you just experienced a job loss, divorce or other life changing event and are beginning to get in over your head.

I Have Good Credit, But Too Much Debt and am Struggling with Bills

This is a borderline case, and your credit will definitely take a hit. You would expect it to take 6 months or more before you get back to a good credit score.

I have Good Credit, But I Just Started Missing Payments Due to an Income Reduction

You are at the point where your credit is going to start going downhill fast. As soon as you get to a place where making monthly payments is a struggle, and are missing them regularly, you are probably in over your head. Unless you anticipate an increase in income very soon, bankruptcy will probably have less of an effect on your credit than missing payments and getting further into the hole.

My Credit is Poor and I Can't Make my Mortgage

At this point, credit is the last of your worries. Miss a couple mortgage payments and the foreclosure lawsuit starts. File for bankruptcy, save your home, eliminate credit card debts and start over.

My Credit is Shot and I Just Got a Notice of Foreclosure

Pretty much the same as above, but now you may have to "emergency file" your bankruptcy petition, which doesn't give you time to plan for bankruptcy and have your attorney organize your assets and exemptions to maximize the outcome of your bankruptcy.

The Bottom Line

The bottom line is, if you are missing payments and unable to pay all of your bills on time, then bankruptcy is not going to have much of an effect on your credit. The reality is, you will probably start getting credit card offers in the mail after only a month or two.

Talk to a Bankruptcy Lawyer now if you're wondering what bankruptcy can offer you.

The Creditors Perspective

Here's another thing to think about. If you just filed for bankruptcy and eliminated all of your unsecured debts, then you probably have some extra income every month to make your payments on time. If I were a credit card company, this might be a good time to offer you a line of credit, because I know you're not struggling with debt and you'll be able to pay me regularly.