This Article is About
high interest rates
declaring bankruptcy
filing bankruptcy
credit score
filing for bankruptcy
credit balances
financial responsibility
first few years
short answer
amount of money
How Does Filing Bankruptcy In Florida Affect Your Credit Score?
Join 1000's of Authors at StreetArticles Today!

How Does Filing Bankruptcy In Florida Affect Your Credit Score?

Bankruptcy is the legal process of being forgiven for repaying your creditors the full amount of money you promised to pay them when they loaned that money to you. Since credit has everything to do with your financial responsibility and ability to repay loans, filing for bankruptcy will hurt your credit a great deal. Filing for bankruptcy is the worst that thing that you can do for your credit and will affect your credit score and creditworthiness.

How Does Filing for Bankruptcy Affect Your Credit?

The short answer is that you will lose a large amount of points off your credit score as a result of declaring bankruptcy. Although every individual may lose a different amount of points, in most situations people can expect to lose in the neighborhood of 100 and 150 points. The number of points that drop from the score is proportional to the credit score prior to filing bankruptcy. A score that was over 700 will see somewhere around a 150 point drop, while a score 600 or lower will experience a loss of about 100 points. It is important to keep in mind that missing payments on any of your monthly bills will drop your credit score, so being several months delinquent before filing bankruptcy will add to the damage done to your credit.

What Does that Mean for Creditworthiness?

The terms of any loan or credit offers are very closely tied to your credit score, so having filed for bankruptcy will worsen or eliminate any terms you might get. A bank views someone that has recently filed bankruptcy is a very large risk and will typically not offer any credit terms for several years immediately following the bankruptcy. Once credit offers do begin to come they will only come with poor terms; high interest rates and low credit balances. While this may be frustrating at first, in order to rebuild your credit and receive better terms you will have to start here and work your way back up. Unfortunately making large purchases, such as a home or vehicle, will be very difficult in the first few years following the bankruptcy.

Can You Recover from the Damage to your Credit?

It is possible to rebuild your credit to good standing after filing for bankruptcy, however it takes years to do so. Think of it like you have just been asked to start your entire credit history from scratch and slowly work your way up. By paying your bills on time, properly managing your secured credit card, and avoiding spending outside of your means, you can rebuild your credit score and creditworthiness over the course of several years. This fresh start financially is a great opportunity to build good money management habits and avoid making the same financial mistakes that may have gotten you to file bankruptcy in the first place. It will take a lot of self control and patience to rebuild your credit score but it can be done and by doing so you can set up a promising financial future.

Street Talk

No comments present
You May Also Like
How Can I Get Out Of Payday Loan Debt?
In the consolidation business you hear a lot of people asking “how can I get out of payday loan debt?” and the answer is always the same: through hard work! Still, there are some simple tricks that you can use in order to get rid of this debt. This is…
By: David Schmidt in  Finance  >  Debt Consolidation   Oct 31, 2012  
  Likes: 3

Saving for An Emergency
Emergencies can come at any time and in many different forms and can happen to any of us. Sometimes they are in the form of a wildfire, like the one Colorado has been battling for the past few weeks. Other times they can come in the form of a health…
By: David Schmidt in  Finance  >  Debt Management   Jul 09, 2012  
  Likes: 10

End Payday Loan Debt
Like most people we’re all feeling the effects of the economy – with the loss of jobs, companies that were supposed to be invincible have even gone out of business. Not to mention the looming fiscal cliff which happens at the end of this year – and if we go…
By: Leo E in  Finance  >  Debt Consolidation   Dec 20, 2012  
  Likes: 5

Criticism On The Pay Day Loans In The UK
Payday loans in the UK are increasingly taking centre stage in the financial market due to the aid they give to local citizens. However, there are some critics who have come out strongly to object these services stating that they are horrendous and all they do is exploit the citizens.…
By: Jonny Haberdash in  Finance  >  Loans   Apr 04, 2012  
  Likes: 0

Improving Your Credit Score In Langhorne – What You Can Do
The best way to go about purchasing a car or house is by financing these big-ticket items with a loan from a bank, credit union or private third party lenders. Good credit is essential for you to be successful with acquiring a loan. The post baby boomer generation grew up…
By: Tom Gilmour in  Finance  >  Loans   Jan 27, 2013  
  Likes: 1

How To Find a Small Business Commercial Loan
Once upon a time when business owners could just walk into a bank and get a loan for the business based on their rapport with the bank and loan officer. However, with the downturn in the economy, it is sad to say that, that time appears to be over! Banks…
By: Reed Cambpell in  Finance  >  Loans   Dec 30, 2010  
  Likes: 0

3 Strategies For Reducing Your Current Debt
The No. 1 way of reducing debt is to reduce monthly expenditures. One way to recognize your potentially fatal spending habits is to keep a record of every expense made for one month. You might be surprised to know the result! At the end of each month, you could see…
By: David Dicristo in  Finance  >  Debt Management   Sep 17, 2012  
  Likes: 0

How to Get the Best Loan After Bankruptcy
Because getting financing at all is difficult with a bad credit history many focus solely on finding approval. While this is obviously the priority, you do want to try and improve your situation as best you can and look at how to get the best loan after bankruptcy you can…
By: Jennifer4 in  Finance  >  Bankruptcy Tips Advice   Nov 28, 2011  
  Likes: 0

Payday Loan Hell
In the Christian religion, and some other Judeo-Christian religions, the concept of “hell” has taken root. Many people fear hell in the afterlife and therefore maintain good relations while they are living. However, the people who are suffering with families every day are in their own type of hell on…
By: David Schmidt in  Finance  >  Debt Consolidation   Aug 30, 2012  
  Likes: 13

I Am Drowning In Payday Loans
A former colleague of mine was in the financial industry after the collapse of the economy in 2008. He was doing great until that year, but I never realized how far he had fallen until we spoke over the phone. He told me “I am drowning in payday loans” and…
By: David Schmidt in  Finance  >  Debt Management   Aug 15, 2013  
  Likes: 6

Learn How to Establish Credit
Having a credit history,good or bad, will allow you to move through the complex financial world we live in. But what if you don't have a credit history at all? For the most part, having no credit history is worse than having a poor credit history. But the question is…
By: Scott Oberholser in  Finance  >  Credit   Aug 22, 2011  
  Likes: 0

Debt Mangement for Londoners - Fundamental Techniques to Get Out Of Your Financial Rut
Debts can be difficult to pay off - this is a hard fact of life. A person who is on the verge of bankruptcy would do well to consider the long-term effects of non-payment, hence, debt consolidation is a must. Where multiple debts are involved, it is wise to resort…
By: Jack Oliver in  Finance  >  Debt Management   Oct 20, 2012  
  Likes: 0

Financial Planning – A Sign Of the Times
Retirement are you ready for it, did you plan well enough, where you informed enough? Fifteen years ago, invited to a seminar for small business, I discovered a fact I was unwilling to face. The seminar covered financial planning for the future, and our standard of preparedness. Being in a…
By: Rob Ainslie in  Home and Family  >  Retirement   Feb 26, 2012  
  Likes: 0

Alabama State Payday Loan Laws
Like many other states, Alabama allows consumers to take out short term loans, also known as payday loans. These loans require repayment in full within a short period of time and have excessively high interest rates on them. When factoring in that short period of time and the amount of…
By: Leo E in  Finance  >  Debt Consolidation   Dec 08, 2012  
  Likes: 0

How to Get A Credit Card With Bad Credit
We have all made mistakes with our credit score. Whether it is a late payment on a utility bill, or even something as horrible as a bankruptcy. Let's face it, we all make mistakes. However, this does not mean that we are not be able to repair these mistakes and…
By: tom13 in  Finance  >  Credit   Dec 08, 2012  
  Likes: 0

Article Views: 2430    Report this Article