How does filing a chapter 7 bankruptcy case affect a persons credit rating?
In most cases, by the time a person is considering the filing of a Chapter 7 case, their credit is already in bad shape. Generally, they are already to the point that they have no available credit and lenders will not consider making them a loan. In this sense, the filing of a Chapter 7 case may actually help you to improve your credit. Some financial institutions openly solicit business from persons who have recently filed under chapter 7, apparently because it will be at least 8 years before they can file another chapter 7 case. If there are compelling reasons for filing a chapter 7 case that are not within the person’s control (such as an illness or an injury), some credit rating agencies may take that into account in rating the person’s credit after filing. A Chapter 7 filing can be reported on your credit report for up to 10 years.
