The Short Answer
No one can give you an exact number, but your credit score will drop when you file bankruptcy — and how much depends on where your score stands before you file. In our experience, people with relatively good credit tend to see a drop of around 100 points, while those who are already behind on payments typically see a smaller drop because their score has already taken hits. What matters most is that bankruptcy also starts the clock on rebuilding — something that doesn't happen if you just stay buried in debt making minimum payments.
In a previous blog post we have discussed how long filing a bankruptcy will impact your credit score. Today we are going to discuss how much filing a bankruptcy will hurt your credit score.
The reality is, nobody knows exactly how much a bankruptcy will impact your credit score. There are five different areas that are reviewed that help formulate your credit score. Exactly how your FICO or credit score is determined is kept secret. However, we know filing for bankruptcy will have a negative impact on your credit. The amount of that impact will vary depending upon what your credit score is before filing the bankruptcy and the makeup of your prior credit history.
In our experience working closely with our clients, if you have a pretty good credit score at the time of filing a bankruptcy you can anticipate about a 100 point drop. Again, this will be different with everyone. Also, if you have a lower credit score then the decrease will not usually be as much.
Although filing for bankruptcy will hurt your credit score, simply doing nothing to address your debt may create an elongated process to poor credit as well. The key is, if you have debt you do not believe you can recover from, filing for bankruptcy may hurt your credit initially, but it will allow you to begin the process to rebuild your credit. Whereas, if you don’t file a bankruptcy but only continue to pay minimums on your debts then you would just continue to have average credit and you will be spending a ton of money by paying interest, late fees and penalties. Of course, falling behind on monthly payments will also chip away at your credit score as well.
The best thing is to talk about your specific situation with an experienced bankruptcy attorney. An experienced lawyer can explain the process and help you determine whether filing a bankruptcy makes sense in your situation.
Key Takeaways
- No one — not even FICO — publicly discloses exactly how bankruptcy affects your score, because the full formula is kept secret.
- Your starting credit score is the biggest factor: the higher your score before filing, the larger the drop you can expect.
- People already falling behind on payments have usually absorbed significant score damage before they ever file, so the additional hit from bankruptcy is often smaller.
- Doing nothing about unmanageable debt isn't a credit-neutral choice — missed payments, collections, and charge-offs steadily erode your score over time.
- Bankruptcy gives you a defined starting point to rebuild your credit, while staying stuck in minimum payments costs you money in interest and penalties without improving your position.
- Talking with an experienced bankruptcy attorney about your specific numbers is the only way to weigh the real credit trade-off for your situation.
Attorney Insight
The mistake I see most often is people holding off on filing because they're protecting a credit score that's already in freefall — every missed payment, every collection account, every charge-off is quietly doing the same damage they're trying to avoid. By the time many clients reach my office, their score has already dropped 80 or 100 points from the delinquencies alone, so bankruptcy's additional impact is far less dramatic than they feared. What I remind them is that the bankruptcy filing date becomes day one of rebuilding — that clarity has real value that another 18 months of minimum payments simply doesn't give you.
