Have you heard that bankruptcy will ruin your credit for 10 years? This is a common misconception. The correct information is that the notation of bankruptcy may stay on your credit report for up to 10 years, but your credit score will not suffer that entire time because of it.
In fact, in many cases bankruptcy can help improve your credit score faster than paying off a large amount of credit card debt over time or settling accounts one by one.
Filing bankruptcy can cause your credit score to drop 100 to 200 points right away, depending on what your score was prior to filing.
However, after about a year from filing bankruptcy, even without doing a thing to “rebuild” your credit, your credit score will increase on its own. After two years, it should be back up to pre-bankruptcy numbers, if not higher.
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Yes, Bankruptcy is the last option one should go for in order to get rid of secured and unsecured debts. Once you file bankruptcy, it will reduce your score by more than 200 points. Once you bankruptcy filing is discharged, you should make sure that you take steps in order to improve your credit scores.
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