Most people already know that filing for bankruptcy will have an immediate, negative impact on their credit score and ability to secure future lines of credit. However, the exact impact of bankruptcy on your credit situation will vary depending on many factors.

There is no straightforward formula that will allow you to calculate the precise impact filing for bankruptcy will have on your score nor the amount of time it will take for your score to return to where it previously was before you filed.

However, there are certain rules about bankruptcy and credit that can give you ideas about your credit options and recovery after Chapter 7 bankruptcy.

Your credit will take an immediate dip

When you file for bankruptcy, it is common for your credit score to drop by as many as 200 points almost immediately. However, the more time passes between when you file and when you apply for credit, the less impact the negative record from bankruptcy will have on your overall score.

You can probably qualify for credit cards within a few weeks or months

Smaller, secured lines of credit that require a deposit may be available within a few weeks of your bankruptcy proceedings. Credit card companies may start reaching out to you, and although the offers they extend won’t be the best, the sooner you start paying an account on time every month, the quicker your score will go back up.

You can get bigger lines in a few years

Once you have begun re-establishing a credit history, you will want to wait roughly 24 monthly payments or two years until you apply for any larger lines of credit. Securing a few other, small credit cards in the meantime can also help.

By about two years from the date of your discharge, you will likely be able to qualify for decent terms on a motor vehicle loan and will be able to qualify for less competitive terms on a mortgage.

Bankruptcy could help your credit

Believe it or not, your score could be higher because you file for bankruptcy then it might be if you try to muddle through your current financial woes! Multiple negative marks on your credit score will have a more profound impact on how companies view your creditworthiness than a single negative mark from the courts.

Don’t let fears about how bankruptcy will affect your credit stop you from getting protection from the debt you are currently dealing with.