 TITLE: Understanding Priority and Non-Priority Debt in Bankruptcy CONTENT: How Does Bankruptcy Affect Your Credit?\n---------------------------------------\nA bankruptcy filing is considered a major negative event in your credit history, and it typically has a long-lasting negative impact on your credit score. Chapter 7 bankruptcies remain on your credit report for 10 years from the filing date, while Chapter 13 bankruptcies stay on your credit report for seven years.\nFiling for bankruptcy typically causes a significant drop in credit score. The number of points by which your score will drop depends on the score you have when the bankruptcy appears on your credit report. Individuals often file for bankruptcy after missing multiple loan payments, and sometimes after defaulting on loans or incurring property foreclosures—all events that can significantly lower credit scores. The cumulative effect of those events may cause a large enough reduction in credit score that a bankruptcy filing itself might not decrease scores very much.\nThat said, a Chapter 7 bankruptcy stays on your credit report, and hurts your credit score, longer than any other negative event. Credit scores do begin to rebound in the years following a bankruptcy filing, but many lenders refuse to consider loan applicants with bankruptcies on their credit reports, regardless of their credit scores.\nFiling for bankruptcy is a decision that should never be taken lightly. If you're considering it, and pondering whether to file Chapter 7 or Chapter 13, it can be helpful to review your debts to understand which are priority debts and which are non-priority, and which can and cannot be discharged. Consulting with legal and financial experts can help you understand the difference, and anticipate where you'll stand if you decide to move forward with a bankruptcy. END