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What Are the Negative Consequences of Bankruptcy

Posted by Charles W. Daff | Sep 09, 2020 | 0 Comments

The consequences of bankruptcy can have long-lasting effects and should not be taken lightly, but it can help people and businesses in debt.

It can eliminate all or a portion of their debts and help them repay part of what they owe to creditors. However, while bankruptcy offers much-needed relief, it comes with more than a handful of negative consequences.

Learn more about the negative consequences that follow bankruptcy below.


Many individuals facing bankruptcy are concerned about the loss of property as a result of filing. If you file for Chapter 13 bankruptcy, you will not lose your house. However, under Chapter 7 bankruptcy, the potential loss of your home depends on how much equity you have in it. Your trustee may choose to sell your house to repay creditors if you have a fair amount of equity in it.

Personal property, such as cars, furniture, jewelry, antiques, musical instruments, and anything else of value, can be sold. Each bankruptcy case is different from the next, so it is important to find a trusted and skilled bankruptcy attorney to help you navigate this complex process concerning your property.


One of the biggest consequences of bankruptcy is the hit your credit score will take. While the exact number varies from case to case, you can expect your score to drop anywhere from 130-150 points. However, exceptionally good credit scores, 700 or higher, can drop 200 points or more. Anyone filing for bankruptcy will generally end up with a credit score below 600, some lower than 400 or 500. This major hit means you will pay a much higher interest rate on loans — assuming you can qualify for one.

Chapter 13 bankruptcies will remain on your credit report for seven years, while Chapter 7 bankruptcies will stay for 10. Over time, you can rebuild your credit score by smartly managing your debts by making on-time payments and paying off debts. FICO estimates a score takes five years to recover from filing for bankruptcy fully.


Another negative consequence of bankruptcy is that everything filed with the court is public record. This means anyone who wants to know how much money to owe and who you owe can access that information.


Bankruptcy is a complicated process that is accompanied by both positive and negative consequences. The consequences of bankruptcy should be taken seriously, and consulting a knowledgeable and qualified bankruptcy attorney like Charles W. Daff is paramount to a smooth and effective process.

Charles W. Daff has nearly 43 years of experience and was granted the “Super Lawyer” award, which is given to the top 5% of Southern California attorneys. We are dedicated to serving our clients. If you reside in Orange County, Riverside County, San Bernardino County or Los Angeles County and are considering filing for bankruptcy, contact Charles W. Daff, Bankruptcy Attorney today.

About the Author

Charles W. Daff

Charles W. Daff is a Certified Bankruptcy Specialist by The State Bar of California with over 46 years of experience as an attorney for debtors and creditors. Charles represents clients in the United States Bankruptcy Court, Central District of California in all of its Divisions. Charles Daff is ...


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