Not necessarily. The effect a bankruptcy has on one’s credit is greatly dependent on the filer’s ability to pay their bills both prior to filing for bankruptcy and after bankruptcy procedures have been completed. Therefore, bankruptcy may have little to no net affect on a filer’s credit rating. However, a bankruptcy will remain on a credit report for 10 years. It is also important to bear in mind that debtor’s often receive credit card solicitations in the mail following filing for bankruptcy. Creditors recognize that the debtor will not be able to file another bankruptcy, in most instances under New York Bankruptcy Law, for up to 8 years, and the debtor’s past debts are about to be wiped clean. Many creditors would rather loan money to someone free from debt without the luxury to file for bankruptcy again for some time, than to someone is in debt and able to file for bankruptcy tomorrow. In most circumstances, after a year of prompt payment of their bills following a bankruptcy discharge, one may apply for a mortgage to buy a home and be approved. It is important to note that it is probable the rate of interest and related closing costs generally will be higher for someone who filed for bankruptcy in the last 10 years, than for someone who has not.

(Courtesy of Association of the Bar of the City of New York)