Bankruptcy can cause a drop of more than a 100 points for a person with a good credit history. Unlike a foreclosure which is only reported on one account, a bankruptcy can affect many different accounts and will cause many negative marks on your credit report. Creditors view a bankruptcy on a person's credit report as much more negative than a delinquency or collection.

When you file for bankruptcy, your debts are not erased. Your creditors will report that you no longer owe them a debt due to the fact that you filed for bankruptcy. This information will remain on your credit report for 10 years, although over time the impact on your credit scores will lessen and your score will begin to improve.

You may not have to take the drastic step of filing for bankruptcy to correct your credit situation. Talk with a credit counseling service to see if they can assist you in working out a plan to pay off your debts and improve your credit score. Your bank might be able to provide you with a referral to a legitimate credit counseling agency near you.

An experienced bankruptcy attorney can help you decide whether filing for bankruptcy is the best option in your particular situation. Contact your local or state bar association for a referral to an attorney who specializes in bankruptcy in your area.

If you can't make payment anymore, then bankruptcy will give you a new start. Your credit will go down to about 400 for a short time. Within 6 months after you clean your credit and establish new credit which is very easy you will be able to get cars and homes.