By the time you are ready to file a Chapter 7 or Chapter 13 bankruptcy case you credit score is pretty low.  This is because you’ve likely fallen behind on your bills over a period of months.  When that happens the creditors report the delinquency to the credit bureaus.

The result of these delinquencies is that you credit score takes a nosedive.  That’s not the end of the world.  No doubt we’d both want to have a high credit score, but the world continues to move on.  Your credit score does not reflect “who you are” it only reflects “how you’ve handled your financial obligations.”  Keep that in mind.

Recently I was asked, “How will me filing bankruptcy impact my son’s credit score?”  The question came because this mom who lives in Knoxville knew that she had a department store credit card along with her son.  The payments were being made by her son.  As often happens however, when he wanted to open the account he had no credit so mom comes to the rescue.  I’ve done the same thing too!

If this is a joint account, (and it likely is), the store will get a notice when mom files her bankruptcy case.  Most likely the store will immediately close the account, noting “bankruptcy” with the credit bureau.  It is even possible they will make the same report on both mom and son’s file.

So what should you do?  First, if possible, the son should contact the store and see if they will allow him to open a new account and transfer the balance.  If he’s had the account for a while and has been paying timely, this may be an option.  Once the new account is open, close the first account.  I normally do not recommend closing open credit accounts but this is one exception.

Then when mom files her bankruptcy she will not owe this creditor money.  She should explain to her bankruptcy lawyer that the account has been closed and the balance transferred.  In some circumstances that department store will not be listed on her bankruptcy papers.

If the son cannot get the store to allow him to open a new account, then he should continue paying as agreed on the account.  Also he should periodically (every 60 days) check his credit file and see if a negative report has been filed.  He can comment on the negative report by explaining the facts.  This doesn’t take it off, but it might help some.

If you are considering bankruptcy most likely the least of your concerns is your credit report.  Get your debt under control immediately by filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.  Start rebuilding your financial life now.  It will get better, honest.