Credit Advice » Debt » Bankruptcy » The Difference Between Default and Bankruptcy

The Difference Between Default and Bankruptcy

Dear Experian,

Which is the lesser of two evils, bankruptcy or default?

– DBU

Dear DBU,

Rarely does a person file for bankruptcy without already having defaulted on at least one credit account. So, if a person defaults on an account, meaning they have failed to repay it as agreed, they have taken the first slippery step toward bankruptcy.

That doesn’t mean the person will declare bankruptcy, but they are a step closer to it. A default occurs with only one account. The problem is that when a person has serious difficulty with one debt, they often are struggling with their other debts, as well.

Bankruptcy is among the worst things that can appear in your credit report. When you file for bankruptcy, you are telling all of your lenders that you will not be able to pay them in full, or at all.

As a result, it will be very difficult, if not impossible to qualify for new credit while the bankruptcy appears on your credit report.

Thanks for asking.
The “Ask Experian” team

Review Your Free Experian Credit Report Today

Good credit begins with knowing where your credit is today. Get started with your free Experian Credit Report, updated every 30 days on sign in. No credit card required.

Get Started for Free

Experian’s Credit Games – Skills Sprint (Part 1 of 3)

Put your credit knowledge to the test to test your fate and see how you fare. Audit your skills in our three-part challenge to try your luck!

Ask Experian for Advice

Your privacy and the information collected here.

Latest Tweets