Bankruptcy improve your credit score? Are you kidding me? Not at all. Let's take a look at some reasons that filing bankruptcy might improve your credit score.

• Many times, by the time someone files bankruptcy, their credit score is seriously low so it may go up instead of down.

• Your credit report is largely wiped clean when you file bankruptcy and get a discharge of debts. High balances, late payments, and records of unpaid debts are removed. Those accounts are given a notation about your bankruptcy instead.

• When calculating scores, the formulas developed by Fair Isaac (the FICO-score company) are set up to grade someone's credit standing as compared with that of consumers in a similar financial position, meaning bankruptcy filers.

• After you eliminate your debt in the bankruptcy, your debt-to-income ratio is greatly reduced and your credit score may increase as a result.

• After bankruptcy (only 3 to 3 1/2 months with Chapter 7), you can actively start to improve your credit rating.

Bankruptcy will ruin my credit for 10 years. Wrong!

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