Will Filing for Chapter 13 Harm My Credit Score?
Chapter 13 bankruptcy, also known as reorganization bankruptcy, is filed by someone who wants to repay their debts over a specific period of time without liquidating their non-exempt property. In general, filing for bankruptcy will leave a mark on your credit score. Having good credit means that you’re more likely to secure loans with good terms, while it’s more difficult to obtain a loan if you are in poor credit standing. Knowing how chapter 13 bankruptcy affects your credit can help you make a more informed decision.
What is Chapter 13 Bankruptcy?
A person who files for Chapter 13 bankruptcy needs to repay at least part of his or her debt. Individuals who file for this type of bankruptcy can expect it to remain on the credit report for at least seven years after the filing date. In Chapter 13 bankruptcy, you are required to repay a large portion, or all of your debts in order for your record to become clean.
How Can Chapter 13 Affect a Credit Score?
If you’ve filed for Chapter 13 bankruptcy, you can expect your credit score to be affected in a few different ways, including:
- Visibility of the bankruptcy on your credit report for seven to 10 years
- A short-term worsening of your credit score shortly after filing
- Possible credit score improvement, depending on repayment of debts and other factors
Although it’s never good for a person’s credit score to file bankruptcy, doing so may alleviate some financial constraints and even allow you to improve your score over time. When you file for Chapter 13 bankruptcy, you should expect your score to drop. This is normal, but there are ways you can bring the score back up. For example, paying off all debts that you are able to repay and ensuring that you do not accumulate any more debt can boost your score.
Filing for Chapter 13 bankruptcy can seem like a difficult situation, but there is a silver lining at the end. When you are ready to repay debts and have a fresh start, you can count on a knowledgeable and experienced Chapter 13 bankruptcy attorney in Las Vegas for assistance.