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How Will Chapter 13 Bankruptcy Affect My Credit?

How will a Chapter 13 bankruptcy affect your credit? Well,  if you need a Chapter 13 bankruptcy, your credit’s probably not very good to begin with, so in many ways it’s going to help you.

Chapter 13 is a five-year (sometimes less) commitment to getting out of debt. And while you’re in that 5-year, 3-year, 4-year – whatever period it works out to be for you – time, you’re not supposed to make any new debt. It’s a commitment to get you free of debt, except for certain long-term obligations like your home mortgage or something like that. But if you complete the Chapter 13, all your unsecured debt like credit card bills, medical bills and so forth, and other bills such as your cars – things of that nature – should be completely paid off.

It can stay on your credit report for up to ten years from filing. Some creditors report it that long, some don’t. But we find that people who are behind on their mortgage, for example, they have a car payment that they’re not making, credit card bills they’re not paying, those things are all very destructive of credit, too.

So yes, if you’re in need of bankruptcy protection, regardless of which chapter it is, you’ve already credit problems. So at least you’re going to be doing something about the debt that caused these problems.

More questions? Contact Darrell Castle:

901-327-2100

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**UPDATE 06/12/13**

Darrell Castle & Associates is pleased to announce a new credit program for our bankruptcy clients. This system teaches you, step by step, how to improve your credit score to a 720, or A rating, in as little as one year – even after a bankruptcy! The program is completely free for our clients. Learn more about it here.