Understanding What Happens to Your Credit Report in Chapter 7 and Chapter 13

Making the decision to file for bankruptcy is often a difficult one, and you may be concerned about the challenges ahead as so many questions emerge about the process and options that may be specific to you. There are many advantages to both Chapter 7 and Chapter 13, and numerous choices open to you— all of which can be explained by an experienced bankruptcy attorney from the offices of H. Lehman Franklin, P.C.

Undoubtedly, you will have many questions as you begin to navigate the differences between Chapter 7 bankruptcy and Chapter 13 and weigh the best path depending on eligibility and what assets you wish to keep. There may also be other considerations like a home in threat of foreclosure, a car about to be repossessed, or student loan payments to be addressed.

In the short term, the automatic stay immediately halts most collections activities and debt collectors in most cases, offering great relief to many debtors as they are given the breathing room to decide how to move forward with keeping assets or not, and establishing a plan to move forward. If you are eligible for Chapter 7, you can look forward to the overall advantage of having most of your unsecured debts discharged within five to six months, as well as keeping most of the things you may likely want—like your home and/or car.

Over the long term, however, you may be worried about what is going to happen to your credit score. For many, after months or years of ongoing, unpaid debt, the credit report may already be so damaged that a credit score is not much of a worry anymore. However, if you may have spent many years working on keeping your credit score at a stellar level, this may be a concern. The reality is that there are many advantages to using bankruptcy as a financial planning tool, but there are downsides and repercussions to the credit score is one. Both types of bankruptcies are reported, with a Chapter 13 plan seen on your credit for seven years, and a Chapter 7 remaining there for ten years. This reporting is from the date of filing the bankruptcy case, not discharge. Therefore, if you are in a Chapter 13 case for five years, you do not have much time left for the bankruptcy to be reported on your credit after the conclusion of the case.

You probably have many questions about bankruptcy, including which type of bankruptcy will work best for you, how much you will have to sacrifice (very little in many cases), and whether you will have to go to court. Speak with a skilled bankruptcy attorney from the offices of H. Lehman Franklin, P.C. Call now to learn more at 912-764-9616, or contact us online.