Filing for Chapter 7 bankruptcy can be very bad for your credit because it remains on your credit score for 10 years. Even if it is on your credit history for 10 years, the impact of the bankruptcy will diminish over time. However, if you're concerned about the impact of bankruptcy on your credit, Chapter 13 bankruptcy will only remain on your credit history for 7 years and will not have much of an impact on your credit.
Chapter 13 Can Help Your Credit Score
One of the reasons why Chapter 13 has less of an impact on your credit score is that you will have a history of making payments. Your payment history is beneficial when trying to obtain credit because creditors are more likely to trust that you will pay off your debts.
Your Credit Score Might Drop Less Than You Think
If your credit score was already bad before you filed for bankruptcy, it will likely continue to be bad with or without your Chapter 13 filing. Chapter 13 is a great way to get started rebuilding your credit and getting your finances in order.
How to Rebuild Your Credit
The best way to rebuild your credit is to check your credit score regularly. By doing this, you will then be able to find out if there are any changes you can make to your life to finally achieve the credit score you want.
When you file for Chapter 13, you will be required to participate in credit counseling. There are various organizations and agencies that provide credit counseling for free. The goal is to provide you with advice on how to budget more effectively. After you are finished with credit counseling, you will then be able to file for Chapter 13 bankruptcy.
Consult With Chapter 13 Bankruptcy Services
Before filing for Chapter 13 bankruptcy, it is important to first verify that you are able to file for this form of bankruptcy. Chapter 13 is considered to be a form of bankruptcy for wage earners. You will be expected to undergo a means test and whether you are eligible will be based on your income.
However, if you are working with a Chapter 13 bankruptcy service, they will help you understand whether Chapter 13 is the right option for you. They will then assist you in filing all of the necessary paperwork and will help you make sure that you will not do anything that could jeopardize your bankruptcy filing.
Contact Chapter 13 bankruptcy services to learn more.