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The Law Office of Adam R. Weaver, Esq. Lehighton & Carbon County Bankruptcy Attorney

Is Chapter 13 Bankruptcy Better for My Credit Than Chapter 7?


Filing for bankruptcy can offer you an opportunity to start over financially. However, the decision to file for bankruptcy is one that you should not take lightly. The fact that you are thinking of doing something about your debts is commendable. But you need to consider certain things before concluding that bankruptcy is the best way forward for your situation and deciding which type of bankruptcy to file.

One concern for many people considering bankruptcy is the effect that filing for bankruptcy will have on their credit. Your credit score is quite crucial if you want to take a loan. Lenders look at your credit score and credit history when deciding whether to approve your loan request. Read on to learn about how filing for bankruptcy can affect your credit score and whether Chapter 13 bankruptcy is better for your credit than Chapter 7.

How Will Filing for Bankruptcy Affect Your Credit Score?

The main downside of filing for bankruptcy is that it can negatively affect your credit score. The truth is that having a Chapter 13 bankruptcy on your credit report is not better for your score than having a Chapter 7 bankruptcy. Generally, both chapters of bankruptcy will impact your credit score the same. Filing for bankruptcy makes your credit score drop dramatically. Unfortunately, lenders are usually hesitant to lend money to people with low credit scores. And if a lender accepts your credit application despite your low score, you can be sure that you will be given less favorable terms. For example, you may be required to pay a high-interest rate.

While both chapters of bankruptcy affect your credit score the same, if you apply for a loan after filing for bankruptcy, lenders reviewing your credit report may consider the chapter of bankruptcy you filed. If you have a Chapter 13 bankruptcy on your credit report, a lender may see that as a more responsible way of handling debt. Chapter 13 bankruptcy involves you coming up with a repayment plan for your debts and making payments over three to five years. On the other hand, Chapter 7 bankruptcy involves wiping out most of your debts without paying them back. A lender may see you as a risk if you have a Chapter 7 bankruptcy on your credit report. In that way, you can think of Chapter 13 bankruptcy being better for your credit than Chapter 7.

Will My Bankruptcy Stay on My Credit Report Forever?

Fortunately, if you file for bankruptcy, the bankruptcy will not stay on your credit report forever. If you file a Chapter 13 bankruptcy, the bankruptcy will typically stay on your credit report for seven years. On the other hand, a Chapter 7 bankruptcy usually remains on your credit report for ten years. Generally, the reason Chapter 13 bankruptcy stays on a filer’s credit report for a shorter time is because this bankruptcy chapter requires one to repay debt.

Contact a Qualified Lehighton & Carbon County Bankruptcy Attorney

If you are considering filing for bankruptcy and need legal guidance, contact our Lehighton & Carbon County bankruptcy attorneys at The Law Offices of Adam R. Weaver, Esq.

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