How Long Does a Chapter 13 Stay on Your Credit Report?
Contents
How long does a Chapter 13 bankruptcy stay on your credit report? 7 years from the date of discharge. But that’s not the whole story. Read on to find out more.
Checkout this video:
Introduction
Chapter 13 bankruptcy is a reorganization of your debts that allows you to make payments over a three- to five-year period. Once you’ve completed the repayment plan, most of your debts will be discharged, and you’ll be able to rebuild your credit. But how long does Chapter 13 stay on your credit report?
There are two types of bankruptcy that individuals can file: Chapter 7 and Chapter 13. Chapter 7, also called liquidation bankruptcy, allows you to eliminate most of your debt by selling off your assets. In contrast, Chapter 13, also called reorganization bankruptcy, allows you to keep your assets but requires you to make payments on a set schedule over three to five years.
What is Chapter 13?
Chapter 13 bankruptcy is also known as a wage earner’s plan. It enables individuals with a regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” (1) If the debtor’s current monthly income is greater than the median, the plan generally must be for five years. During this time, creditors are prohibited from starting or continuing collection efforts.
How Chapter 13 Works
To file for Chapter 13 bankruptcy, you must submit to the court:
A petition
A list of your creditors
Your income and expenses
A schedule of your assets and liabilities
The deed or mortgage on any real property you own
Proof of payment from your employer if you havereceived any wages within 60 days before filing After you file your petition, you will need to attend a meeting of creditors, which is typically held about 30 days after the filing. At this meeting, creditors have an opportunity to object to your repayment plan. If there are no objections, your case will be assigned to a trustee who will oversee your case and ensure that payments are made according to your plan. You will make payments directly to the trustee during the life of your repayment plan.
How long does a Chapter 13 bankruptcy stay on your credit report?
Chapter 13 bankruptcies stay on your credit report for seven years from the filing date. This is shorter than the 10-year mark for Chapter 7 and other types of bankruptcy, but it’s still a significant blemish.
During that time, it will be difficult to get new lines of credit and you’ll face higher interest rates if you are approved. A Chapter 13 bankruptcy can also make it tough to find a place to rent or buy a home.
That being said, filing for Chapter 13 bankruptcy can actually help your credit score in the long run. As long as you make all of your required payments on time, your score will slowly start to improve. After a few years, you may even be able to qualify for new lines of credit at better rates.
The effect of a Chapter 13 on your credit score
A Chapter 13 bankruptcy can stay on your credit report for up to seven years. This means that if you file for Chapter 13 bankruptcy, it will have a negative impact on your credit score for a significant period of time.
However, the good news is that as time goes on, the impact of a Chapter 13 bankruptcy on your credit score will lessen. Additionally, if you make all of your payments on time and as agreed, you can actually see your credit score improve during the life of your repayment plan.
If you are considering filing for Chapter 13 bankruptcy, it is important to understand the impact it will have on your credit score. However, it is also important to remember that bankruptcy is a tool that can help you get back on track financially and rebuild your credit over time.
How to rebuild your credit after a Chapter 13 bankruptcy
One of the first questions many filers have is how long a Chapter 13 bankruptcy stays on your credit report. The short answer is seven years from the date you file. But that’s not the whole story.
While a Chapter 13 bankruptcy will stay on your credit report for seven years, it will actually have less impact after the first two years. That’s because as time goes on, bankruptcies have less and less effect on your credit score. So if you’re looking to rebuild your credit after a Chapter 13 bankruptcy, you should start seeing results within a few years.
One thing to keep in mind is that a Chapter 13 bankruptcy will stay on your report for longer than other types of bankruptcies. That’s because a Chapter 13 bankruptcy is considered to be more serious than a Chapter 7 bankruptcy. So if you’re hoping to rebuild your credit quickly, you might want to consider filing for a Chapter 7 bankruptcy instead.
Another thing to keep in mind is that even though aChapter 13 bankruptcy stays on your credit report for seven years, it doesn’t mean that you won’t be able to get credit during that time. In fact, many lenders are willing to work with borrowers who have filed for Chapter 13 bankruptcies. So if you’re looking to take out a loan or get a new credit card, don’t let a bankruptcy stop you from applying.
Conclusion
Chapter 13 bankruptcies can stay on your credit report for up to seven years. This means that if you filed for Chapter 13 bankruptcy protection today, it would remain on your credit report until 2026. Chapter 7 bankruptcies remain on your credit report for up to 10 years.
