What does Chapter 13 do to my credit?

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Updated: 4/13/2007 3:35 pm
Like all bankruptcies, a Chapter 13 filing will negatively affect your credit rating and hurt your ability to obtain credit for some time. However, unlike a Chapter 7 bankruptcy, Chapter 13 plan will appear on your credit report for only seven years, instead of 10. Also, remember that a Chapter 13 bankruptcy involves fulfilling all or part of your debt obligations, not eliminating them. So, if you successfully completed your repayment plan in a Chapter 13 bankruptcy and most of your debts were paid, it will show on your credit report. Creditors may take this into account and treat you more leniently than someone with a Chapter 7 on their credit report. Likewise, if you didn’t successfully complete your repayment plan or only a small portion of your debts were paid off, the effect a Chapter 13 filing will have on your credit may be essentially the same as a Chapter 7 bankruptcy. Generally, having a bankruptcy on your credit report won’t make it impossible for you to obtain credit in the future. Most likely though, you can expect credit, mortgages, and loans to be offered at a higher interest rate and be limited in amount. If you choose to continue using credit cards after a bankruptcy, always remember the extent in which easy access to credit cards can lead to an unmanageable debt. The best way you can repair your credit after a bankruptcy is to pay your bills on time and use credit cautiously and wisely.

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