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Is Chapter 13 Better for Your Credit Rating than Chapter 7?

July 23, 2019

Making the decision to file bankruptcy is Oregon is tough enough, but having to then figure out whether to file Chapter 7 or Chapter 13 can be frustrating. You may have heard people talk about which is the better choice, but if you are concerned about your credit after you file, then you may find one option outweighs the other.

With any bankruptcy filing, you will harm your credit. You are, after all, not paying your debts in full, making creditors have to take on the burden. This does not bode well for you in the future when creditors asses the risk of lending to you. However, according to Money Crashers, while your debts from your Chapter 13 bankruptcy will likely stay on your credit report longer than if you filed Chapter 7, the way creditors consider a Chapter 13 could be more beneficial.

Since Chapter 13 is a repayment plan, you will pay off some of your debt. You will show you can stick to a payment plan as well. Plus, this type of bankruptcy allows you to hold onto your secured debts, so you have those already working to put your credit back towards the positive once your bankruptcy case is complete.

This is beneficial because reestablishing your credit after filing can be tough. Having positive reports on your credit is very helpful to starting the rebuilding process. Therefore, if you can make a repayment plan work, then filing Chapter 13 may be your best option. This information is for education and is not legal advice.