Chapter 13 Bankruptcy

Learn What This Type Of Bankruptcy Can Do To Your Future, Good And Bad

The process of Chapter 13 bankruptcy

Chapter 13 bankruptcies are filed by individuals wanting to remedy the stresses of their current financial situation. You would want to file a Chapter 13 bankruptcy if you have a large of amount of assets and some debts that may not be dischargeable in bankruptcy. In Chapter 13 bankruptcy instead of having your assets liquidated, like a Chapter 7 bankruptcy, you make arrangements to have all of your creditors paid.

The positive impact of Chapter 13 bankruptcy on your finances

Creditors look more favorable upon you if you have filed a Chapter 13 bankruptcy as opposed to a Chapter 7 bankruptcy. In filing a Chapter 13 bankruptcy you have taken steps to ensure that all of your creditors are paid what they are owed over the next few years. Creditors will view a Chapter 13 bankruptcy more favorably when it appears on your credit because they know that your past creditors received payment on the debts they were owed. In addition to the favorable outlook of future creditors, your current creditors will continue to look at you as someone who does not walk away from the debts they owe.

The negative impact of Chapter 13 bankruptcy on your finances

Your credit is negatively impacted by a Chapter 13 bankruptcy filing. Creditors will view the Chapter 13 bankruptcy as an indication that you were not capable of managing your finances. Creditors will flag your credit as high risk because of a Chapter 13 bankruptcy. This can make it more difficult to obtain any sort of financing or mortgage approvals. In addition, a Chapter 13 bankruptcy will stay on your credit report for the next seven to ten years. Any creditor you views that report will know that you have had financial difficulties in the past and may question your future ability to pay because of the Chapter 13 bankruptcy.