Which Bankruptcy Type Looks Better on My Credit – Chapter 7 or Chapter 13?

Bankruptcy Decisions…

In deciding whether to file bankruptcy or not, potential clients often ask which bankruptcy type looks better on their credit: a Chapter 7 or Chapter 13? The brief answer is that there is no real difference as to how it affects your credit. However, bankruptcy does impact your credit negatively and can remain on a person’s credit report for up to 10 years. Other things that negatively impact a person’s credit: keeping large amounts of debt, continuous late payments, repossessions, and charged-off accounts. These things, and a host of others, can stay on a person’s credit report and impact it negatively. So the question then becomes, individually, which one will have the best effect for you?

For some people, utilizing the “fresh start,” provided by a Chapter 7 filing, happens in a relatively short amount of time, as it results in the discharge of large amounts of unsecured debt, like credit card and medical debts. For some, this makes the most sense. A Chapter 7 filing can allow you to more quickly gain access to credit and begin rebuilding your credit and future. Freeing up disposable monthly income, through a Chapter 7, is sometimes the best move you can make for your overall credit.

On the flip side, it can also be argued that a Chapter 13 filing might be better suited for some people and that a lender may look more favorably upon a Chapter 13. Creditors prefer Chapter 13, as it results in a tangible plan to repay, which is administered by the bankruptcy court. Chapter 13 also alleviates creditors’ concerns, as they now know that they will recoup some, if not all, of the obligations previously extended to a debtor.

Make an appointment to speak with one of our experienced bankruptcy attorneys at REFUGE Law, PLLC to discuss your options and evaluate whether a Chapter 7 or Chapter 13 would be the right solution for you. Bankruptcy can help give you relief from your financial worries. Call us today at (404) 618-2733 in Georgia, (713) 570-6377 in Texas, to discuss today.