Reasons for Bankruptcy
By the time the majority of debtors file for Chapter 7 or Chapter 13 bankruptcy, their credit will have already suffered. They may have fallen behind on credit card payments, received court judgments, or defaulted on their mortgage. Therefore, your credit score at the time of filing depends on the amount of debt you owed initially and how far behind you were. If you owe a small amount, consider whether the credit damage will be worth it if you can resolve the debt on your own.
Debt Discharge
The quantity of debt discharged is also a factor in determining how much your credit score will drop following a bankruptcy. If you have a substantial amount of unsecured debt, which is typically discharged in both Chapter 7 and Chapter 13 bankruptcies, more of it may be discharged, and the credit impact may be more severe. Typically, more debt is discharged in a Chapter 7 bankruptcy, so people who want to preserve their credit typically choose Chapter 13.
Length of Bankruptcy
In the majority of states, bankruptcy records remain on credit reports for approximately seven years. In Chapter 13 bankruptcy, this encompasses the duration of the payment period. Therefore, if you are on a three-year repayment plan, the bankruptcy will remain on your record for four years after the final payment has been made. However, if you have remained current throughout the duration of the plan, your credit score can substantially improve after discharge.
Credit Choices
Courts of bankruptcy strongly discourage obtaining new credit during a bankruptcy filing. Few creditors will extend credit to someone who has recently emerged from Chapter 7 bankruptcy, and Chapter 13 debtors typically receive less favorable terms. Small personal loans may be available from banks specializing in negative credit lending, but make sure you're dealing with legitimate lenders and that you're not violating your bankruptcy terms.
" - https://www.affordablecebu.com/
