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Credit Repair Drill

Credit Repair Drill

Putting your credit pieces back together

Chapter 13 bankruptcy – How it affects your credit

Obtaining Credit after Chapter 13 bankruptcy

In October 2005, Congress made sweeping changes to the bankruptcy laws. The changes give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Under Chapter 13, you are allowed to keep your property, such as a mortgaged house or car, that you might otherwise lose, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors.

In a Chapter 13 bankruptcy, the court approves a repayment plan to pay back some of your debts. Chapter 13 bankruptcy allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. A trustee is appointed and will collect the payments from you, pay your creditors and make sure you live up to the terms of your repayment plan. After you have made all the payments under the plan, you receive a discharge of your debts.

Chapter 13 bankruptcy may get rid of:
Unsecured debts
Stop foreclosures,
Repossessions,
Garnishments,
Utility shut-offs,
Debt collection activities and
May provide exemptions that allow you to keep certain assets (exemption amounts vary by state).

Chapter 13 bankruptcy does not:
Erase child support,
Alimony,
Fines,
Taxes, and
Student loan obligations.

How long does Chapter 13 bankruptcy stay on your Credit Report

According to the Fair Credit Reporting Act (FCRA), a bankruptcy can remain on your credit report for as long as 10 years from the filing date. If the bankruptcy is completed or discharged, it is generally removed after seven years.

Chapter 13 bankruptcy stays on for seven years from the date of discharge (the date you finish paying — typically either three or five years from when you start). If one of these items does not fall off your credit report after the time allotted by law, you can file a dispute with one or more of the three nationwide credit reporting agencies (CRAs). /////////////////
Chapter 13 Bankruptcy Scenario One:

1. Filed Bankruptcy Chapter 13 and not yet received discharge

2. You have made less than 2 years of payment under Chapter 13 plan

3. You don't even have 1 year payment history under Chapter 13


Do you have bankruptcy on your report?
What type of bankruptcy did you file? Chapter 13
Are all accounts in Bk listed under "Included in Bk" section on your report?
Are you still in bankruptcy?
Have you made at least 2 years of payment under Chapter 13 plan?
Do you have at least 1 year payment under Chapter 13?

Suggestion:

1. Keep making on-time payments on debts not under bankruptcy.
2. Make sure there is no late payment on your mortgage under Chapter 13 plan.
3. File reaffirmation with the court and start paying some of the debts included in bankruptcy.
4. You need to take court permission to get new credit. Get a secured card and make sure the card provider reports payment history to the CRA.
5. Be an authorized user on someone else's credit card. The account history will be shown on your credit report.
6. Get a small personal loan and make on-time payments.
7. Wait till 12 months of payments are over.
Chapter 13 Bankruptcy Scenario Two:

1. Filed Bankruptcy Chapter 13 and not yet received discharge

2. You have made at least 2 years of payment under Ch13 plan


Do you have bankruptcy on your report?
What type of bankruptcy did you file? Chapter 13
Are all accounts in Bk listed under "Included in Bk" section on your report?
Are you still in bankruptcy?
Have you made at least 2 years of payment under Ch13 plan?

Suggestion:

1. Keep making on-time payments on debts not under bankruptcy.
2. Make sure there is no late payment on your mortgage under Chapter 13 plan.
3. File reaffirmation with the court and start paying some of the debts included in bankruptcy.
4. You need to take court permission to get new credit. Get a secured card and make sure the card provider reports payment history to the CRA.
5. Be an authorized user on someone else's credit card. The account history will be shown on your credit report.
6. Get a small personal loan and make on-time payments.
7. Determine your equity and then seek court approval. Only then can you take out a mortgage. The lender will check out the bankruptcy papers prior to offering loan.
Chapter 13 Bankruptcy Scenario Three:

Filed Bankruptcy Chapter 13 and received Discharge Order


Do you have bankruptcy on your report?
What type of bankruptcy did you file? Chapter 13
Are all accounts in Bk listed under "Included in Bk" section on your report?
Are you still in bankruptcy?

Suggestion:

1. Chapter 13 will not have as bad an impact as Chapter 7 as you've been making payments.
2. Try paying off remaining balance on your accounts under Chapter 13. If there's a mortgage under Chapter 13, you may go for repayment plan/loan modification/refinance.
3. Use an unsecured/secured credit card for minimum purchase and pay off the balance asap.
4. Get a car loan or a small personal loan to rebuild credit.
5. Open a checking/savings account or emergency fund and make deposits.
6. Try for FHA loans if 1 year have passed after discharge. For conventional loans, wait till 2 years after discharge.
Chapter 13 Bankruptcy Scenario Four:

Filed Bankruptcy Chapter 13 and not yet received discharge.

You have made less than 2 years of payment under Ch13 plan.

But you have 1 year of payment under Ch13 plan.

No such derogatory item has been recorded in this 1 year of payment.


Do you have bankruptcy on your report?
What type of bankruptcy did you file? Chapter 13
Are all accounts in Bk listed under "Included in Bk" section on your report?
Are you still in bankruptcy?
Have you made at least 2 years of payment under Ch13 plan?
Do you have at least 1 year payment under Ch13?
Is any derogatory item recorded in this 1 year of payment?

Suggestion:

1. Keep making on-time payments on debts not under bankruptcy.
2. Make sure there is no late payment on your mortgage under Chapter 13 plan.
3. File reaffirmation with the court and start paying some of the debts included in bankruptcy.
4. You need to take court permission to get new credit. Get a secured card and make sure the card provider reports payment history to the CRA.
5. Be an authorized user on someone else's credit card. The account history will be shown on your credit report.
6. Get a small personal loan and make on-time payments.
7. You can qualify for FHA loans.
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Chapter 7 Bankruptcy

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How long negative information stays on your Credit Report


Chapter 13 bankruptcy: 7 years

Charged off accounts: 7 years

Late payments: 7 years

Collection accounts: 7 years

Civil judgments: 7 years

Chapter 7 bankruptcy: 10 years

Inquires: 2 years
Tip of the day!