Chapter 13 bankruptcy is a payment plan that will allow you to get rid of your debt within three to five years. It is important to understand bankruptcy law before you file for chapter 13. There are several things that you need to know about chapter 13.
Your Credit Score
Chapter 13 bankruptcy can help your credit score more than it hurts it. Your credit score will take a dip after you file for bankruptcy. However, if you continue to miss payments and have liens filed, then your credit score will continue to go down. Even though your credit score will go down initially, it will start to improve after you start making payments on time.
The Payments May Not Be Reported
The payments that you make may not be initially reported to the credit bureaus. The creditors are not required to report the payments. However, your credit score will improve after you have completed all of the payments.
Credit Score Does Not Matter for a While
Your credit score will not matter while you are making payments. You will not be able to take out any new credit without talking to your chapter 13 trustee first. It will also be a lot harder for you to get approved for a credit card or loan while you are going through bankruptcy. If you are unable to get new credit, then you should not worry about your credit score much. You should just focus on making all of the payments on time so that you can complete the process.
Completing Your Chapter 13 Case
All of your accounts will be reported as zero after you have completed all of the payments. That is when your credit score will increase. Keep in mind that there are some debts that will not be cancelled in chapter 13 bankruptcy. You may still be left with car loan debt, mortgages and student loans. The balance may still be reported to the credit bureaus.
It can be difficult for you to understand bankruptcy law. That is why you do not want to go through this alone. You will need the help of a bankruptcy attorney. Your attorney will help you understand whether chapter 13 is the right option for you. They will also guide you throughout the entire process. If you are in need of an attorney, then you will need to contact Fair Fee Legal Service.
Unwanted debts can put a hole in your income and savings. It can cause a severe financial stress on your condition. Therefore, you can eliminate the financial burden and get a peace of mind by hiring an attorney who will help you in filing chapter 13 bankruptcy. Click here to learn more about the process of filing chapter 13 and other details.