How does Chapter 13 Bankruptcy affect my credit score?

Chapter 13 Bankruptcy in West Virginia can have a negative effect on your credit score. This type of bankruptcy involves a repayment plan in which debtors must use their disposable income to repay creditors over a three to five-year period. Once the repayment plan is approved, you must make regular payments on time to the court-appointed trustee or your creditors. If a debtor fails to make payments as scheduled, the court may dismiss the case and creditors can take action to collect what is owed. Additionally, the fact that you filed for Chapter 13 Bankruptcy will appear on your credit report for up to ten years. This can make it difficult to obtain loans or credit cards and can decrease your credit score significantly. Even after your repayment plan is successfully completed, lenders may still be hesitant to extend credit. However, in some cases, filing for Chapter 13 Bankruptcy may result in a higher credit score than someone with unpaid debts. Since this type of bankruptcy is structured to help debtors repay their debt, it shows lenders that you are serious about making payments. Also, since the length of a repayment plan is usually three to five years, paying regularly over time may actually help to improve your credit score in the long run.

Related FAQs

How does Chapter 13 Bankruptcy affect my credit score?

Related FAQs

Related Blog Posts