Defeat Bankruptcy

Rebuilding Credit During a Chapter 13 Bankruptcy

While Chapter 13 bankruptcy may be a favorable option to help you get out of debt, there’s always the problem of rebuilding your credit during and after it. Unlike Chapter 7, Chapter 13 bankruptcy is more like a repayment plan. Your debts are not automatically discharged, although, the court may reduce some of the amount that you owe. Over the course of several years, you must repay your creditors as set out in the Chapter 13 bankruptcy, and as with any bankruptcy, your credit is going to take a hit.

A lot of people like to begin rebuilding during their Chapter 13 bankruptcy. This is a very wise move, however, the costs of acquiring credit might be slightly higher than it would have been if you were absent the bankruptcy. It is true that rebuilding your credit during a Chapter 13 bankruptcy is going to be a hard task, but it’s not impossible.

There are some lenders, usually on a more local level, that will work with you to rebuild your credit. This is partially due to the fact that people who have a current or recent bankruptcy are not allowed to file again for at least 7 years after their discharge date. Because of this rule, lenders may look at that Chapter 13 bankruptcy and see you as less of a risk than someone without it.

Regardless, you always want to be cautious and wise when rebuilding your credit. Don’t be hasty nor do you want to take on more than you can handle. Remember, you want to rebuild your credit during your Chapter 13 bankruptcy, not get reburied in debt.