Is Chapter 13 Bankruptcy Better for My Credit Than Chapter 7?

If you are filing for bankruptcy, you may have a lot of questions. Some of these questions and concerns are likely about your credit score. Read on to learn about how different types of bankruptcy can affect your credit score.

What is Chapter 13 Bankruptcy?

In chapter 13 bankruptcy, you propose a plan to repay debts. Chapter 13 debtors are required to commit their “projected disposable income” to a repayment plan over a period of between 3 years and 5 years.

What is Chapter 7 Bankruptcy?

A Chapter 7 bankruptcy will grant you a discharge of most of your debt, including credit card debt, personal debt, medical bills, foreclosures, and automobile repossessions. Generally, student loans and tax debt are not included. Under a chapter 7 bankruptcy, you are allowed to keep certain assets, such as bank accounts, automobiles, pension plans, IRA’s, and your house.

Which is Better for my Credit Score?

Chapter 7 and chapter 13 bankruptcy both affect your credit score the same. In either case, your credit score will drop. The amount your credit score drops will greatly depend on how good it was before filing for bankruptcy. For example, a high credit score may take a greater hit than a low credit score. That being said, it is important to know the individual reviewing your report will look at much more than just your credit score. Because chapter 13 involves repaying some or all of your debt over a three to five-year period, and chapter 7 bankruptcy involves wiping out most of your debts without paying them back, a lender looking at your report may see chapter 13 as a more responsible way to handle your debt. The best thing to do is speak with an experienced bankruptcy attorney. Every situation is different, and a knowledgeable attorney will be able to help you with your individual situation.

How Long Will my Credit Score be Affected?

If you file for either chapter 7 or chapter 13 bankruptcy, this will appear on your credit report for up to ten years.

If you are struggling financially, it may be in your best interest to speak with an experienced bankruptcy attorney. Our firm is here to advocate for you during this stressful time. Reach out today to speak with a skilled attorney.


Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.

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