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

One of the biggest concerns you might have when it comes to bankruptcy is how it will affect your credit report. When you file for bankruptcy, it will appear on your credit report for about ten years. So, if you want to get rid of your debt, you might be wondering which bankruptcy chapter will be better for your credit score.

If you have questions about how bankruptcy will affect your future, contact our Irvine bankruptcy attorneys today at (949) 570-5025 to schedule a consultation!

Which Bankruptcy Chapter Is Best for My Credit?

Unfortunately, Chapter 7 and Chapter 13 bankruptcies will both affect your credit the same. Therefore, filing for Chapter 13 instead of Chapter 7 won’t make a difference on your credit report. However, when lenders look at your credit report, they will do more than look at your score.

Although the bankruptcy chapters won’t technically impact your credit, they may influence a lender’s decision. Lenders may consider the type of bankruptcy chapter you filed when deciding whether to grant you a loan. Chapter 7 bankruptcy can help an individual eliminate most debts without paying them back. However, Chapter 13 bankruptcy requires the individual to repay some debts over a three- to five-year period.

If you file for Chapter 13 bankruptcy, the lender could see it as a more responsible way to handle your debt. They might think it was in good faith that you decided to repay your debts aside from your financial hardship.

How Soon After Bankruptcy Can My Credit Score Improve?

You can work towards improving your credit score immediately after filing for bankruptcy. The best way to improve your credit score is by making regular debt payments. By demonstrating that you can responsibly pay off your debts, your credit score will improve in time.

Your credit score won’t skyrocket immediately. It will take time for you to get your credit score where you want it to be. Although bankruptcy may have an impact on your loan interest amounts and rates, it won’t significantly impact your credit.

What Steps Can I Take to Repair My Credit After Bankruptcy?

If you are in the process of filing for bankruptcy, or you have just completed the process, your next goal is probably to improve your credit score. The truth is, even though bankruptcy will be listed on your credit report for the next ten years, you can still apply for new credit opportunities. With your new lower debt-to-income ratio, you will be more eligible for credit than before.

Our team at McFarlin LLP has helped individuals throughout Southern California rebuild their credit after filing for bankruptcy. We take the necessary steps to develop the best possible strategies for rebuilding your credit. Some of the steps we take include the following:

  • Ensure your report is completely accurate
  • Perform a deep examination of your history of credit and debt, extending several years prior
  • Tailor your plan, so it fits your individual needs based on your current income and savings

Contact Our Irvine Credit Repair Attorneys

Whether you need help with your bankruptcy process or you are ready to rebuild your credit, our team at McFarlin LLP is here to help you. We have years of experience and a reputation for supporting our clients throughout the area. We’ve already helped many other individuals who were in the same situation you are in now, so we know what steps you need to take to get the financial freedom you want. Let us guide you through the process from start to finish.

Contact our Irvine credit repair lawyers today at (949) 570-5025 to schedule a case review!