When dealing with overwhelming debt, bankruptcy can be the fastest way to help you recover and get the fresh financial start you need. Of course, one consequence of filing bankruptcy is that it will remain on your credit report for several years after you file. You should know that there are differences between Chapter 7 and Chapter 13 in how long they stay on your credit report.
A Chapter 7 bankruptcy will stay on your credit report for 10 years from the time you file. A Chapter 13 bankruptcy, on the other hand, will only be on your credit report seven years from the time you file. The primary reason for this difference is that in Chapter 13 bankruptcy, you will be repaying a portion of what you owe. Credit scores also tend to be less affected when people file Chapter 13 bankruptcy.
But there are other reasons besides credit reporting and credit scores when deciding which bankruptcy chapter to file. While Chapter 7 will remain on your credit report longer, the chance to start over comes sooner in Chapter 7. In a Chapter 7 your discharge order will enter about four months after you file. In a Chapter 13, you may not get your discharge order for between three and five years. Your discharge order is what shows that you are no longer legally liable for the debts you owe.
It’s also important to note that not everyone qualifies for Chapter 13. Two primary reasons someone might not qualify are that they don’t have a steady stream of income (because of unemployment, for example), and Chapter 13 also has debt limits. While those limits are very high, if you owe more than those limits you’ll have to consider Chapter 7 or perhaps even Chapter 11.
If you have any questions about whether Chapter 7 or Chapter 13 bankruptcy may be a good option for your or your family, we hope you’ll come into our office for a free, no-obligation consultation with an experienced bankruptcy lawyer. You can make an appointment by calling 303.331.3403 or by using our online scheduling system.