A lot of attention is paid to the entrance into Chapter 13 bankruptcy and the process during, but what happens after the case is completed?
Perhaps how you respond and recover from this proceeding is as important as the petition itself.
First, you’ll get a discharge order that clears the remaining balance of qualifying debt. This debt includes most kind of “non-priority unsecured debts” – credit cards, medical bills, personal loans not secured by collateral and more.
This also includes certain debts that can be discharged through completing a Chapter 13 case, but are not able to be discharged in a Chapter 7 case:
-Willful and malicious property damage
-Debts Incurred to Pay Non-dischargeable taxes
-Qualifying divorce or separation property settlements
-Government fines, penalties and forfeitures
-Certain other qualifying debts
About Your Credit Score
After a Chapter 13 bankruptcy, one of the chief concerns is the hit on your credit score and your ability to rebuild.
Your credit score is much easier to obtain now than it used to be, but too many requests can still create a negative impact. It’s worth checking your score about three months after your discharge, then again a year after that.
Developing sensible financial habits can go a long way towards rebuilding your credit score, which could take a hit of as much as 200 points from the filing of the bankruptcy case. By law, a bankruptcy can stay on your credit report for up to 10 years, so that could play a role in future loan applications even years down the road.
One of the best things you can do following a bankruptcy is becoming more literate in personal finance.
Developing personal strategies to save money, budget and build an emergency fund can help prevent bankruptcies in the future.
Just because you’ve gone through a Chapter 13 bankruptcy doesn’t mean that you can’t have credit either. You can use the lessons learned through working with a qualified bankruptcy attorney to build a plan to apply for, keep and maintain quality credit (through cards or otherwise) in the future.
This planning can be overwhelming and the help of a bankruptcy attorney can make it a smoother and easier process. Call Natural State Law at (501) 916-2878 to discuss making a plan for your personal success following a Chapter 13 bankruptcy.