How Do I Know When My Chapter 13 Is Over?

Going through a bankruptcy is an extremely difficult process. Maybe it starts with losing a job or having your wages reduced; next comes the realization that you have to choose

Banner image

which credit card to pay off first because you don't have enough money to pay your debts each month while leaving enough for yourself to live. Then, the calls and letters start–at first, just a few, and then a flood, and soon, you’re getting legal notices from creditors that want to take you to court. 

Sound familiar? You aren’t alone. In 2010, more than 400,000 Americans applied for Chapter 13 bankruptcy protection. Below, we’ll explain what a Chapter 13 bankruptcy is, how it is managed, and when it is considered finished. We’ll also look at how bankruptcy affects your credit score as well as how to rebuild your credit after Chapter 13

What Is a Chapter 13 Bankruptcy?

Before we dive into what a Chapter 13 bankruptcy is, let's understand what the overall concept of bankruptcy means. 

Bankruptcy is not just something that happens in monopoly games–bankruptcy is when you approach the courts for protection and relief from unmanageable debt. By declaring bankruptcy, you are legally telling your creditors that you are unable to manage your debt based on your current circumstances. 

A Chapter 7 bankruptcy is a complete write-off. Say that you’re 100% broke and cannot afford to pay any of your creditors. Once you’ve demonstrated to the courts your complete inability to pay, your debts will be discharged. However, Chapter 7 bankruptcies are extremely detrimental to your credit report as it shows a total inability to manage debt. 

Chapter 13 bankruptcy on the other hand is a type of bankruptcy that allows your debt to be consolidated into a more manageable payment plan that both you and your creditors agree upon. Once an agreement is made on the amount of debt and the repayment schedule—typically three to five years—you will begin making payments to a bankruptcy trustee who will distribute the money to your creditors. 

When Is a Chapter 13 Bankruptcy Over?

Just because you’ve made all of your payments according to the provisions of your bankruptcy agreement does not mean that your bankruptcy is finished. You must file with the courts in order to be discharged from bankruptcy. 

It’s important to note that filing for bankruptcy as well as being discharged from bankruptcy involves extensive amounts of complex paperwork and legal filings. For this reason, it's imperative that you seek qualified legal counsel to assist you in dealing with the courts. This ensures your bankruptcy process starts and ends as smoothly as possible. 

That being said, the discharge process is somewhat straightforward in that so long as you’ve made your payments, attended any state or federally mandated financial classes, and met any additional necessary steps, your bankruptcy judge should approve you for discharge. 

How Do Bankruptcies Affect Credit Scores?

If you know how often Capital One reports to a credit bureau, you understand your bankruptcy must be reported. As mentioned above, the Chapter 13 bankruptcy, while less severe, is still a significant stain on anyone's credit report. 

A Chapter 7 bankruptcy will remain on your credit report for ten years, and a Chapter 13 bankruptcy will remain for seven years. This isn’t to say your credit is completely ruined for seven to ten years–so long as you continue to make timely payments on any open credit accounts or loans, your credit score will slowly improve over time.

How Can Credit Repair Companies Help?

Credit repair companies can help to repair your credit by working with you to identify inaccuracies on your credit report. They then will assist you in disputing these inaccuracies to make sure they are removed, thereby improving your credit score.

These inaccuracies can frequently happen in bankruptcy cases because a debt may have been included in the bankruptcy proceedings, but due to a clerical error, the debt may appear as active or unpaid on your credit report. Once errors such as this are removed, your score can skyrocket.

We Fix Bad Credit

100% Free Consultation

Call Now