Contrary to popular myth, bankruptcy does not “ruin your credit.” Unfortunately, a bankruptcy debtor’s credit score is most likely already damaged by repeated late payments and other negative information. It’s true that bankruptcy will take credit scores from bad to worse, but it can begin to be repaired after. If you’re wondering what does Chapter 13 bankruptcy do to your credit, you might be ready to file.

Chapter 13 has less of an effect on your credit score than Chapter 7. Chapter 13 filings usually remain on credit reports for seven years. Chapter 7 filings could linger for as long as ten years. As far as Experian and other FICO companies are concerned, Chapter 13 is essentially a take-control bankruptcy.

Bankruptcy debtors have even more control over their financial futures when they partner with Athens bankruptcy lawyers. Only an experienced attorney can unlock some advanced bankruptcy features, such as lien stripping and cram-downs, which can save your family thousands of dollars. An Athens bankruptcy lawyer has the expertise to care of all dischargeable debts and maximize resources for your fresh start.

Benefits of Bankruptcy

Most people initially consider bankruptcy because they are struggling with late payments. Most lenders are not very patient in this area. Once an account is more than one or two months delinquent, they quickly become more aggressive. In limited circumstances, civil judges can intervene and stop adverse actions. Section 362 of the Bankruptcy Code, also referred to as the Automatic Stay, automatically halts creditor adverse action, such as:

• Utility shutoff,
• Foreclosure,
• Lien placement,
• Repossession,
• Wage garnishment, and
• Eviction.

The Automatic Stay goes into effect immediately upon filing of Chapter 7 and Chapter 13 bankruptcy. It is not an complete stoppage of creditor/collection activity, so it has a limited effect in some of areas. For example, Section 362 of the Bankruptcy Code always delays utility shutoff, but it does not always disallow it completely.

What bankruptcy does do is protect your key assets. Outside bankruptcy, creditors may seize items almost at will to pay debts, largely because the Supreme Court has watered down some Fair Debt Collection Practices Act consumer protections. Bankruptcy in Georgia protects your:

• House,
• Motor vehicle,
• Personal property,
• Retirement account, and
• Government benefits, including Social Security benefits.

An Athens bankruptcy lawyer can use bankruptcy to make some assets more affordable in the long term. For example, there may be the option to pay fair market value of a motor vehicles instead continuing a loan. This is good because fair market value is often far less than they currently owe. The added bonus is that it may allow the debtor to own the vehicle outright.

Rebuilding Your Credit Score with Loans

Many people think that the credit rebuilding process does not begin until after the judge ends the bankruptcy. These people miss a golden opportunity to build a solid foundation for a better financial future.

Student Loans

Student loans are a good illustration, because many debtors owe tens of thousands of dollars to student debt lenders. Because it is rather difficult to discharge student loans in bankruptcy, many debtors do not even try.
However, as we learned in school, you don’t get anything if you don’t ask. If debtors request student loan relief but don’t meet all the requirements, the judge may still grant a partial discharge.

Most judges refer disputes like this to mediation. If that happens, the student loan lender has a duty to negotiate in good faith. In other words, the bank must be willing to make some compromises to reach an agreement. A hardline “Sorry, Charlie” approach is not negotiating in good faith.

How Borrowing Money After Chapter 13 Can Actually Help Your Credit

Borrowing money is one of the best ways to boost your credit score following a Chapter 13. Athens bankruptcy lawyers have professional associations with auto, home, and other lenders. So, a lawyer points families in the right direction. Former bankruptcy debtors usually have fewer choices and normally pay higher interest rates. When an Athens bankruptcy lawyer is involved, the bank is much less likely to say “no.”

It is illegal to discriminate against people who filed bankruptcy. No bank wants to deal with a potential discrimination action. They would much rather lend money and earn interest. So, former bankruptcy debtors have considerable leverage in this area.

Get a Free Consultation About How Chapter 13 Bankruptcy Will Affect Your Credit

Are you asking, What does Chapter 13 bankruptcy do to your credit? Chapter 13 adversely affects your credit score, but the effect is probably not as bad as you think. For a free consultation with an experienced Athens bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. If you choose to enlist services, convenient payment plans are available.