Chapter 7 vs Chapter 13
Head to Head. Which is Better?
Which is Better Chapter 7 or Chapter 13?
Chapter 7 vs Chapter 13 on Your Credit Report
Chapter 7 will stay on your credit report for 10 years from the filing date. But Chapter 13 will stay on your credit report for 7 years. But this does not mean that your credit is tarnished for 7 to 10 years. What you do after you file is critical to your credit recovery. If your goal is to buy a house as quickly as possible, you should know that some lenders will offer mortgages to consumers in Chapter 13 after only one year. Compare this to the 2 to 3 year wait after a Chapter 7 discharge.
If your goal is just to improve your credit score as quickly as you possibly can, but are not interested in buying a house, the Chapter 7 wins over Chapter 13. Why? Because, in part, the Chapter 7 is over faster. Chapter 13 cases last for 3 to 5 years before you get a discharge.
Why Consider Chapter 13 if You Qualify for Chapter 7?
Income Limits for Chapter 7 Bankruptcy
The most common reason people file Chapter 13, however, is that they make too much money to file for a Chapter 7. These people may need to file Chapter 13. The income limits for Chapter 7 are adjusted periodically, so be sure to check current information. Even if your income is above the median for your family size you may still be able to file Chapter 7. The means test can be legally manipulated.
When you’re considering which bankruptcy chapter to file, you ought to consult a certified specialist to help you. It’s free, and no matter how much internet research you do, it’s never as good as checking with a seasoned professional.
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Here are two helpful calculators for managing your debt repayments and Chapter 13 commitments.