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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12050
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I'm wondering how a credit score is impacted after a

Customer Question

Hi. I'm wondering how a credit score is impacted after a successful Chapter 13 bankruptcy falls off the credit report.
Submitted: 1 year ago.
Category: Finance
Customer: replied 1 year ago.
Have been current with all bills during the bankruptcy and since it was discharged a year ago. The bankruptcy should fall off the reports next August. Have 2 credit cards, always kept below 10% usage and paid in full each month. I'm finding conflicting info online about this question. Some say once it falls off, you're grouped in with people that have never filed BK and the score drops substantially. Others say theirs increased significantly. Please give me a professional answer on this matter. Thank you.
Expert:  Lev replied 1 year ago.

The bankruptcy will stay on your credit report up to ten years... There is no difference between Chapter 13 and Chapter 7 for that purposes.
While a Chapter 13 bankruptcy involves repaying some of your debt over a 3-5-year period - repayments and the fact of being current on your accounts are also reflected on your credit report.

A credit score is affected when filing a Chapter 13. That effect is very individual and depends on personal circumstances. However, if most of debts are ultimately paid off under a Chapter 13 plan, that definitely helps to rebuilt the credit score.

So while the fact of being under Chapter 13 protection still is on your credit report - the credit score may increase significantly after one year.

Customer: replied 1 year ago.
There IS a difference if you would Google further ...."however, a Chapter 13 will typically be removed after 7 years". I don't agree with your answer. And you didn't address the intended question.
Expert:  Lev replied 1 year ago.

Specifically for the Chapter 13 bankruptcy - on your credit report
- the fact of filing for chapter 13 protection will remain up to seven years from the date it was filed
- or up to ten years if it has not been completed.
- the accounts that are discharged as part of the bankruptcy should be removed after seven years they are closed.

Customer: replied 1 year ago.
Thanks...you told me nothing I didn't already know. I'm not satisfied.
Expert:  Lev replied 1 year ago.

If the answer has no value for you - you may simply ignore it... That is not an issue.
If you are looking for a specific effect on YOUR credit score - it would not be possible to tell as that effect is very individual and depends on personal circumstances.
Regarding what you already know... that is impossible for me to know unless you specifically tell.
If you already know the answer - what is the reason to argue?

Customer: replied 1 year ago.
I originally asked if you knew what impact a bankruptcy falling off a credit report typically has on a credit score. I gave you all the the information regarding my payment history since the BK was filed. I already know when it will fall off. You responded by telling me it will stay on 10 years until I pointed out there IS a difference in length between Chapter 7 and 13. You should've known that. I'm not arguing, I'm just not satisfied with your lack of knowledge regarding my question.
Expert:  Lev replied 1 year ago.

I just do not feel comfortable to continue this conversation and honestly hope someone else will be better help for you.

Customer: replied 1 year ago.
I don't feel comfortable either and I hope someone else will be better able to answer accurately.
Expert:  Lev replied 1 year ago.

I would appreciate if you stop responding because the system forced me to reply.

Customer: replied 1 year ago.
If you charge me for this worthless conversation I am going to dispute it.
Expert:  Lev replied 1 year ago.

I PERSONALLY do not charge you - so there is NO reason to continue that dispute with me.
But as I already mentioned - if the answer has no value for you - you may simply ignore it.

Customer: replied 1 year ago.
Whatever......
Expert:  Lev replied 1 year ago.

I REALLY appreciate if you stop responding because the system forces me to reply.

Expert:  Lane replied 1 year ago.

Hi,

...

I'm a different expert with a SOMEWHAT different answer

...

I am a CFP with 30 years of experience in the personal and business finance arena. I also hold an MBA in Finance and tax along with a Juris Doctorate (a doctoral degree in the law)

...

Chapter 7 and Chapter 13 bankruptcy will stay on your credit report for the same amount of time; about ten years.

...

Now, although they both have the same effect on your credit score, ONE particular creditor over another, reviewing your report to decide whether to lend you money, might view one chapter more favorably than the other.

....

In my experience, with my clients that have filed Chapter 13, creditors have been more willing to lend to Chapter 13 fliers that have completed the process rather than Chapter 7.

...

This is likely the difference you are hearing about. ... But again, I've been doing this for many years and have clients in multiple states, the way the credit itself is affected is no different.

...

Here's a good overview of this from the attorneys at NOLO.com:http://www.nolo.com/legal-encyclopedia/is-chapter-13-bankruptcy-better-my-credit-than-chapter-7.html

...

A distinction exists between (1) how credit is affected (in terms of the bureaus, FICO score and staying on the reports) and (2) likelihood of any particular's underwriting policiies being different from another ... with SOME feeling better about taking on risk from someone who took the "high road" and made the payments required under a Chapter 13 plan.

...

Hope this helps to clarify

...

Lane