After Chapter 13 Bankruptcy

Chapter 13 bankruptcy comes to a closure at the end of the tenure as agreed and approved on the basis of the repayment plan by the federal bankruptcy court. On the conclusion of the payment period, the trustee audits the account of the debtor and submits the report to the court for its approval. The court, if satisfied, will approve for the discharge of the debtor from his debts. The completion of the repayment plan under Chapter 13 provides the debtor with a new dawn to resume a better financial situation planning his moves, thereby preventing its occurrence in the future.

Typically, the Bankruptcy Code and the Fair Credit Reporting Act governs the matters related to bankruptcy. When the debtor seeks relief under Chapter 13 bankruptcy, this gets reflected in his credit scores which takes seven to ten years time to resume its older position. But, when the debtor is discharged off his debts and wherein he has made a conscious effort to payoff his dues to the creditors, even though he gets termed as “bankrupt,” his credit score bounces back. The rise in the credit score always pose to be of advantage to the debtor in the long run.

A wiser and more responsible debtor will channel his efforts by going for a secured credit card that limits his payment option to the money deposited by him. He will also inculcate the habit of making the timely payment of his bills and clinging to the small credit extended towards him. Living on cash is always safer than spending on credit as it permits better money management.

The debtor on the discharge of Chapter 13 has to ensure that the credit history mirrors his latest financial situation. There have been numerous instances wherein the credit rating agencies mirror a poor rating in spite of the debtor getting discharged from bankruptcy. So, always remain wary of the same and scrutinize the report and inform the credit agency to make the necessary amendments. This will help in pulling back your credit to a better position.