How Can Someone Reestablish Their Credit?
We get people to focus on the future and to try and understand exactly how they got in a bind, but we do it in a way that treats them with understanding and great respect so they walk out of here feeling far better about the financial portion of their life path.
Does Bankruptcy Look Better Or Worse On A Credit Report To Creditors?
One would think bankruptcy looks worse, but the reality is, they look the same, which is why so many more people file a Chapter 7 than a Chapter 13. About 15 percent of the cases nationwide are under Chapter 13 because no one wants to repay their debt over 3-5 years if they can just make it all go away in 4 months.
Why Would Someone Want To Repay Their Debt?
One reason we advise people to opt for Chapter 13 is if there is a delinquent house payment and we want to keep them in that protective bubble for 3-5 years so they can repay the delinquent portion of the mortgage over that time. Another reason they may opt for Chapter 13 is if they owe taxes that are otherwise non-dischargeable in a Chapter 7; the IRS must take payments over 3-5 years without penalty, and sometimes without interest.
A third reason to file under Chapter 13 is if they’re afraid of losing an asset in a Chapter 7, because we can allow them to keep that asset by repaying the value of that asset into the bankruptcy over the 3-5 year period. Another reason comes if they had a huge moral compunction about wanting to repay and delay their fresh start. I’m not sure this reason makes legal sense, but if someone is driven by that moral compunction, I’m completely fine with that.
