If you are an Indiana resident struggling with debt, you may want to consider declaring bankruptcy as a way to make a fresh start and improve your financial situation. Chapter 13 bankruptcy is one of the options that may work well. There are many aspects to chapter 13, and there may be both benefits and potential disadvantages for your unique circumstances. You may be particularly concerned about how chapter 13 affects your credit score and history. While you may see some negative impacts to your credit right after you file, chapter 13 does not irreparably damage your credit.

Chapter 13 bankruptcy is also known as a “wage earner’s plan.” This plan may be a good option for you if you have a consistent income. With chapter 13 bankruptcy, you may work with creditors to develop an affordable repayment plan. Filing for chapter 13 may stop creditors from pursuing collection efforts. In most cases, payment plans last for three to five years.

According to USA Today, filing for bankruptcy may decrease your credit score by up to 200 points. While this may seem like an extremely negative result, continuing to carry debt and miss payments may affect your score just as much. Additionally, the record of your chapter 13 filing should only remain on your credit report for seven years. If you continue to make your payments during those seven years, you may be able to improve your credit score appreciably. Once the bankruptcy is no longer part of your credit history, you may see your score increase even more. As long you make your chapter 13 payments consistently and follow good financial strategies, you may rebuild your credit after filing for bankruptcy.

This information about chapter 13 bankruptcy is intended for educational purposes only and should not be interpreted as legal advice.