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Credit rating - chapter 13 v. chapter 7 - which affects your credit worse?

Carlsbad, CA |

If I reorganize my credit through chapter 13 does it affect my credit any less than if I go chapter 7? Either way, can I keep my home?

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Attorney answers 3


Generally speaking, the information that I'm hearing is that a 13 will be less damaging on your credit report than a 7 because, ina 13, you're probably going to be paying back a portion of your debt to unsecured creditors but I'm not certain that the difference is very significant.

With regard to your home, you can keep it regardless of whether you file a 7 or a 13 depending on many factors such as your income, whether and to what extent you are in arrears on your mortgage, and others. For a complete analysis, you should consult an attorney to discuss whether and when you should file a petition for bankruptcy and whether it is possible to strip away any secondary loans that you may have against the property. There are many possibilities to consider and an attorney who practices in this area is best suited to help you make your decisions.


It depends on what you are trying to accomplish. If you are looking to quickly eliminate credit card debt and rebuild credit then chapter 7 is probably a quicker vehicle for that. The chapter 7 process takes approx. 4 months versus a 3-5 year chapter 13. During that 3-5 year period, there is nothing you can really do to improve your credit since you are in bankruptcy and generally cannot obtain new credit to help you rebuild during that time. Chapter 13, does however, have advantages that chapter 7 doers not, namely the ability to strip/remove junior mortgages. You should seek a qualified attorney in your area to go over options that are best for you.

Mr. Larkin is a CA licensed bankruptcy attorney and is located in San Diego. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Larkin strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case.


You can keep you home if you can afford the mortgage loan payments. In C13, if you can afford the extra payments the plan will allow you to catch up on your arrears if you are late. If you are current, C7 is a possibility. In either C7 or C13, if reduced or credit card payments eliminated ... maybe this will allow you make your house/car payments you were having trouble making...?

Still lots of question, seek professional help...there are a whole lot of variables that will make a difference in how you get to your own personal goal....