What Happens At The End Of A Chapter 13 Bankruptcy ?  

When a person files for Chapter 13 bankruptcy, the court allows the person a maximum time period, usually of 6 to 7 years to pay off their debts. As long as he is paying back the debts, bankruptcy remains open. And, as long as bankruptcy remains open, the person’s credit report will show that he is bankrupt.

A credit report carries bankruptcy status at least for seven to twelve years. In the mean time, the person is allowed to clear his debts. After the debts get cleared, the bankruptcy is closed. Once the bankruptcy gets closed, dramatic improvements are seen in the credit reports and a sudden change in the credit scores. All of them depend on several factors. Those factors are under his control.

Firstly, in the seven-year period, one should have cleared all the payments without any delay or being charged late fees. The court will then certify if that person has paid in time or not. If he had missed a payment, the court will inform the credit rating agencies, whether or not the person has cleared out his debt.

Secondly, the court then makes a repayment plan, to allow the person’s credit to rebuild. During the seven years of time, the credit keeps improving on account of the payments that the person has made. At the end of Chapter 13 bankruptcy and even after the case is closed, the credit rating basically improves due to regular payment. Also, because of, all the previous debts have cleared off.

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