How California Creditors Perceive Chapter 7 Differently From Chapter 13 Bankruptcy Explains Lawyer

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Law Offices of Nicholas Gebelt
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This answer can certainly vary depending on the case. In Chapter 7, the ultimate purpose is to remove your debts entirely. In one vein, creditors may not view you as a good risk to take because of your lack of outstanding debts and your inability to go back into Chapter 7 bankruptcy for another 8 years. This means that if you needed to default and go into bankruptcy in order to pay off your debt to a creditor, you would not be able to.

In Chapter 13, however, creditors know that you will be involved in your plan for several years. Generally, most of my clients are able to finish their plans to repay their debts, but this can be a red flag to creditors who are not sure that you will be able to do so. From a creditor’s perspective, a Chapter 13 bankruptcy can serve as a determining factor in your eligibility to receive credit.

It can take about a year before creditors approach you to begin borrowing money again. However, it will look far more favorable if you are on a high-percentage plan, as creditors will know that they are able to make money off of the interest they will charge you.

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