How Does Chapter 13 Affect Credit Scores?

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Chapter 13 allows an individual to declare bankruptcy, thus removing the right for creditors to collect from that individual. Learn about the availability of Chapter 13 to companies with help from a registered financial consultant in this free video on credit and personal finance.

Part of the Video Series: Credit & Personal Finance
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Video Transcript

When an individual experiences a credit problem they have to declare bankruptcy many times and if they do so it has a name and a law called Chapter 13. Chapter 13 allows an individual to declare bankruptcy and no longer do creditors have a right to collect from that individual. They must settle for pennies on the dollar and that individual is then pretty much blacklisted for the next seven years in the credit reporting bureaus as being a bankrupting individual. But once they are discharged from their bankruptcy and all things are settled they really have a clean slate and they can start going forward with the exception that they have been identified as a bad risk so it is cautious for an individual who is just emerging from bankruptcy not to jump back in and get into credit problems again. It is a situation called Chapter 13 and it also is available to companies as well if they are facing reorganization. This is Patrick Munro talking about Chapter 13 in the area of bankruptcy.

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