Chapter 13 discharge vs dismissal

[Rwil72]

I filled chapter 13 about a year a ago. I am paying Back all my creditors at 100% due to my income. I do not want to be in chapter 13 anymore and I believe I can settle with my creditors for less than what the courts are having me pay. My question is how bad does a dismissal look on your credit versus a discharge? And included with that would be debts settled for less on my report. I just figured if I was paying them back in full anyway and my credit was already damaged with the chapter 13 showing up on it what's the benefit of staying in chapter 13. I only filed to save my house and that has been accomplished. I was able to catch the payments up and reaffirm.

[DebtStinks]

IMO, the damage from the BK on your reports has already been done. It's going to stay there for the 7 years. I think the only thing you gain from this is the potential savings on settling minus the tax implications and the notation on each account going from IIB/CH13 wage earner plan, etc to settled, etc.

It's a toss up, but only because you're on a 100% pay back Ch13 plan.

Best of luck whatever your decision may be.

[Rwil72]

Thank you debtstinks.

I forgot to ask, is a dismissal scrutinized more versus a discharge when trying to obtain future credit specifically in real estate? I want to get back into real estate investing.

[DebtStinks]

I'm not 100% on that, but I am certain they would ask why it was dismissed. In your case, I don't think it would be any worse than the CH13 BK itself since you were in a 100% unsecured repay plan.

I think your biggest hurdle getting into real estate investing is getting a Non-Owner Occupied loan, especially in today's economy. I'm sure it's possible, but your ROI needs to look great from the beginning because the terms likely won't be so fair.

Best of luck!

[krielly]

A discharged Chapt 13 will remain on your credit for 7 years. A dismissed Chapt 13 will remain for 10.

Damage is already done. If you are able, i would continue to make the payments and complete your 13. 3 years is a big difference.

[DebtStinks]

@krielly  A dismissed CH13 stays on credit for 10 years??? I can only find that this is true on Equifax. 

I'm curious since this is new territory for me.

[Rwil72]

Wowzers!!! If that's true. That changes things. To have that reported and extra 3 years would make me hit the brakes. 

[Rwil72]

I am not seeing that, I am only seeing a dismissed chapter 13 staying on your credit for 7 years. I could be wrong, could you please share the site you are getting that information from. Thank you. 

[krielly]

That was my understanding, but it may be only Equifax that still reports for 10 years, as has been mentioned. 

The reason being, a Chapter 13 is typically at least a partial re-payment of debt, and therefore drops after 7 years, however a Dismissed Chapter 13 was not a successfully completed bankruptcy.