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Chapter 13 discharge vs dismissal

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Rwil72
Regular Contributor

Chapter 13 discharge vs dismissal

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.

Message 1 of 9
8 REPLIES 8
DebtStinks
Established Contributor

Re: Chapter 13 discharge vs dismissal

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.

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Closed - PenFed $35,000 - Cap1 World Elite MC $11,200
Total CL - $115500

CH7 BK Filed 8/1/17 Discharged 11/7/17

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Message 2 of 9
Rwil72
Regular Contributor

Re: Chapter 13 discharge vs dismissal

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.

Message 3 of 9
DebtStinks
Established Contributor

Re: Chapter 13 discharge vs dismissal

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!

NFCU More Rewards AMEX $25000 (Opened 1/19) - NFCU Platinum $21000 (Opened 1/21) - TTCU Platinum Visa $10000 (Opened 10/18) - Discover $5500 (Opened 11/21) - Barclays View MC $5000 (Opened 1/19) - Capital One Platinum $3500 (Opened 2/19) - Capital One World Elite MC $1000 (Opened 3/21) - Target Store Card $2000 (Opened 10/18) - Floor & Decor Store Card $42500 (Opened 10/18)
Closed - PenFed $35,000 - Cap1 World Elite MC $11,200
Total CL - $115500

CH7 BK Filed 8/1/17 Discharged 11/7/17

Scores as of 2/18/21:




Inquiries Last 12 Months:
Message 4 of 9
krielly
Established Contributor

Re: Chapter 13 discharge vs dismissal

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.

 

 


You can't have your cake and eat it too. But you can dip your finger in the bowl and lick the icing!
Message 5 of 9
DebtStinks
Established Contributor

Re: Chapter 13 discharge vs dismissal

@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.

NFCU More Rewards AMEX $25000 (Opened 1/19) - NFCU Platinum $21000 (Opened 1/21) - TTCU Platinum Visa $10000 (Opened 10/18) - Discover $5500 (Opened 11/21) - Barclays View MC $5000 (Opened 1/19) - Capital One Platinum $3500 (Opened 2/19) - Capital One World Elite MC $1000 (Opened 3/21) - Target Store Card $2000 (Opened 10/18) - Floor & Decor Store Card $42500 (Opened 10/18)
Closed - PenFed $35,000 - Cap1 World Elite MC $11,200
Total CL - $115500

CH7 BK Filed 8/1/17 Discharged 11/7/17

Scores as of 2/18/21:




Inquiries Last 12 Months:
Message 6 of 9
Rwil72
Regular Contributor

Re: Chapter 13 discharge vs dismissal

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

Message 7 of 9
Rwil72
Regular Contributor

Re: Chapter 13 discharge vs dismissal

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. 

Message 8 of 9
krielly
Established Contributor

Re: Chapter 13 discharge vs dismissal

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.

 

 


You can't have your cake and eat it too. But you can dip your finger in the bowl and lick the icing!
Message 9 of 9
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