Can I Improve My Credit Score While I’m in a Chapter 13 Bankruptcy?

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Chapter 13 bankruptcy is a repayment type of bankruptcy where a debtor can pay debts in a three to five-year payment plan, often at a more affordable monthly payment than could be achieved outside of bankruptcy.

Many debtors are concerned, however, that their credit score will not be able to improve during those three to five years, making it difficult for them to obtain credit afterward.

Debtors can take out some new debt while they are in a Chapter 13 but must obtain permission from the bankruptcy judge, and there needs to be a good reason, such as a vehicle needing to be replaced or necessary repairs for a home. Taking out such debt can help to improve a debtor’s credit score during the Chapter 13 if the payments are made on time with the new creditor.

But what if a debtor doesn’t need to take out a new loan for something? Is there anything that a debtor can do to help improve his/her credit score without taking out new debt? The answer is: Probably.

One thing a debtor can try is to dispute all the debts listed on the debtor’s credit report. The debtor would need to create disputes at each of the big three credit bureaus (Equifax, Experian and Transunion) for each debt listed on his/her reports. When a dispute is generated through a credit bureau for a specific debt the credit bureau must report the dispute to the creditor to see what that credit has to say about it.

If the creditor does not respond within 30 days, then the credit bureau is required by law to take the debt information off the credit report. This is how many “credit repair” companies “clean up” a credit report. This can often result in an increase in the credit score within 45-60 days of the disputes being made.

Using the dispute process is a way to create a manufactured “increase” in the credit score, and it doesn’t mean that you don’t still owe the debt, nor does it mean that the creditor can’t report the same information to the credit bureaus again later … it simply means, for now, that debt is not being used in the calculation for the credit score. But as long as disputes are allowed a debtor should consider using them to his/her advantage.

Another way a debtor can increase his/her credit score during a Chapter 13 bankruptcy is to contact his/her cell phone or internet or utility or streaming service providers and ask that they report his/her payment information to the credit bureaus. Those are excellent ways to show that he/she is making timely payments each month while at the same time not incurring any new debt.

If you want more information on how to improve your credit score while you are in Chapter 13 bankruptcy, please contact one of our attorneys or visit our website at At W M Law, we are Here to Help!

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Jeffrey L. Wagoner


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