Credit after bankruptcy is destroyed. Don't believe the hype.

[Logan]

I think lawyers tell you to do that, so when they run your credit score before the Chapter 7 341 meeting, there won't be any doubt in the trustees mind that you are bankrupt. If you are on time, the trustee may wonder why you are filing, as you can obviously pay your bills. It may also prove to creditors that you are having serious money problems, and they won't go after you in court. I don't know these reasons as fact, just guessing.

If you stop paying your cards then you get to keep the money. If your payments on all your dischargeable bills is $500 then you get to keep the $500.

Everyone's situation is different. I anticipated starting a new job sometime during my BK so I had a plan that included buying a house after 2 years so I wanted my credit as clean as possible. When the loan officer called me back with my credit scores last month he was very surprised at my credit--My girlfriends FICO is 796 so she dwarfed me.

Another interesting note is my credit score has stalled. It is exactly the same as it was 6 months ago with a 686 mid FICO.

Hang in there money trouble because it will get better.

Logan

[Stilltheone]

hmmm. so some people pay their credit cards right up to the day of filing? the attorney i talked with said to stop paying once you deicded...

Now im confused on what i should do....

Like TBLTZ said, my lawyer also told me to stop making all payments in a Chapter 7. I guess what I am noticing with people who got credit right away, the majority seemed to be married or make more than me. A few people posted their income was 100,000. I guess when it comes to credit, the people who may not need the credit seem to get the most. It has only been about 5 weeks since my discharge, so I guess I will have to wait. Thanks everyone.

Let me clarify that I DID stop paying my credit cards once I decided to file BK. BUT, once I decided to file, it was only a 2 week time span in between the time I stopped paying and the time I filed. I wasn't late on anything yet. It wasn't like I paid my credit cards until the day before BK. I stopped paying, but my lawyer filed my case so quickly that I wasn't late. That's the way my husband and I wanted it.

As for our income, when we applied for credit, my husband's pay was still in the toilet and was only making $40K/year. Now, he's gotten several promotions and is over $70K. But, at the time we applied through Capital One, his income was nothing. We also applied for separate credit, not joint credit, so that ruins your married theory.

[eddiep]

I think lawyers tell you to do that, so when they run your credit score before the Chapter 7 341 meeting, there won't be any doubt in the trustees mind that you are bankrupt. If you are on time, the trustee may wonder why you are filing, as you can obviously pay your bills. It may also prove to creditors that you are having serious money problems, and they won't go after you in court. I don't know these reasons as fact, just guessing.

I think the reason the attorney said to stop paying is because any money you pay to the cc is money just thrown away. My combined monthly cc payments were almost $2000 a month. We stopped paying 10 months ago because of a decrease in income and could no longer afford them, that would have been $20k in payments!!! Wow just figured that out! wow!

[jonathanroy]

Banks will look at your situation NOW and if it justifies giving you a new credit card, they will emit it. As long as you are paying your current bills and have a steady income your fine.

[moneytrouble]

Banks will look at your situation NOW and if it justifies giving you a new credit card, they will emit it. As long as you are paying your current bills and have a steady income your fine.

I got a letter from one of the companies stating the reason for denial. BANKRUPTCY.
Please tell me what I am doing wrong, and why people are getting approved for crazy credit immediately after Chapter 7 bankruptcy. Did these people keep their homes? I live in the state with the highest unemployment, so maybe it immediately sends up a red flag. I have been at my current job for over 5 years. My bills are current and are reporting current on my credit reports. What else do they look at besides your credit and income?

[Stilltheone]

I got a letter from one of the companies stating the reason for denial. BANKRUPTCY.
Please tell me what I am doing wrong, and why people are getting approved for crazy credit immediately after Chapter 7 bankruptcy. Did these people keep their homes? I live in the state with the highest unemployment, so maybe it immediately sends up a red flag. I have been at my current job for over 5 years. My bills are current and are reporting current on my credit reports. What else do they look at besides your credit and income?

When we filed BK, we kept our home because we were current. We also kept our auto loan b/c we needed a vehicle and were current as well. I don't know if cc companies look at that and say "these people were responsible enough to keep their home and vehicle, let's give 'em credit". I have no idea. All I can relay is our situation.

I know that RIGHT NOW credit is tight, anywhere for anyone. I think banks are looking for excuses to deny people.

Good luck!

[moneytrouble]

When we filed BK, we kept our home because we were current. We also kept our auto loan b/c we needed a vehicle and were current as well. I don't know if cc companies look at that and say "these people were responsible enough to keep their home and vehicle, let's give 'em credit". I have no idea. All I can relay is our situation.

I know that RIGHT NOW credit is tight, anywhere for anyone. I think banks are looking for excuses to deny people.

Good luck!

I was responsible with my vehicle. It was paid in full and lists so on my credit report, so that obviously did not help me in anyway. I will just forget about credit. I am done with it. They don't want to give me credit, so be it. I don't need it, other than buying a home in a few years, or a student loan for a Master's degree. I will never buy anything with a credit card again, unless it is a major repair for something.

[Logan]

I got a letter from one of the companies stating the reason for denial. BANKRUPTCY.
Please tell me what I am doing wrong, and why people are getting approved for crazy credit immediately after Chapter 7 bankruptcy. Did these people keep their homes? I live in the state with the highest unemployment, so maybe it immediately sends up a red flag. I have been at my current job for over 5 years. My bills are current and are reporting current on my credit reports. What else do they look at besides your credit and income?

I was denied recently for a CC for the same reason. I would have had a 30% discount on the clothes I was buying at the Banana Republic. I was denied even though I have reestablished credit, my FICO is in the upper 600's and I have credit cards with credit limits totaling around 17K.

I should have known better since the creditor was GE but I guess I was more curious than anything. On top of that it is their loss not mine. I saved a hell of alot more money in BK than the 30% I would have saved if I was approved.

My recommendation is to stop applying for credit since it sounds like you may have way too many inquiries on your credit report. 1 or 2 is fine in a 6 month period but more than that will really hurt you.

Also, do some research about which card to apply for and then build from there. My first credit card had only a $500 credit limit and I paid an annual fee. A few months later I had a card with a $3500 credit limit. I eventually canceled the card with the annual fee while I acquired other credit cards. I use one credit card for my regular purchases then I do occasional purchases on the other cards just so they don't get canceled. I anticipate getting a car loan in a few months then I will most likely stop using a couple of the cards all together since I won't care if they cancel.

You need to develop a plan and do that by researching this board and others. I am 2 years from BK and I wake up everyday thankful that I declared BK and if someone doesn't want to lend me money then it doesn't matter since I now use credit as a tool---not a necessity.

Also, there is a website called creditboards.com that may have some credit card ideas.

Good Luck,

Logan

[moneytrouble]

I applied for 3 credit cards recently, that was all and 2 were secured. I just got another letter where they wouldn't even state the reason for denial. I will wait a year to apply for credit. I guess I am just not one of those people who will say life is great after bankruptcy. It is worse than when I was 18. They were throwing credit cards at me then, I had no credit, and barely any money.

[StartingOver08]

Moneytrouble, time is your friend in this case. Also check your reports to make sure you have made corrections because right after discharge the creditors make all kinds of reporting errors.

Another thing, you have put your finger right on it, many of the cards do a wholesale blacklisting of entire zip codes when we are in a market like this credit crunch. So part of the reason may be entirely unrelated to your credit profile - but it is hard to know, especially without a reason listed in the denial. BTW, I would call that creditor and ask for the reason since they did not give one over the phone.

Go to debtorboards.com as Logan suggests or go to www.creditinfocenter.com and look at the strategies for rebuilding your credit after BK.

[Stilltheone]

I applied for 3 credit cards recently, that was all and 2 were secured. I just got another letter where they wouldn't even state the reason for denial. I will wait a year to apply for credit. I guess I am just not one of those people who will say life is great after bankruptcy. It is worse than when I was 18. They were throwing credit cards at me then, I had no credit, and barely any money.

See, I don't understand this. In one post, you're saying you don't want credit and then in this post you're saying how terrible your life is because you DON'T have it.

REGARDLESS if you get credit after bankruptcy, life IS great after bankruptcy. Would you rather be without credit or would you rather be paying back the thousands of dollars you just had discharged?

Getting credit cards "thrown" at you doesn't make your financial life a success. Being debt free, not owing a credit card company DOES.

[moneytrouble]

I was talking about how I am being treated when it comes to credit. I don't want it, but it looks like I am going to be looked at like a nobody for a while. When sub-prime companies won't loan to you, it seems bleak for the time being. Financial success and bankruptcy sound like an oxymoron.

[Stilltheone]

I was talking about how I am being treated when it comes to credit. I don't want it, but it looks like I am going to be looked at like a nobody for a while. When sub-prime companies won't loan to you, it seems bleak for the time being. Financial success and bankruptcy sound like an oxymoron.

You've got people with perfect credit who are looked at like nobodies right now due to the credit "crisis" in this country. Do you honestly think someone with a bankruptcy on their record is going to be looked at as stellar?

Sorry, but being treated "poorly" is a small price to pay for getting rid of your previous debt. If you don't need the credit, it shouldn't affect you how you're being "treated".

I plan on really not getting any "normal" credit for the next 10 years. My husband and I each have a Capital One, Best Buy, Target, Orchard Bank and Hooters. Next year, we plan on applying with our CU for one of their cards (b/c we have to wait 2 years since discharge), but that's about it for us as far as "normal" credit goes.

I won't die if I never have a Discover card again or a US Bank. It's a good feeling to know that if all of our current cards are maxed out right now, I will only be a few thousand dollars in debt...not $60K like I once was.

[oldhack]

...I guess what I am noticing with people who got credit right away, the majority seemed to be married or make more than me. A few people posted their income was 100,000. I guess when it comes to credit, the people who may not need the credit seem to get the most...

Again, I seem to be your anti-stereotype: I'm single, and make about half that amount.

...Some people are racking up credit like crazy after bankruptcy. That seems scary to me and throws in the face of bankruptcy laws, like they were put there to be abused...

Well, my new mortgage payment is several hundred dollars less than I'd been paying for four years to my previous rent and Chapter 13 trustee combined, and I'd still been saving almost a third of my income by discharge, so I actually have less financial vulnerability regarding income-expense ratio. Buying this very nice house -- and taking on the associated mortgage -- seems like a no-brainer under those circumstances.
As for the low-limit credit cards I've also acquired, their purpose is exactly what you stated: emergencies and backup, not convenience. I've hardly used them, other than a minor charge or two occasionally so they'll report to the credit bureaus.
So, there are pretty defined benefits to me to 'wracking up' this recent credit, as you call it. Not accepting something that benefits me so obviously simply to avoid 'credit dread' seems like the axiomatic "cutting off my nose to spite my face", to me.

As others have suggested, I think the ability of some of us to obtain credit quickly after discharge relates to credit status prior to filing. As I noted earlier, I was current with all my creditors on filing day, though that wouldn't have lasted much longer had I waited. Thus, with no lates and several closed/PIFs in good standing still reporting, my FICO scores never really bottomed out.

[moneytrouble]

I filed **Chapter 7** and gave up everything. Are people who are getting approved for credit Chapter 13 filers who kept their assets? That may be the big difference between others and me. I own no large assets, except a 9 year old junker car I paid for in cash. I truly was bankrupt. I was not trying to be negative towards anyone in my posts, everyones situation is different. I was just wondering what is going on. I was raised to believe a bankruptee is one step up from a criminal, and was of the feeling that you should "pay" for your bankruptcy without getting credit for a while. I obviously don't believe that now, after spending time on this forum and others. I know my family and co-workers still do, based on the conversations I had with them. It just shocked me that people were applying before, during, and after their bankruptcy and were getting approved. I decided if they could, maybe I should try as I needed a car repair, then I found out I still could not. I just wanted to let people know who may be having the same problem as me, that they were not the only ones not getting approved, and really wanted to understand why. This whole bankruptcy has been a nightmare for me and maybe I am just confused and frustrated as to how to go about my future. Sorry if I indirectly offended anyone.