Thought I was finished with effects of Chap 13, Think again...

[NotFinished]

(originally posted in wrong forum- "Before discharge" sorry about that)


Hello Everyone-

Just wanted to share my FRUSTRATION here as I hope many of you may relate. Maybe even help or clear the air with CORRECT information as well.

Here goes- a little background..

I filed my Chap13 in NOV2003. It took a while to go through the motions and stuff. I paid $900+ every month on my 5 year plan. Finished it off and FINALLY in AUG 2009 I was discharged. Sounds Great- Right? Well.... Here is the kicker--

My assumptions-
1. Pay through my plan and after 5 years it would be gone. After 7 years its off my credit report and I am finished.. // Told repeatedly that its on for 10 years- I read 7 in multiple forums- WHATS correct??
2. I needed to pay this as I am a person of Character and need to pay my debts. / Reality- The loan officers do not care if its a 7 or 13- if you filed, they look down on you.. and have denied us constantly.


So Last month I went to the bank looking to see what we need to do to get a construction loan/house loan- Investigating really but seriously as well.. After the 3rd Bank told us the same thing I said this is crazy. They all told me that I have to wait for 2 years past the discharge date (Their policy I assume). I couldn't believe it. I also needed to raise my score as well- It was 629 at that time. So my discharge date is AUG2009- That would be from Nov 2003 through AUG 2011.. BUT if I did a Chap7 it would be Nov 2003 to Aug2005 (something like that).

SO I got some low balance credit cards in my name to help build my score. 1 has a $250 limit/ 1 has a $500 limit. I am trying to build my score up so I can build a house.

So today my credit score is 650, my wife's is 735. I make over $100k a year. I have a total of $1800 a month in TOTAL bills (everything minus food). I have over $3500 a month clear and free after putting away 401/savings. -I am NOT bragging- I am frustrated. Keep reading please...

I call the bank and see if I can get an unsecured loan for $8000 or any amount that I can qualify for. They denied me and said AGAIN- It has to be 24 months AFTER the DISCHARGE date. The loan officer mentioned that I could do a "secured loan" using my money as collateral. I bluntly asked her that even if my score was a 750 right now, and have over $4000 a month NET income for my household, could I qualify for ANY type loan- secured or unsecured. She saw my point and said NO. the BIG N O ...

I paid over $70000+ back through my chapter 13 plan. I am glad I did as my character means a lot to me. BUT COME ON... If I did a Chap 7 I would be in a new house right now and have a credit score of 700+ Guaranteed.. Plus have $70k in the bank.. Banks (most that I have dealt with anyway) need to look at the big picture and see that not all Chap 13 and BK in general are not due to the people's fault and most try and do the right thing. Banks Need to really differentiate between the Chap7 and Chap13 people. I can tell you first hand- THEY LOOK AT YOU NO DIFFERENT THAN A PERSON THAT FILED A 7... You are still looked down on. One Loan officer stated that she filed a 7 and they built a new house not even 1.5 years after she filed.. ITS RIDICULOUS... She told me we should have done the 7.

--For those that wonder why I filed to begin with, It was due to Medical bills and VERY BAD ADVICE from a BK Lawyer. (Look at all of your options and make an educated decision- not like us)


So I ask Am I totally by myself here? Is this the NORM? Is there any Banks out there that are CHAP 13 friendly?? Either for a typical loan, or a construction/house loan.

I know CASH is KING but its hard to buy a house with CASH.

ANY ADVICE??

Thanks....

[Logan]

2 years out of BK for a mortgage is standard for FHA for Ch. 7. You need to check the guidelines for 13. It could be 1 year but I can't remember.
Banks usually want 3 or more.
Credit Unions may look at 'your' situation and approve a loan.
Your credit score doesn't mean too much until you're further out of BK. Of course a 750 will help you get a credit card etc. but many lenders want 3 years out of discharge so your score means nothing until then.

Good luck

[LadyInTheRed]

A Chapter 13 should only remain on your credit report for 7 years after filing. Check your credit report in December. If the BK still shows, then work to get your reports corrected.

Character has nothing to do with anything when it comes to getting a loan (or the choice between a 7 and a 13). There are people of high character run into financial problems and people of low character who never do. Lenders look at your credit history, your income and your assets. Lenders can't tell anything about your character from that information. Wait until the 7 years is up, make sure your report is accurate and apply for the loan again.

[NotFinished]

Thanks for the responses.

I agree with you on the Character comments. I didn't mean anything negative to anyone who has done a 7. I was just in the situation where I was able to pay a portion back and that was the reason I chose to do the 13. If I wasnt able, I would have done a 7.

So after the 7 years- It should be off the reports. Does that make it any easier in getting a loan? As most of the applications ask- Have you "ever" declared BK? Or am I still stuck with the "2-3 year waiting period"? (after discharge date)

I assume that this is for any type of a refinancing as well..
Just wondering.

Thanks again for your response.

[Exployer1234]

Your BK filing stays on your credit report for 10 years for chapter 7, I am not sure what it is on chapter 13.

I can only account for chapter 7, but I believe chapter 13 works the same way for the amount of years it stays on your credit.

It stays in the public listing on your credit report. Some of the creditors you included in BK start to fall off after 7 years, but the BK will stay on your credit report for 10 years.

This is the second BK I have done in my life and the last one did not come off my credit report until I got past the 10th year.

Once you receive your discharge date is when the clock starts ticking counting towards the 10 year mark.

[Flamingo]

Thanks for the responses.

I agree with you on the Character comments. I didn't mean anything negative to anyone who has done a 7. I was just in the situation where I was able to pay a portion back and that was the reason I chose to do the 13. If I wasnt able, I would have done a 7.

So after the 7 years- It should be off the reports. Does that make it any easier in getting a loan? As most of the applications ask- Have you "ever" declared BK? Or am I still stuck with the "2-3 year waiting period"? (after discharge date)

I assume that this is for any type of a refinancing as well..
Just wondering.

Thanks again for your response.

I'll try to help you out a bit here. We are four years this month past discharge. First, I was advised by our attorney, a bank rep, mortgage brokers and other financial folks that those that file chapter 13 are viewed more favorably credit-wise over Chapter 7 filers and that is because those that finish their plan successfully, paying all on time, etc. showed responsibility and also paid back a portion of their debt. Also, your credit prior to filing is also a big factor. We refinanced while still in a Chapter 13 (April 2006), bought a new car the same month (qualified for the advertised rate of 0%) and were discharged August 2006. Our reports came off our records in April 2009. we are sitting very pretty credit-wise, credit-score wise, kept our house and have no credit issues whatsoever.

I believe the banks feel you are moving too fast after being discharged from a bankruptcy and I too feel the best thing for you to do under all these circumstances is wait the few months for the BK to come off your records, in January get copies of all 3 of your credit reports and ensure all is off and clean them up. Also, the more credit you apply for the more hard inquiries you rack up and that does not look too good on a credit report with a bankruptcy. Time is your friend after discharge. It is not all that bad - you may be hitting some bad stuff with the economy and the timing also.

[LadyInTheRed]

I can only account for chapter 7, but I believe chapter 13 works the same way for the amount of years it stays on your credit.

Once you receive your discharge date is when the clock starts ticking counting towards the 10 year mark.

The research I've done says 7 years for Chap 13, 10 years for Chap 7 and the time runs from the filing date for both a 7 and a 13.

[LadyInTheRed]

Now that I have a few more minutes, I thought I'd provide some references:

http://www.creditinfocenter.com/bankruptcy/chapter13BK.shtml#7

http://www.daveramsey.com/article/th...ut-bankruptcy/ [I don't agree with some of what Dave Ramesy says about BK, but he has his facts right on this question]