Does Good Credit Before Bankruptcy Make Rebuilding Credit Easier?

[Dan76]

I was wondering about two things when it comes to my credit score after filing Chapter 7 bankruptcy.

1. If you had an excellent credit score pre-bankruptcy, will rebuilding credit come quicker since you had a good credit history at one point instead of it always being a low score?

2. When your Chapter 7 case is an asset case, does this effect your credit score more positively since your accounts are being paid as opposed to a no-asset case where the creditor receives nothing? Will it show up differently on your credit report like the account being paid in full as opposed to being discharged?

[DebtEnder]

I can only speak on my experiences but in my case my credit was still high 600 when I filed. I was up to date on all CC's and only a month behind on house mortgage. (surprise lawsuits are no fun) I was able to get unsecured, no annual fee credit card 6 months after BK, with a credit card I filed BK on.

in regards to rather they report different in an asset case they should always report IIB included in BK. Now it may affect if they are willing to work with you in the future. Just because they can't collect does not mean they have to keep doing business with you. If they do get otherwise paid then perhaps they might be more willing. Really I have no idea.

[SMinGA2]

No personal experience specifically, but one of the factors that damages a credit score is late payment history. It affects the score somewhat for 7 years, and significantly for 2.

So if you're current on everything at time of filing - then in theory you would not have any late payments on your accounts. I imagine that would mean for a higher credit score once everything is updated to show IIB.

[Dan76]

Well, I was current and had great credit up until the time I decided I was going to do BK, then I stopped paying all my cards and loans. I didn't actually file until a year later, so there will definitely be a years worth of late payments on my credit history. I did however get approved for a replacement car loan up to $13,000. They told me people with good credit history prior to filing BK are more likely to get approved for these type of replacement loans on a car.

[tobee43]

well, we were ones that didn't listen to our atty and paid our charge bills until we filed. by then it was too late for the companies to report us late we were in the high 680's after our bk....now we are both in the 700's like 720 and 712. before we filed we were in the 800's. we just didn't give any time for reporting so it worked out well for us.

also, please note, we are the exception and NOT the rule about continuing to pay on our cards, there was a reason and it was choice. actually, it worked out well for our credit scores in general.

[Dan76]

I had no choice, I had to stop paying. Even then I couldn't save enough money after a year for filing and legal fees. I had to sell a bunch of stuff on eBay last minute before I was about to get judgements. It's OK though, I'm not looking for super good credit again. It's not like I'm going to be buying a house or anything soon. I don't think I even want to get any cards again.

[Flamingo]

From personal experience and input/advice from attorneys, mortgage brokers and some bankers we have spoken/worked with. It seems one who files a Chapter 13 and has prior good credit in the years prior to filing a Chapter 13 and all Plan payments are made on time, not missed and the plan successful, they come out of BK the best as to credit rating and the best chance of getting better rates and loans with former creditors with which they had prior good credit/loans (i.e., car loans, etc.). That is why I always say if one has had in the past a paid on time and in full car loan with a major car lender (i.e., GMAC, Ford Credit) that they have an excellent chance of getting another loan out of bankruptcy, as long as that lender was not in the bankruptcy. It appears creditors view a successful Chapter 13 filing over a Chapter 7 bankruptcy as it shows the debtors have attempted to pay back at least part of their debts. This information is straight from those I mention above.

[HHM]

Short answer, yes. But only on the margins. You shouldn't "try" to maintain good credit up until BK (not worth the money to stay current on payments). But in general, if you go into BK with relatively clean credit, it is a bit easier to rebuild because you don't have a ton of negative payment history and other adverse entries already accumulated on your credit.

[AngelinaCat]

We had a credit score of 820, when we filed in Dec. 2007. Now, two years later, we were at 670, and 662. We didn't default on anything until shortly before we filed. We haven't done anything in particular to try to rebuild. We were an Asset Ch7.

[tobee43]

I had no choice, I had to stop paying. Even then I couldn't save enough money after a year for filing and legal fees. I had to sell a bunch of stuff on eBay last minute before I was about to get judgments. It's OK though, I'm not looking for super good credit again. It's not like I'm going to be buying a house or anything soon. I don't think I even want to get any cards again.

i understand, our circumstances our situation was really odd, i can make a guess that it's not the best strategy in 99.9% of situations to continue to pay, our reasoning seemed like a sound decision at the time.

well, let me say this, even about a good credit score. it makes really no difference because there is a GREAT BIG BK on our report. it looks odd, since the report is so good, but it's still there and the bottom line decision made by any company extending credit is that BK. i think that's goes with a 13 or 7 until it's removed from your credit report.

also, time does heal all wounds including those from bk. the longer from your discharge and close dates to the time you apply for credit the greater your chances are on getting some decent interest rates. although, as i have mentioned we are in the 700's after 4 years so it does get back up there.

[ksgirl38]

Well, I can't speak from experience yet, but I've discussed this with 2 attorneys. The first said that if I stopped paying the cc's and filed within 90 days then it wouldn't give the cc companies long enough to do anything about the non-payment so it really wouldn't hurt me that much by having any non-payments on my credit report. By the time they were ready to go after you for non-payment you would have filed the BK. The second attorney I met with yesterday said that I could go with the surprise lawsuit, I think someone here mentioned it, and that wouldn't hurt you as much either. In my case the downside of this is I was planning on using the payments to the credit card as payment to the attorney instead. Obviously you are going to have the BK on your record, but I was advised that creditors are going to look at your payment history above some other factors. Whether or not you paid on time or at all would have a greater impact. This is what I was told. I've made all my payments and if I decide not to pay this month's cc bills then this will be the first month so I can't imagine my 764 credit score will fall that much until the actual BK hits.

[sunflwrgrl13]

Our credit scores were in the mid-800s prior to filing. We had to file because of my being downsized out of my engineering job. We only missed 1 credit card payment, and (maybe) 2 house payments before we filed ch7. Our current scores are showing around the 720 mark, and even though we were approved for a brand new car loan at 8.99% back in Dec.2011 (9mo post-discharge), we still cannot get approved for an unsecured credit card. And we still have a Macy's/AmEx card that we kept through the bk, and have made the payments all on time. We're about ready to just stop trying to get approved for an unsecured card. We really don't need it, since we've gotten used to paying cash for everything anyways. We are about 14/15mos post ch7 at this time.

[ksgirl38]

Our credit scores were in the mid-800s prior to filing. We had to file because of my being downsized out of my engineering job. We only missed 1 credit card payment, and (maybe) 2 house payments before we filed ch7. Our current scores are showing around the 720 mark, and even though we were approved for a brand new car loan at 8.99% back in Dec.2011 (9mo post-discharge), we still cannot get approved for an unsecured credit card. And we still have a Macy's/AmEx card that we kept through the bk, and have made the payments all on time. We're about ready to just stop trying to get approved for an unsecured card. We really don't need it, since we've gotten used to paying cash for everything anyways. We are about 14/15mos post ch7 at this time.

Can I ask what other lines of credit you have? I'm just surprised that you're having difficulty getting a good credit card with a credit score like that. Just wondering if it's because you don't have enough credit to show for right now.

[sunflwrgrl13]

Can I ask what other lines of credit you have? I'm just surprised that you're having difficulty getting a good credit card with a credit score like that. Just wondering if it's because you don't have enough credit to show for right now.

The excuses I have had are 1)debt-to-income too high and 2)delinquent accounts (because of bk). Which I really don't understand #1 because now that I'm employed again, my hubby and I make close to $100k/yr.

I'm wondering its because of my student loans holding us back? I still owe over $50k on those, and they are now back in repayment since I'm employed. Tbh, though, I've only been trying to get a card through our bank - US Bank. I've been unsure of where else to apply for one, because I pretty much refuse to pay exorbitant fees to have a CC.

As far as our TL's go, we have:
1) CC through Macy's/AmEx
2) Car loan with Cap1
3) My student loans

All are current on payments.

[ksgirl38]

The excuses I have had are 1)debt-to-income too high and 2)delinquent accounts (because of bk). Which I really don't understand #1 because now that I'm employed again, my hubby and I make close to $100k/yr.

I'm wondering its because of my student loans holding us back? I still owe over $50k on those, and they are now back in repayment since I'm employed. Tbh, though, I've only been trying to get a card through our bank - US Bank. I've been unsure of where else to apply for one, because I pretty much refuse to pay exorbitant fees to have a CC.

As far as our TL's go, we have:
1) CC through Macy's/AmEx
2) Car loan with Cap1
3) My student loans

All are current on payments.

That's hard to say. I wouldn't think it would be the student loans. I'm in the same situation with mine and it's never held me back. Although my student loan debt and salary are lower than yours. Do you actually use the Macy's/AmEx? I know lots of people say they have one, but don't actually use it which doesn't really help much.

Have you tried creditcards.org? I wouldn't pay a fee for a credit card either. You could always look into one at a gas station or something like that. For some reason I thought retailer credit cards were easier to get. Maybe that's just my perception though. Maybe after a while of using something like that you'd have better luck with a Visa/MC one. Just a suggestion.