And they said Bankruptcy would destroy my credit

[ccmisery]

@ccmisery, I certainly appreciate what you're saying. I think that, in our case, we'd already lived through the effect of years and years of living on cash rather than credit because of the two judgements for medical bills. For 15 years now, we haven't been able to obtain any kind of decent credit aside from the ones you noted. My husband is disabled and cannot work. So really, we've lived the post-bankruptcy life for nearly twice what most ever have to live with. It's not because of poor spending habits, either. In our case, we've learned excellent spending habits because we had to live within our means. When we got our car loan over a year ago, we just applied on a whim resigned to the fact that we'd be declined... but our other car was in need of repairs we could not afford all at once. At the time, it was easier for us to make a car payment that we could afford than be without a car for 6 months while we saved enough to get it repaired. We live in a pretty remote area (because it's what we can afford on our income) and not having a car for 6 months is pretty much not an option. Even though it's a town of more than 12K people, the nearest real grocery store is 20 miles away, but any real shopping as well as our doctors in a larger town is 45 miles away. Shoot, just to file our BK papers, we had to drive THREE HOURS to Fresno since we didn't have an attorney. Our situation required us to file in person. Ultimately, we filed because my salary was slashed and hours cut and we just could not carry on, and we really needed to get those judgments cleaned up if I were to try to find a better job -- since they always show up on background checks and even though they are 15 years old, I have been turned away from several great jobs I'm otherwise qualified for because of my credit. Clearly, it was pretty bad if just filing for bankruptcy increased our scores by 100 points.

So now, because of the BK, we haven't made a car payment on the newer car in 8 months. We were keeping that money stashed away to become current on payments if needed, and if we ended of reaffirming. If we reaffirmed, we knew that our judge would not approve it unless the terms were renegotiated. Different lawyers warned us of that, and I looked at that judge's history via PACER... and it was true, the only agreements he approved were ones where the creditor made drastic changes in the terms. Ultimately, we decided against that and decided to take that money we'd saved and get the other car repaired. That work is nearly done and we're hoping to pick it up sometime next week. And, so far, they haven't come for the other car, either... so that's fine by me. I really like our newer car, but it's just a car... and I'm at peace knowing we're going to lose it. I won't lie, though... it sure would be nice if they didn't bother me until after we got the other car back. I have several faml ymembers and friends who have offered to lend us a vehicle if it comes to that, but it would be nice if they just kind of forgot about us for a good long time.

Ultimately, we didn't really want to get credit cards anyway. We're so used to living without them that we didn't see the point. However, we are going to be moving out of state in the coming years and we may end up buying some property, so before that happened we wanted to build up a stellar post-bk credit profile. So, we've decided that we are still going to live on a cash-only budget, only we are going to put certain expenses on the credit card instead, then pay off the card each month. We do not want to finance anything if we can avoid it... though we may need to eventually because of some extensive dental work. But, we don't know how much will be covered by medical insurance first, as the work needed is one of those gray areas. We're hoping that my medical insurance will cover it as it is a medical problem that requires a medical doctor,,, but the reconstruction afterward will require dental expertise. Fun stuff.

Your story is so true with what happens, I know that though it's illegal, people get turned away from jobs when employers see their credit history.

All that I'm saying is, each person that files experiences different consequences/results. I had great credit for 25 years, I always paid off my cards or paid on time. It wasn't till the downturn that things changed, what annoys me about not filing sooner was I paid with savings and severance, 6 months of credit card bills while not having a job. I should have just filed a few weeks after losing my job. Instead I was too proud and thought I could turn things around, boy was I dreaming! Now I look back and think of the thousands of dollars I lost, not even mentioning my property that is getting sucked up by the trustee. All and all I'd hate to add it up but surely it's more than all the debt I had in CC's.

All of that hard work, paying bills on time and reaffirming a financed car, and leased car didn't do much to help me. My score has fallen but jumped up a few points, still not good enough or have the history to start rebuilding credit. I think it won't see anything till my BK closes, the Trustee is dragging their feet and doesn't respond to me on the status.

[ccmisery]

I was advised by my lawyer and many posters on this board to stop making payments as soon as you've made the decision to file BK. Not bad advice but I decided to make my payments right up to when i filed and when it came time to rebuild my credit it wasn't too difficult. Back when I was in the mortgage business I remember a credit score of a women in the mid 700's just 2 years after her and her husband had declared BK. She had no debt when they filed so other than the BK there wasn't a single bad mark on her report. In fact, now that I passed the 7 year you could easily miss that I have a BK because the report looks good until you reach the bottom under public records.
Logan
Logan

Yes, if you stop and file within 90 days you will be better off, wait 6 months then file, not so good. The only good thing I noticed is most of my credit cards are not even on my credit reports, they are gone. Only a couple show, the late payment history. Might be my only benefit.

I think BK will not be so frowned upon after the downturn, it's more common then people hate to admit.

[ccmisery]

I stopped paying once I knew I was going to file BK. Waited about 6 months to file, so my credit report was wrecked with negatives.

Immediately post discharge, I was approved for a $1500 card. I built on that success, used my credit cards responsibly and always paid in full, and now (10 months post discharge) I was just approved for a 10K limit on a card with no annual fee and 2% cashback.

Paying credit cards when you know you're going to file BK in an attempt to "save" your credit report is misguided in my opinion. That money would be better spent on a secured credit card with a local credit union, if nothing else.

Count yourself lucky, it doesn't always work that way. Discharged vs Closed, I think that the fact my BK is not closed is causing issues.

[grizindabox]

The only thing I regret in regards to filing BK is that I didn't do it earlier.

Ditto...and starting the rebuild process sooner.

[Logan]

Paying credit cards when you know you're going to file BK in an attempt to "save" your credit report is misguided in my opinion. That money would be better spent on a secured credit card with a local credit union, if nothing else.

Maybe but it I only had a couple of payments between my decision and when I filed. $800 wasn't going to make 1 bit of difference in my life and I know that I easily obtained credit immediately after my discharge.

[Logan]

I stopped paying once I knew I was going to file BK. Waited about 6 months to file, so my credit report was wrecked with negatives.

Immediately post discharge, I was approved for a $1500 card. I built on that success, used my credit cards responsibly and always paid in full, and now (10 months post discharge) I was just approved for a 10K limit on a card with no annual fee and 2% cashback.

Paying credit cards when you know you're going to file BK in an attempt to "save" your credit report is misguided in my opinion. That money would be better spent on a secured credit card with a local credit union, if nothing else.

Also, when I went BK in 2007 it was much more difficult to get credit. There were no cards with 2% cashback and lenders were tightening up everything. I had a CC the day after discharge with a small credit line of $500 (It was a known lender that gave out small lines to people with poor credit so $500 was expected), 3 months later I had a card with a $3500 credit limit and anther card a few months later with a 7K limit. I know from reading this board that I was not the norm at the time and I'm sure it's because I had no lates and or collections.
The response I got from the people on the board back in 2007 was just like yours regarding me being misguided but as I said before I was getting approved for alot more than everyone else at the time.

[PhillyGuy]

I stopped paying once I knew I was going to file BK. Waited about 6 months to file, so my credit report was wrecked with negatives.

Immediately post discharge, I was approved for a $1500 card. I built on that success, used my credit cards responsibly and always paid in full, and now (10 months post discharge) I was just approved for a 10K limit on a card with no annual fee and 2% cashback.

Paying credit cards when you know you're going to file BK in an attempt to "save" your credit report is misguided in my opinion. That money would be better spent on a secured credit card with a local credit union, if nothing else.

I made all my payment up to the day I filed. I re-affirmed my primary house and car and kept making the payments through-out my BK, they were always current. Now, 16 months after discharge, 2 months after it finally closed, I have two scores in the 700's and the third creeping up there.

So I would suggest, any accounts you are going to 100% re-affirm, keep them current through out the BK process, it seemed to help my scores. Anything your not re-affirming, stop paying. Just my thoughts.

[turtle19]

Going to update this one... they finally came for the car, about 5 months after discharge. The hilarious part of it all was that they sent a repo guy to camp out and scare the nonsense out of my neighbors by camping out in the driveway of a vacant house. The cops were called for suspicious behavior. Meanwhile, we weren't home for several days... and we had the car with us. The other car, the one we'd had repaired month before, was there... but it's not like they could do anything with that. We got a call from our local police department saying a repo guy was looking for us. That was embarrassing. I called the bank and asked them why they didn't just arrange a time for us to surrender the car... and they said they couldn't, that the recovery driver just had to catch the car whenever he could. I said, he could have just knocked on the door.... we'd been waiting for somebody to come pick it up for months. Again they said they couldn't. It was all quite ridiculous. I told them I'd been trying to arrange for them to pick it up for months, and nobody would talk to me when I called.... nobody would even come to the door. So, instead they send a creepy repo guy to stalk the neighborhood, completely unnecessarily. Even the police officer I spoke to said they guy was a bit of a jerk, said we were 'hiding' assets and he had to stake the place out to catch us. Um... that wasn't even true. In fact, I had gone to the PD (it's a small town) and told them we were trying to surrender this vehicle and the bank wasn't cooperating with us, and inquired about local regulations regarding potentially parking it somewhere secure.

Anyway, we're now just over 6 months out of discharge and are working with a financial advisor to boost our credit so we are ready to put in an application for a mortgage as soon as the BK ages some more. We're putting together a great plan, and I'm really encouraged. We are still living well within our means but we have applied for and been approved for several credit accounts. We now have $5,000 combined on a mastercard, a walmart store card, a target store card and an amazon store card.... all over $500 limits. We never charge anything that we don't already have cash for, but we're already used to living that way, so that's pretty easy. I'm just amazed.... but our advisor said it's because we're doing it smart and proving that we are living within our means and "learned our lesson". Our credit scores have jumped higher than I've ever seen i my life. I don't know how we did it, but even with a relatively fresh Cahp7 BK, we're hovering just under 700 each.

[avengers]

Thanks for the story. I was thinking about something similar this week. I'm discharging about $50 to $55k of debt and was wondering if it was worth it, especially considering that I'm going to have to give them a big check next week (pay that I earned prior to filing, but was not paid until after filing and will have to give them most of my tax refund.

Then I did some calculations. At the interest rate of most of my credit cards, it would take me over 4 years to get rid of $50k of debt while paying $1500/month, resulting in total payments of $72k. When looked at in that way, paying filing+attorney fees and my tax refund is well worth getting rid of $72k of payments.

[Drazil65]

Living on cash, well below your means (live on one paycheck and bank the other it builds up very fast) and building up a big emergency fund (cash in bank, cash at home, become a cash hoarder) is the best feeling in the world, especially coming out of bankruptcy. The freedom and the peace of mind is palpable and so amazingly freeing.

The experience should change you, change the way you think and change your lifestyle, if it does not then chances are you will be right back at the door of bankruptcy at some point. Bankruptcy is not a temporary solution to debt but a major lifestyle adjustment for your future and that is well worth it! Good Luck with your decision...

[drew999999]

Yep. As the others here have said, don't over do it with the card and it will reward you. My wife and I were discharged from our Chap13 in April 2014 and I applied for the Quicksilver MC in May just to see what would happen. They gave me a 500 limit unsecured card. I have used it for gas and such other than using my debit card and paid it off almost weekly. Just kept constant usage going. At the beginning of December, I received an email that they had increased my limit to $3500! I still only use it for 'normal' purchases, but its nice to know that it's there for car rentals/etc that require major cards. It's crazy how my view of credit cards has changes since pre-BK times. I almost get anxiety when there is a balance of more than 100 on it. I also pulled my FICO and my score is now almost 150 points higher than pre-bk and nearly 100 points higher than April of last year.