Another secured creditor question.....

[vicmost]

I'm a bit confused about a few of the secured creditors I have. I have accounts with Dell, Sears, Home Depot, Lowe's, and Snap-On Tools. I plan on filing chapter 13. I've read about these accounts and my understanding is that these creditors have a secured interest the items that I purchased. So, if I wish to keep keep some of items I purchased do I just keep paying on these accounts as usual? Some of the items I've purchased can't be surrendered...A few examples would be cleaning supplies, gardening supplies, tile, etc... etc..
How do you deal with these creditors? I've read that some people have negotiated deals with these creditors...I'm planning on filing in about 6 months and I will probably stop paying some of these creditors in about 3 months...Sorry for the repetitive post, it's a confusing subject for me

Thanks!~!

[busby]

I had Dell and Home Depot accounts included in my filing.

The Dell account only had a $50 balance but is listed as secured and I suppose will be paid before any others but the Home Depot account (about $500 balance) was listed as unsecured.

[optimistic1]

Stop paying on them right now, you are wasting your money. When you file the 13, they will ALL be treated as unsecured. Then, if they file a secured claim for the balances owed, your attorney needs to fight them on it, and object to the value of their claim, and state they are only entitled to the collateral of the value of what you own. So, it is almost like a cram down, if you bought a table saw from Home depot, and its worth only $100, but you bought it for $250, then the $100 is all they get. There may be other solutions to the problem though. Let some others chime in.

[vicmost]

Stop paying on them right now, you are wasting your money. When you file the 13, they will ALL be treated as unsecured. Then, if they file a secured claim for the balances owed, your attorney needs to fight them on it, and object to the value of their claim, and state they are only entitled to the collateral of the value of what you own. So, it is almost like a cram down, if you bought a table saw from Home depot, and its worth only $100, but you bought it for $250, then the $100 is all they get. There may be other solutions to the problem though. Let some others chime in.

Would that go for items that purchased in the last two months? Everything I have read tells me to wait at least 90 days to file but it's better to wait at least 6 months..

Thanks for the "Optomistic" reply

[optimistic1]

Look, if you intend to file a BK, then you need to just stop using the cards, period.

And stop paying the monthly payments at the same time.

Use the cash that you have and buy the things you need.

You need to be careful with just how much you are spending, they might look beyond the 90 day mark, to see if you bought a bunch of stuff, they would see this as abuse.

[vicmost]

Look, if you intend to file a BK, then you need to just stop using the cards, period.

And stop paying the monthly payments at the same time.

Use the cash that you have and buy the things you need.

You need to be careful with just how much you are spending, they might look beyond the 90 day mark, to see if you bought a bunch of stuff, they would see this as abuse.

I understand,
I haven't used any of my cards except for some tires I charged at Sears...I'm waiting for my house value to drop a little bit more so that I can lien strip my second mortgage. I was concerned about secured creditors because if I am going to pay them in my bk then I might as well focus on paying them now..
I think the only one I will pay on is my Snap-on account as it is newer and very neccesary for me (I'm a mechanic)..

Thanks for the advice!

[MacyJ]

I have to disagree about stopping paying them IF you want to quickly rebuild your credit. After all is done, your credit is going to show you filed bankruptcy, but if you were current on your credit accounts that is a huge help to rebuilding credit because those on time payments will still show up.

Now if you've already been late and have already gotten behind on things, I'd stop paying them because it's really not going to help.

When we filed, we had several credit lines and the only one who filed a secured claim was for our wedding rings (probably since those really don't lose their value). Others for things like Circuit City and a fridge never filed a claim.

[optimistic1]

I have to disagree about stopping paying them IF you want to quickly rebuild your credit.

[MacyJ]

I'm not saying keep the credit line open and reaffirm, I'm saying stay current until you file (if you have a good payment history). Your credit history will still be on your credit report up until your date of filing. After that it will show IIB. If you have a long history of no late payments, that will benefit you as you rebuild your credit post bankruptcy.

Having said that, if you have lots of late payments over 30 days, I'd stop paying completely because it's not really a benefit.

[catleg]

After my first bk (chapter 7) the IIB tradelines were listed as "neutral" in the score analysis reports. If you were late or charged off you can dispute that, it can only be either IIB or deleted. So I see no benefit to being current before you file. Also most creditors will close your accounts with them once they see you have filed BK, whether IIB or not. Now I can't say what happens if you have an account charge off and sold to a JDB and then IIB, but I'll let you know. :-)

[optimistic1]

The moment he files, his credit score will drop immediately. I don't see how your thinking that just because he has no late payments means he is not a risk, especially considering he would file the BK. It makes no sense and it is a waste of money, he will be on the plan for the next 3 to 5 years, and at that point, they wont even care anymore about being current on some credit line that far back. Upon discharge of all the debt he will be less of a credit risk period, because he would have no debt, and he couldn't file another BK for a while. Something as small as what you are proposing just would not benefit him at all IMO, if your gonna file a BK, stop paying the creditors, continuing to pay them is like trying to revive someone who died already, its over.

[MacyJ]

From my experience, those who had good credit histories were able to rebuild them faster than those who did not. People have even been able to get a home loan shortly after filing bankruptcy because of this (granted now with the economy the way it is, things have probably changed).

When they look at your history, they aren't just looking at the tag lines "IIB, charged off, etc", they are looking at your payment history as well. It's a huge part of determining their risk with you. If you were 30, 60 or 180 days late before you filed, it's still going to show on your credit and it will be a ding on your credit score. Yes your score will take a hit from the bankruptcy, but if you have a strong payment history it's only going to drop you about 50-100 points, whereas lots of late payments, charge offs, etc are going to knock it down even further.

I rebuilt my credit after filing chapter 7 nearly 7 years ago. Each time I was able to get a late payment removed from my history, including those IIB, my score would go up. I was able to get my score from around 450 to 650 by getting late payments removed as well as getting older accounts IIB removed. It does make a difference.

Having said that, I don't recommend going without to pay these cards. I don't recommend struggling to get by just to paythem. If you've already been chronically late, it's not going to help you to continue to pay. But, if your payment history is good, it will benefit you post BK.

[Trixie007]

When I read about improving credit scores after BK, then see someone is back in BK after improving their scores, it makes me hope that my credit scores just stay in the toilet so I can't use credit anymore! But that's just me. I'm looking forward to just paying cash... and yes, I know that credit scores come up for things like auto insurance, etc.

[MacyJ]

When I read about improving credit scores after BK, then see someone is back in BK after improving their scores, it makes me hope that my credit scores just stay in the toilet so I can't use credit anymore! But that's just me. I'm looking forward to just paying cash... and yes, I know that credit scores come up for things like auto insurance, etc.

I'm assuming this snarky comment was pointed at me, and yes I have filed twice. The first time was probably stupidity on my part combined with being a single mom. The second time however had to do with my husband being out of work. We had orginally intended for only him to file chapter 7 since nearly all the debt was his that he had when we got married. However, since our vehicle was in both our names, and I had nearly $5,000 in medical bills, it made more sense to for both of us to file and go through 13. It was truly a hard decision for me because I had worked so hard to rebuild my credit and I was essentially giving all that up. It was not because I ran up more credit card debt though.

[optimistic1]

I'm not understanding the logic behind staying current on your credit cards, and then filing and getting a full discharge from the debt, so that somehow it looks good, that just doesn't make sense. You still filed the bk and got out of the responsibility.

Yes the fico does take into effect the payment history, but honestly, do lenders really care? You discharged the entire account, and never paid on it anymore, thats just as bad as not paying the account and letting it go late.

# Amounts owed - 30%
# Length of credit history - 15%
# New credit - 10%
# Types of credit used - 10%


Payment history is 35%


In all honesty, I dont see what is you are trying to accomplish by having a higher score, other than slightly lower interest rates, which they will still be high anyway because your bk is showing on your credit report.


To buy a house, after a bk, all you need is minimal credit history, even just a utility bill, and you can very easily qualify for a FHA loan after two years from the discharge, regardless of how low your score is. I did exactly that and got a fixed rate at 5%.

Further, you can very easily purchase a car, with 0 obligations to old debt, and get a fairly decent interest rate.

So, if your in this just to make your score higher after the BK, to just go out and rack up new credit card debt, I guess its worth it to continue paying on your credit cards right up until you file the petition.

I see it as a waste of money and time. I could care less about credit cards at this point, they are designed to give people grief and imprison people in debt for decades.