Using loans to rebuild credit after CH. 7.

[noirman]

I am going to file a chapter 7. I have a car loan and a personal loan with the credit union, that I have agreed to leave out of the bankruptcy. The credit union told me that if I didn't include them, then they will treat the bankruptcy as if it didn't existed and lend me money later. Otherwise, no way!
But they also told me that my interest rate for new loans will be based on my credit score as always.

So this is my question. If the credit union continues to report my credit (which they said they will if I leave them out), will these two lines of credit (personal loan for $3895, and car loan for $16,000) improve my score enough to have a good score within a year or two after the ch.7? With other lenders so that I can get good interest rates in case I don't want to use the credit union is what I'm asking. I plan to pay over the amount due to pay them off in a year and a half from now. The car loan is due to end 12/2012.

Can anyone help me with this?

[sdbird101]

I hope that you are using an attorney as you should make sure this will not effect your case. The courts may not look kindly on someone who claims to need a ch7 but is electing to keep unsecured debt, some districts even keep a close watch when you are retaining secured debts like your car loan.

Assuming its all fine and good with the court/trustee/lawyer, these things will help your score allot, I would also recommend getting a credit card 6 months or so after bankruptcy. There are allot of suggestions on this forum under "rebuilding credit". I believe I read you want to establish at least 4 lines of credit, a mix of kinds if possible, which you could easily have.

[2manybills]

You have to list all debts on your petition whether you plan to reaffirm or not. You cannot pick and choose which debts to include and which not to include.

[noirman]

I know I have to list them all. Keeping them out meant reaffirming them.

[2manybills]

That's good. By saying "keep them out" it sounded like you weren't listing them on your schedules.

From what I've read on this forum and maybe someone with some experience in this can chime in, once you file BK, those creditors show a 0 balance even if you reaffirm. I hope that's not the case, because I'm reaffirming my car and would like to have my payment history reflected on my credit report.

[LuciluS]

I don't believe a Trustee will allow a Reaffirmation on an Unsecured Loan as you are showing a Preference. Reaffirmations are used for Secured Loans such as a Mortgage or a vehicle loan.

Now, after your case is closed, you may continue to make payments on any unsecured loan if you so desire.

[Keebler]

I don't believe a Trustee will allow a Reaffirmation on an Unsecured Loan as you are showing a Preference. Reaffirmations are used for Secured Loans such as a Mortgage or a vehicle loan.

Now, after your case is closed, you may continue to make payments on any unsecured loan if you so desire.

[noirman]

I don't understand that a Trustee won't allow it period, when clearly people do that all the time. They reaffirm credit cards, which are definitely not an important debt and are considered unsecured. Anyway, on that note, I spoke with a bankruptcy attorney in my area and he said that as long as I could afford it, it could be reaffirmed. And I definitely can afford it. Thanks for your input though.

That was never the problem anyway. I just wanted to know if by doing so, I would establish "good" credit faster (1-2 yrs) if all payments are current after the bankruptcy and reported.

[bxphae]

noirman, I would contact the credit union. Rules vary, I know one of my credit unions and WF don't report to to anything after IIB even after reaffirmation when I spoke with 3-4 representatives from both banks just to make sure I got the same answer.

Although the lawyer gives sound advice, according to what i've read, it's really more up to the trustee (or BK judge? ) to approve the agreement.

[noirman]

noirman, I would contact the credit union. Rules vary, I know one of my credit unions and WF don't report to to anything after IIB even after reaffirmation when I spoke with 3-4 representatives from both banks just to make sure I got the same answer.

Although the lawyer gives sound advice, according to what i've read, it's really more up to the trustee (or BK judge? ) to approve the agreement.

Yeah, I spoke to the credit union and asked them directly if they change anything about my agreement or reporting and they said no. No extra fees or anything. Just signing saying I'm keeping the debt out of BK (reaffirming). BUT, I am going to write it in the agreement if there is a place to put it that they don't charge me extra fees, and that they report my credit as how it is being paid from that point forward. No "implied agreement" allowed!

[bxphae]

Yeah, I spoke to the credit union and asked them directly if they change anything about my agreement or reporting and they said no. No extra fees or anything. Just signing saying I'm keeping the debt out of BK (reaffirming). BUT, I am going to write it in the agreement if there is a place to put it that they don't charge me extra fees, and that they report my credit as how it is being paid from that point forward. No "implied agreement" allowed!

That's excellent news if they continue reporting. I'm not reaffirming any of my vehicles just because of the opposite, too bad for them