reaffirmation and credit score

[fatjay]

Does reaffirmation of a debt help your credit score recover faster? Example: my home lone is through B of A and they stop reporting when I filed...I did not file due to not having any money and piles of credit cards but for other reasons..reaffirming can only help me, correct?

I know all the reasons not to reaffirm but are there any pros to doing so?

Thanks
J-

[BoxerLover]

I look forward to seeing what response you get on this.

[fatjay]

Me too...I know that I have seen many folks talk about the cons...but there must be some pros to having good debt reported to the credit dept.....

[df04527]

Afraid to say that it really doesn't make a difference on your credit report one way or the other. The account will be marked IIB and that all by itself is a negative and will send your scores down the tube. Now if you can talk them in to reporting your payments and not reporting IIB then great!

[btbeme]

Reaffirming a debt is a poor way to increase a credit score, and is an especially a bad idea if the only reason to reaffirm is to raise your score.

For my own curiosity - since BK gives you a way to get out of debt and a credit score gives you way to get back into debt...why all the concern about a credit score? A secured credit card with a $2000 limit, and buying a 2 year old vehicle for half the price of a new one (and paying cash) will get you about anything you need for the first couple years after BK, and your score will repair itself along the way.

All a "good" credit score does is get you in debt cheaper than a "bad" score. But it is still debt.

[SunshineGal]

Does reaffirmation of a debt help your credit score recover faster? J-

It depends. If the mortgage company reports, than yes, reaffirming your mortgage will help your score providing you DO NOT miss a payment. One late payment on a mortgage after a BK will make it nearly impossible to get a mortgage later.

Afraid to say that it really doesn't make a difference on your credit report one way or the other. The account will be marked IIB and that all by itself is a negative and will send your scores down the tube. Now if you can talk them in to reporting your payments and not reporting IIB then great!

I disagree, although it is possible the lender would report this way, they shouldn't. The tradeline should report as paid as agreed and show ontime payments. If it's showing IIB with a reaffirmation agreement, than take the time to straighten this out.

Reaffirming a debt is a poor way to increase a credit score, and is an especially a bad idea if the only reason to reaffirm is to raise your score.

For my own curiosity - since BK gives you a way to get out of debt and a credit score gives you way to get back into debt...why all the concern about a credit score? A secured credit card with a $2000 limit, and buying a 2 year old vehicle for half the price of a new one (and paying cash) will get you about anything you need for the first couple years after BK, and your score will repair itself along the way.

All a "good" credit score does is get you in debt cheaper than a "bad" score. But it is still debt.

I couldn't agree with this more! I was pretty set on reaffirming our mortgages for the reasons above and then realized that a higher credit score just wasn't worth the dollar amount owed on the loans.

Basically, having a mortgage reporting does help your score, but you can get around it with an installment loan (car) and a few credit cards including one major visa or mc with a $1500+ limit. If you do not reaffirm, the lender can't report so you want to keep proof of each payment you make such as cancelled checks or bank statements.

[Ihatebk]

Why don't you shoot for a "0" on your credit score and promise yourself to never get in debt again. I think Dave Ramsey has the right idea when it comes to credit amd debt and that idea is to be "debt free and have a "0" credit score. Although I disagree with his way of getting there. He says to work 10 jobs and pay them all back over the next 10 years. I say fill chapter 7 and get debt free in 3 months - then follow his plan and stay debt free by never borrowing another dime from anyone.

[fatjay]

I didnt file do to being in debt though...I had a great credit score and was able to manage my money very well...I didnt file because I was 100k in CC debt or made poor choices...Money issues are not the only reason to file...I was being sued and needed to protect myself. Not that it makes a difference though..I see the point of what everyone is saying and either way reaff. sounds like a bad choice just in case..

Thanks to all

[Fallonedward]

The other thing a good credit score gets you is a job. I was offered a position and later the offer was rescinded due to my credit score, I thought it was because of my BK but it was due to the credit score. So in my case, I'm not looking to get back into debt, I just want a job so I can support my family and I need a good credit score to do so.

Reaffirming a debt is a poor way to increase a credit score, and is an especially a bad idea if the only reason to reaffirm is to raise your score.

For my own curiosity - since BK gives you a way to get out of debt and a credit score gives you way to get back into debt...why all the concern about a credit score? A secured credit card with a $2000 limit, and buying a 2 year old vehicle for half the price of a new one (and paying cash) will get you about anything you need for the first couple years after BK, and your score will repair itself along the way.

All a "good" credit score does is get you in debt cheaper than a "bad" score. But it is still debt.

[fatjay]

Also car insurance rates go up when you have bad credit...so there are other reasons for having good credit....some a great deal more important then others

[btbeme]

Reaffirmation is an expensive and dangerous way to increase a credit score for any reason. The same repairs can be made post-BK fairly rapidly without the risk of a reaffirmation.

In cases where a job is at stake, a fresh BK will torpedo you with or without any reaffirmations. Car insurance costs? A legit concern...but, six months post-discharge, anyone can be solidly on the path with a secured card or two and some other options found in the forums herein and elsewhere. I'd much rather pay a little extra for insurance than run the risk of a repossession post-BK, which will crash you for a much longer time period.

Now, I myself DID reaffirm a car loan in my filing, knowing full well that I only had 4 payments left on it and would pay it off the day after discharge using the money saved by not paying credit cards. Interestingly enough, two months after discharge (and well after I paid the loan in full and received the title and lien release in the mail), I received a letter asking me to pay up or be repossessed. One phone call cleared it up, but it demonstrates that banks, etc often have different parts of the company that have no clue what the other parts are doing...leaving YOU holding the bag.

[btbeme]

The other thing a good credit score gets you is a job. I was offered a position and later the offer was rescinded due to my credit score, I thought it was because of my BK but it was due to the credit score. So in my case, I'm not looking to get back into debt, I just want a job so I can support my family and I need a good credit score to do so.

It sounds like good logic, but reaffirmations really make little or no difference, especially for several months after discharge. You can easily rebuild credit using other means. Reaffirm only when you simply cannot afford to be without the asset and when you absolutely can afford to pay it off.

Think of a Ch 13 BK as the "ultimate" reaffirmation - you agree to pay back some or all of your debts by order of the court, and the Trustee controls those payments for 3-5 years. Sounds like a great path to recovering your credit score - paying off debts on time, as ordered. But nobody who qualifies for a Ch 7 would ever opt for a Ch 13 unless there is something seriously wrong...

[DebtHater]

Afraid to say that it really doesn't make a difference on your credit report one way or the other. The account will be marked IIB and that all by itself is a negative and will send your scores down the tube. Now if you can talk them in to reporting your payments and not reporting IIB then great!

I reaffirmed a mortgage loan and as of 1 year post discharge there is no indication of bankruptcy on the entry. It shows the status of the loan as "open/never late"