All bills current at time of BK filing - how would FICO be affected?

[justbroke]

With regards to your comment that everything will be shut down, per my research, one must declare everything that is owed on the bankruptcy.

This is not a true reflection of how this actually works. Most large creditors, think big banks like Chase, Bank of America, and CitiGroup, subscribe to services that alert them to bankruptcy. I had a mid-tier bank and did not list an credit account with them. Within 48 hours of filing, every single one of my credit accounts were closed; whether listed or not. It's just a fact of the modern electronic world and the knee-jerk reaction of "sophisticated" creditors when they see a bankruptcy hit your credit profile. (Even the fact that you filed bankruptcy is generally on all three major credit bureaus within 48 hours!)

We have one moderator who had a $0 balance card survive for some time, but it was -- for lack of a better word -- arbitrarily closed at some point due to the bankruptcy. I'm talking many months after filing.

The reality of this, after having actually been through bankruptcy, is that there is a very good chance that not one of your accounts will survive, scheduled or not.

[frogger]

With regards to your comment that everything will be shut down, per my research, one must declare everything that is owed on the bankruptcy. If my cards have a zero balance, technically, there is no need to declare them on the bankruptcy. I am fully aware that during a periodic credit report, the bk will reveal itself to the credit card companies. If they do not close the account within 60 to 90 days after the bk, I believe there may be a good chance that the accounts will survive. Has anyone been in this situation?

While there is no need to declare a 0 balance on your filing, they will find out about as fast as the ink dries on the paper. Count on each and every card being shut down.

These folks have some great software that you can only dream of..........

[keepsmiling]

LV, you need to read some more here. It takes a while to understand the whole concept.
Meanwhile, you can schedule a few free consults with some attorneys. They may help you get a broader perspective and maybe- just maybe-- give you some other options.
Realize you aren't alone-- lots and lots of people are in the exact same boat. Hope that helps a tiny bit.

Once you walk away from the underwater house and discharge your other debts, you won't need the cc's anymore. Think how much cash you will have!

[ace300s]

Sorry my friend, but you just don't get it yet.

Everyone is going to shut you down. All of those credit cards are going to close, zero balance or not. While your income situation may get better, you best get accustomed to not having any credit to speak of for a couple of years.

Open your eyes and face the facts. The facts won't be changing for you......

why bother

[Pizza]

I agree with all of the above posts, but it seems counter-intuitive that banks would close 0 balance credit accounts, then within a few months you get offers again. Chapter 7 should make your risk better because you have no debt and can't file again for years. Nonetheless, plan to kiss them good-bye, especially through the larger banks.

[justbroke]

It makes no sense, but the automated computer programs which make these credit decisions, are not looking to the future. It is a well known fact that debtors tend to "run up" debt before filing. This run-up isn't "eve of bankruptcy" fraud, but people trying to stay afloat. The fact that you filed bankruptcy actually means something. Your entire financial profile could have changed. So, that $10,000 unused line of credit could have been based on your pre-petition financial health when you had the $100K/year job, a $500K home, and investments galore.

The post-petition (or even pre-petition) health is more than likely to have changed. A smart creditor would be very careful about leaving accounts open. While it's just my opinion, I would believe that a person who lost their job, their home, and just filed for bankruptcy could possibly be "un-collectible" after they emerge from bankruptcy (are discharged). So that $10,000 line of credit would look juicy to the out of work, no income, no assets, post-bankruptcy debtor. The creditor would have "recourse" but it would amount to nothing more than a judgment which they can't collect, because the debtor is flat broke and jobless. That's a serious consideration.

After you emerge, a new credit application can be completed and the creditor can reassess the risk associated with the particular individual.

Maybe you're right, pizza. Maybe they could just reduce the credit line rather than just close the account. That way, you would need to engage with the creditor, provide new financials, and they can reassess what the credit line should be; or close the account at that time. (For reference, I'm talking about $0 balance accounts upon filing.)

[Faust]

For whatever reason my zero balance victoria's secret card made it through and I have used it a few times. They even raised my limit last year.

[justbroke]

Department store cards that are not co-branded (with VISA, M/C, AMEX, Discover), seem to pass through the bankruptcy if they are not scheduled. I do not recall if I have ever read about a "major" credit card making it through the bankruptcy process. I have read on numerous occasions, with Faust adding another, of department store cards making it.

[btbeme]

My two cents:

It isn't a credit score. It is a debt score. You get a better FICO by accumulating debt, then making payments on debt, and keeping debt for a long period of time while you pay interest on debt, and if you want a better score you need more debt to show that you are "fiscally responsible."

Now, post-discharge, you will get an avalanche of credit card and auto payment offers in the mail. These folks know that you are the best target, since your debt ratio is the lowest it will ever be and you are "anxious" to rebuild your debt score. Oh, and forget the fact that if you screw up you cannot stiff them for another eight years, so they can sue you and get paid no matter what.

That will help your FICO score. Whatever happens pre-BK is pretty much a non-issue. It is post-BK that will count.

[kawh]

With regards to your comment that everything will be shut down, per my research, one must declare everything that is owed on the bankruptcy. If my cards have a zero balance, technically, there is no need to declare them on the bankruptcy. I am fully aware that during a periodic credit report, the bk will reveal itself to the credit card companies. If they do not close the account within 60 to 90 days after the bk, I believe there may be a good chance that the accounts will survive. Has anyone been in this situation?

After I filed last month, bank of America closed my zero balance card in just a couple of days.
Capital One still allows me to log onto my zero balance account there, but says in red letters, that my account is restricted.
One of my Citibank cards was zero balance. They had already reduced my limit to just $500 because of defaulting on their other cards. This account still shows open with the $500 limit, no restriction evident, but I'd be afraid that if I tried to use it, it would be shut down immediately or the transaction refused, so I'm not trying.
One of my Discover cards was zero balance, but that account won't let me log onto it. I haven't received a closure notice from Discover, tho.
I recently received an email from my Lowe's card (GE Moneybank) about some promo offer, so I guess that account still is open.

So the upshot is that 3 weeks after filing, only one of my zero balance cards is closed, but I don't feel free to use any of them (aside from the bk prohibition against using any credit), for fear they would deny the transaction or close the account because of the sudden activity.

But here's a thought: What if you now took out a small balance transfer (0% with little or no fee, of course) on your favorite card, and reaffirmed that small payment debt in bk? I wonder if the CC company would keep that one open for you?

[lillymarlene]

None of my "major" credit cards VISA, MC or AMEX, those personal or business, zero balance or not, survived my chapter 13 filing. My old credit union even instantly closed my debit card. However, a few of my "zero balance" business accounts survived. I am able to presently use them, I only charge small amounts and pay them off within 30 days. This may not be true in other areas, but according to my attorney, this is O.K. since it's just considered "general business."

[frogger]

I agree with all of the above posts, but it seems counter-intuitive that banks would close 0 balance credit accounts, then within a few months you get offers again. Chapter 7 should make your risk better because you have no debt and can't file again for years. Nonetheless, plan to kiss them good-bye, especially through the larger banks.

Actually, it makes perfect sense, because the cards you may have had before filing could have been no fee and low interest rate cards. It's not uncommon to see a debtor with a good credit score have a 8.9 % interest rate on a credit card, with "free" no interest balance transfers, etc.

They close the old accounts with the favorable terms and if you get another account, you will be at a higher rate of interest and possibly account fees that did not come with the more favorable cards.

Everyone needs to remember that credit cards are a major profit center for the lenders and these people, while they may do idiotic things, are not stupid. They make money.

[frogger]

Department store cards that are not co-branded (with VISA, M/C, AMEX, Discover), seem to pass through the bankruptcy if they are not scheduled. I do not recall if I have ever read about a "major" credit card making it through the bankruptcy process. I have read on numerous occasions, with Faust adding another, of department store cards making it.

The unbranded cards are known as the "secondary" credit market. While most all of them report on your credit reports, they are not like the mc/visa cards that are the first tier credit market.

A branded card vs unbranded card could be summed up as this:

Buy a new car from a dealership or buy a used car from a buy here/pay here used car dealer.

First tier credit vs secondary credit market.

There are more credit reports out there than just the "big three". There is an entire market of secondary credit that flies below the radar.

[AngelinaCat]

We learned today that 'Hub's ex wife, in filing her petition, tried to keep her Target Card.

The attorney noted it as "wish to retain" in her paperwork; the balance was zero when she filed September 10, 2012. That card is GONE--period; end of subject, and period.

[lillymarlene]

There are more credit reports out there than just the "big three". There is an entire market of secondary credit that flies below the radar.

That is so true. A lot of my business accounts, even ones that I had to list, did not appear on my reports from the "big three."