Life after BK

[no_it_all]

I will have been out of Chapter 7 BK three years in November and thought I would update my situation if anyone is interested :-)

Cliff notes version of my BK: Pro Se filing in August 2006, discharged Nov 2006. About 154K in unsecured debt, including about 12K in federal taxes (woot!). My filing was done under the "new" BK laws.

Kept my nose clean for about ten months (no new debt). Spent a little bit of time polishing up my CR, nothing major. About 12 months post BK I bought a new Toyota Tacoma (27K, no money down, 8.9 percent Chase Bank). When the stimulus package hit, I decided to buy a home. I ditched the Tacoma (sold it privately for balanced owed) about three months ago and now driving my beater again (1992 Taurus wagon!)

Ditching the Tacoma loan means that my current debts are tiny. Only have a student loan, nothing else. Local bank qualified me for a $215K-240K mortgage.

About a month ago I put an offer on a property that I had looked at a few years ago (for 318K). Offered 200K and it was accepted. My downpayment will be a whopping 2K. In about two weeks I should be closing. A couple of months later, I will be getting my 8K check in the mail from Uncle Sam.

My credit scores are ok, nothing great, ranging from 675 to 693 depending on where they are pulled from. Since BK, my credit has been <perfect>.

After BK I got a raise (to 67K) and together with my newly established credit that is a huge factor in qualifying for the mortgage. My goal will be to most likely rent out the property at some point and look for another deal. I like the leverage that real estate affords when building net worth.

Good luck to all, thing will work out eventually, believe it or not!

[NoMoreCards]

Thanks for the uplifting message! Hearing all the bad stuff that BK does, it is wonderful to hear how well it can turn out if we are careful Post BK about debt.

Congratulations to you, and thank you. I enjoyed reading your very positive message! It is great to know that keeping our noses (and credit) clean after BK allows us to truly move past it and into a fresh start.

All the best.

[lrprn]

Thanks so much for coming back and sharing your story, no-it-all! Good to see you again, and wonderful to know that your life is going so well post-bk!

[qsr]

Be careful about real estate leverage since you can only file once every 7 or 8 years.

[Nick9075]

I don't understand -- how was this guy able to qualify for a 30K truck 1 year after BK with Chase of all banks with NO money down?? and even better buy a home with a huge downpayment of $2,000?? FHA requires a minimum of 2 years post BK.

I don't mean to be a fly in the ointment but seriously if life could be so good as little as 12 months after filing (or less even!!!) wouldn't everyone with unsecured debt just decide to walk & file BK?? Even at 1.5 million or 2 million filers out of the total adult population in the USA the % of people filing is very very small.

Shouldn't it be a last resort if you truly cannot pay your bills or need to block a garnishment or bank levy?? Are those of us who are making every effort to pay what we can to avoid BK are we just suckers.. Should I just file BK under a chapter 13 and take the $1,500 that I would have left after the monthly payment given the 100% payback scenario and just spend it on 'whatever''??

Maybe I will get my wish. I am 180 days late on Chase and have 6 other delinquencies. Maybe I will forced into it due to a pending lawsuit and I can starting shopping for a 30K car and a $200,000 home in the city of Lynn Mass where property is dirt cheap and 'rent it out'.

And on a 67K income, how was he able to get a chapter 7 approved under the 'new' laws. He said he got a raise but from what?? Assuming the OP is single and in a high income state like NY or CA the median or mean income is only in the mid 50k's so he got a 20K raise or something?

[backtoschool]

I don't understand -- how was this guy able to qualify for a 30K truck 1 year after BK with Chase of all banks with NO money down?? and even better buy a home with a huge downpayment of $2,000?? FHA requires a minimum of 2 years post BK.

I don't mean to be a fly in the ointment but seriously if life could be so good as little as 12 months after filing (or less even!!!) wouldn't everyone with unsecured debt just decide to walk & file BK?? Even at 1.5 million or 2 million filers out of the total adult population in the USA the % of people filing is very very small.

Shouldn't it be a last resort if you truly cannot pay your bills or need to block a garnishment or bank levy?? Are those of us who are making every effort to pay what we can to avoid BK are we just suckers.. Should I just file BK under a chapter 13 and take the $1,500 that I would have left after the monthly payment given the 100% payback scenario and just spend it on 'whatever''??

Maybe I will get my wish. I am 180 days late on Chase and have 6 other delinquencies. Maybe I will forced into it due to a pending lawsuit and I can starting shopping for a 30K car and a $200,000 home in the city of Lynn Mass where property is dirt cheap and 'rent it out'.

And on a 67K income, how was he able to get a chapter 7 approved under the 'new' laws. He said he got a raise but from what?? Assuming the OP is single and in a high income state like NY or CA the median or mean income is only in the mid 50k's so he got a 20K raise or something?

From what I am reading the OP is three years out of bankruptcy with very little debt and a decent job, all good qualifications for a decent mortgage, and a car loan, both of which are secured debts.

Congrats to the original poster. Your story gives me hope that my life will get back on track after this bankruptcy.

[Nick9075]

From what I am reading the OP is three years out of bankruptcy with very little debt and a decent job, all good qualifications for a decent mortgage, and a car loan, both of which are secured debts.

Congrats to the original poster. Your story gives me hope that my life will get back on track after this bankruptcy.

He said he bought the car & home as little as 12 months after. And 67K is a 'really good job' debatable --- in NY, CA or in New England it barely is an entry level salary for kids out of college today.

I guess if it is that easy and so easy to get approved for cars & real estate more people should do it

[backtoschool]

He said he bought the car & home as little as 12 months after. And 67K is a 'really good job' debatable --- in NY, CA or in New England it barely is an entry level salary for kids out of college today.

I guess if it is that easy and so easy to get approved for cars & real estate more people should do it

Actually it is easier to get approved for secured debt than credit cards, since the loan is secured by the property (ie the house or the car).

A loan for a $200k house on a 67k salary is pretty straightforward. Since the OP said it was a 318k house it must have been a short sale or a foreclosure.

And the OP said that he sold the car, so he doesn't have that debt anymore.

And of course, I agree, having lived in nyc for 10 years, that 67k is not a high wage in nyc, but having moved to the midwest in Jan, I can say that 67k is a good wage other places in the country.

[CindyLou]

I filed in Oct 2005 and was discharged in Feb 06 under the "old law" Did a chapter 7 pro se and though I had a higher income (90,000+) it went off without a hitch...had about $125,000 in unsecured after a bad divorce. In April of '06 (4 months after filing) I bought a new ford escape and financed with Ford Motor Credit (even though i had bk'd them months prior) and got the loan at 0.9% (zero.point.nine). In August 06, got approved for Juniper Cards at 3000 each and then in 07 for Wamu at 4000 each (both hubby and I). The in September 06, got my husband a new vehicle as well. Financed through Capital One at 13% and then one year later refinanced through Christian Community Credit Union at 6.75%.

Fast forward to now. Credit score from 680-710. No credit card debt. Managed cards well. Still have the same vehicles bought right after BK and plan to keep them long term...one is close to being paid off. We had decided to buy a house but after being approved for an FHA in November 07 (less than 2 years out) we backed out on our offer after a bad inspection on the house and took it as a sign and decided to not take on the responsibilty of home ownership in southern california. The bank had done a manual override of the 2 year waiting period on the FHA to get the approval.

We have recently rented an apartment closer to my work and they didn't blink at the BK and just paid the $500 deposit.

I still have my student loans which are $70,000 consolidated and locked at 3.625% paying over 25 years. I had lapband surgery in November and financed the surgery through my credit union without any problem.

I have since saved $50,000 in my 401K and have 2 months of living expenses in the bank.

Why am I saying all this???????????????? Because there IS LIFE AFTER BK!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! So that's my story and my update.

[frogger]

Glad things are working out well for you. Looking forward to that for myself and family in the future.

[OhioFiler]

I don't understand -- how was this guy able to qualify for a 30K truck 1 year after BK with Chase of all banks with NO money down?? and even better buy a home with a huge downpayment of $2,000?? FHA requires a minimum of 2 years post BK.

I don't mean to be a fly in the ointment but seriously if life could be so good as little as 12 months after filing (or less even!!!) wouldn't everyone with unsecured debt just decide to walk & file BK?? Even at 1.5 million or 2 million filers out of the total adult population in the USA the % of people filing is very very small.

Shouldn't it be a last resort if you truly cannot pay your bills or need to block a garnishment or bank levy?? Are those of us who are making every effort to pay what we can to avoid BK are we just suckers.. Should I just file BK under a chapter 13 and take the $1,500 that I would have left after the monthly payment given the 100% payback scenario and just spend it on 'whatever''??

Maybe I will get my wish. I am 180 days late on Chase and have 6 other delinquencies. Maybe I will forced into it due to a pending lawsuit and I can starting shopping for a 30K car and a $200,000 home in the city of Lynn Mass where property is dirt cheap and 'rent it out'.

And on a 67K income, how was he able to get a chapter 7 approved under the 'new' laws. He said he got a raise but from what?? Assuming the OP is single and in a high income state like NY or CA the median or mean income is only in the mid 50k's so he got a 20K raise or something?

The suckers are those who give the credit repair shops a chance before they file BK. If you are attempting to pay your bills to avoid a BK that's fantastic!

If you are able to do a 100% C13 payback plan AND have $1,500 each month left over perhaps BK isn't for you. How is it you are 6 months delinquent on Chase if you have plenty of cash available? I am more confused by your situation than I am at no_it_all's situation.

Income is not the SOLE deciding factor in whether one qualifies for a C7 or not. If most of your debts were acquired while serving in the military you don't have to complete the means test. The means test only raises the flag of presumption of abuse. It's not the final arbiter.

[liz417]

Thanks for giving those of us who are just starting this BK road some hope that there is life after BK.

Good Luck to you!

[jennordhavn]

Congratulations. I am almost 6 months post-discharge and am working on credit repair/scores. Your story gives me hope that I will be able to buy a house one day! My goal is to buy a house before my 40th birthday (March 2012).

[no_it_all]

I don't understand

I snipped your post but will answer your questions. They are great questions BTW.

Understand that in 2006 I knew as much or more about the new BK laws than any attorney that I talked to. Point? Point is I had knowledge that I could use to my advantage. Second, I used that knowledge to create a strategy that would result in creating the least economic damage. Third, I absolutely knew I would have to rebuild my credit post BK. I learned how the credit <game> worked and again, used it to my advantage (once I was post BK).

Buying the Tacoma was a strategic move. I knew I would sell within two years so looked for a vehicle with great resale. My FICO was just over 600 three months out of BK, I had a cheap rent and no bills (other than a student loan). On paper I looked golden. My salary was close to 50K/year. Used the Toyota $500 rebate as my down payment and with the help of Chase, drove my new truck off the lot (it was actually three months post BK, not twelve, I just looked it up).


Once the stimulus package came out I saw that as a perfect way to buy a home. I had over a year of perfect payments on the truck ($500+ mo). I had paid off a couple of small CC debts (about 2K worth) and had a cheap rental apartment. I looked golden again. FICO was now touching 690+.

BUT! I had no money for a down payment! I searched for a Rural Development Loan (100 percent financing, woot!) and found out I can buy a house with as little as 1 percent out of pocket. You are correct that you must be 2 years out of BK with FHA. I am 3 years out, so I could have used them but again, they wanted 3 percent down. Rural Development requires only one day out of BK. No PMI and low rates and no down payment. Sounded perfect!

In my job I get paid more if I have more education. Weird. Over the last two, three years I've been going to school and that resulted in my income going from just under 50k/year to 67k/year. If I get a PhD it will go up to maybe 75K. The area I live in has a cost of living index of 102 (national mean is 100).

Don't get caught up with what you <can't> do. Concentrate on what is possible. And yes, most people are suckers and will fight BK till they have not a penny left. Is that smart? No, but everyone does it. Well, not everyone, some actually plan it out and use the law to their advantage and actually create a <credit rebuilding > plan. Those are the ones that come out smelling like a rose

[NewLifeAhead]

Hey No It All!!!!! Nice job!!! Congratz on your rebuilding efforts and plan. Gives us all something to think about.