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Credit Building during Chapter 13

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srloring13
Regular Contributor

Credit Building during Chapter 13

I am askin this question on behalf of a family member. They filed Chapter 13 and would like to know if they can start the rebuild process now or do they wait until they have received their discharge.  If they start now, are there any creditors that they should try to establish accounts with?

FILED CH7 BK 02/25/13 -- DISCHARGED 06/10/13
Starting Scores 06/10/13 EQ474 EX538 TU503
Message 1 of 7
6 REPLIES 6
TRC_WA
Senior Contributor

Re: Credit Building during Chapter 13

Waiting until discharge is strongly recommended.  Their attorney should have also advised them to do that.

 

Applying for new credit while still under bankruptcy protection without trustee approval can lead to dismissal of your case if the trustee (who isn't your friend) objects.

 

"No new credit without trustee approval" was exactly what my attorney told me.  If the trustee says it's OK... go for it.  Applying without informing the trustee is a risk I refused to take.

 

I rebuilt the profile you see in my sig without any problems at all... and I started the day after discharge.

 

Smiley Wink

 

 

FICO8 current as of : ----- EQ: --- TU: --- EX: ---
Hard INQs last 12 months: EQ: 5 | TU: 7 | EX: 9
Verizon Visa $6500 Amex Delta Platinum $10,000 Care Credit $12,000
NFCU CashRewards $6000 Apple Card $2000 Best Buy $3500 Amazon $5000
NFCU auto loan (2022 Ford Bronco Sport Badlands - Cactus Gray) $44k new - balance $31k/6.94%
Total CL: $45,000 --- Total CC UTI: --% --- AAoA: 5.5 years --- Income: $200k
Last app: 11-30-23
Message 2 of 7
srloring13
Regular Contributor

Re: Credit Building during Chapter 13

She has received trutee approval for up to $500.00

 

FILED CH7 BK 02/25/13 -- DISCHARGED 06/10/13
Starting Scores 06/10/13 EQ474 EX538 TU503
Message 3 of 7
TRC_WA
Senior Contributor

Re: Credit Building during Chapter 13


@srloring13 wrote:

She has received trutee approval for up to $500.00

 


So go for it then...  just let her know that she should try to avoid garbage lenders like Credit One and First Premier.

 

Also, let her know that Rome wasn't built in a day.  Rebuilding is a marathon... not a 100 yard dash.   I'm 2 years into rebuilding since discharge... during which time my scores have went from 630's to 680's.  I won't see 700+ until the public record and IIB accounts fall off my reports in the coming months.

 

A $500 CC is a nice start... just don't expect miracles with a credit score.  She may also have difficulty getting approved with an open but not yet discharged Ch 13 on her reports as well...  I went to buy a used car a few days after discharge in 2013 and ALL of the approvals I got were conditional on them seeing proof of my discharge due to the fact my reports hadn't yet updated.

 

 

 

 

FICO8 current as of : ----- EQ: --- TU: --- EX: ---
Hard INQs last 12 months: EQ: 5 | TU: 7 | EX: 9
Verizon Visa $6500 Amex Delta Platinum $10,000 Care Credit $12,000
NFCU CashRewards $6000 Apple Card $2000 Best Buy $3500 Amazon $5000
NFCU auto loan (2022 Ford Bronco Sport Badlands - Cactus Gray) $44k new - balance $31k/6.94%
Total CL: $45,000 --- Total CC UTI: --% --- AAoA: 5.5 years --- Income: $200k
Last app: 11-30-23
Message 4 of 7
bstone
Frequent Contributor

Re: Credit Building during Chapter 13

Her best bet may be a secured card.  As TRC mentioned, getting approved with an open BK is going to be difficult, however a secured card should be an option.

NFCU Rewards - $18,000, NFCU Signature - $18,000, NFCU LOC - $15,000, Care Credit - $7,700, Lowe's - $6,400, Capital One QS - $5,000, Walmart - $5,000, Amazon - $4,000
Message 5 of 7
srloring13
Regular Contributor

Re: Credit Building during Chapter 13

Thank you. I will pass the information along to her.

FILED CH7 BK 02/25/13 -- DISCHARGED 06/10/13
Starting Scores 06/10/13 EQ474 EX538 TU503
Message 6 of 7
savingmoney87
Regular Contributor

Re: Credit Building during Chapter 13

I got a capital one card approved about a year into my CH13. My trustee approved me for up to 1,500. I was able to open another account with Barclays Apple Visa. I didn't get anything else. It was also never approved for a credit increase I stayed with the 500 & 1K limits the entire time I was in the plan. My scores didn't start to increase until after my discharge. By the way my car was totaled while in bankruptcy so I was able to secure financing for another car with approval.

Fast forward to now 6 years since filing
I've had two auto loans: one paid, one recently opened for 2.49% APR
AMEX EveryDay, Venture Rewards, Quick Silver, Military Star Card. My credit scores have went up but I don't expect them to pass where they are at currently until they finally come off. My recommendation is build slow, receive approvals in plan if they need it, and wait.




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Message 7 of 7
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