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Registered: ‎04-10-2017

Credit building After BK7 Questions

Greetings,

 

Long time lurker that has a few questions regarding rebuilding credit after chapter 7 bankruptcy.

 

I have read the BK7 discharge to 700 in 24 months or less post and found it very informative. The issue is I will need a good car soon and it does not really outline the best way to fit it in. Perhaps it will be beneficial if I explain my situation then ask my questions.

 

I filed chapter 7 BK on 2/14/2017. I had been making 50k+ annually until I moved home to help family in 2015. I took a job making 40k but ended up getting laid off after 6 weeks. I was on unemployment for 8 months and then was able to get a job making just over 30k per year. During this time I had a new Mazda CX5, about 2k worth of furniture from Rooms to Go (Tidewater Finance) and $1800 worth of jewelry from Kay jewelers (the ex had fun with my card). I also had 18k in medical debt.

 

Due to the income drop I was consistently behind on my payments and eventually the CX-5 was repossessed 7/15. I had also stopped paying the other bills as well. The only debt I have ever had and not paid as agreed was medical debt which never caused much of an issue besides dinging my credit, so I stuck my head in the sand and ignored believing like medical debit it would exist but not cause any ill effect.

 

Fast forward to 2/1/2017, I am in the drive thru and my debit card gets rejected. By a miracle this is the one day in many years I have a few hundred dollars in cash in my wallet. I find out from the bank that a lawyer from Tidewater has placed a lien on my account. I did get the court summons and ignored it, what can I say? When I put my head in the sand I do it right. My account being seized and losing my rent money caused me to contact a lawyer and decide to move forward with chapter 7.

 

I filed on 2/14/2017 and had my 341 meeting on 3/14/2017 so I am hoping for discharge around mid May. I was in the process of applying for new jobs during the filing of my BK and had an interview the same week that I filed. By the time my 341 meeting came around I had a second interview, was offered and started a new job making well above the cut off at 60k per year. I was freaking out thinking that this was going to cause me to have to switch to a chapter 13 adjusting to the new pay. I told my lawyer and of course he advised full disclosure to the trustee and see where we go from there. I was the last person in the last hour of the day. The trustee asked if I was still working at my old employer to which I responded no, I have gotten another job since filing. He said congrats, everything is in order and good luck.

 

My plan moving forward is to open an account with NFCU as soon as I have my discharge. Following the BK7 – 700 plan post discharge I will pull all three credit reports and verify everything is reporting correctly then start getting a couple of cards/accounts to start the rebuild. The only credit score I have is some blended credit analysis report that my lawyer’s office gave me. It shows a current 572 but does not show what score each credit reporting company has.

 

My questions are:

Can I start cleaning up my report before discharge?

Should I go ahead and set up my NFCU checking and savings account now and then apply for their credit products post discharge, or should I wait and do it all at once?

I know the longer I can wait to get a car the better my interest rate will be but I travel for work quite a bit and I will need something relatively soon. I could possibly wait 3 months, maybe 4 before I get something. I am shooting for something brand new but reasonable. Another Mazda or a Chevy Cruise. I refused to pay over 20% interest and would really hope to pay less than 15%. My question here is how much will my late payment history affect this? I read a ton of posts and some people go ahead and file BK before getting way behind and this seems to help them after BK. I tried really hard to keep my car. I would get behind for a few months then catch it all up, then fall behind, then pay 2-3 months and catch up. It was like that for over a year. I am curious how that will affect purchasing another car.

 

Any info is appreciated.

 

Thanks,

 

J

Valued Contributor
Posts: 1,567
Registered: ‎07-13-2016

Re: Credit building After BK7 Questions

I personally would wait till after discharge to start cleaning up reports. 

 

You can can definitely open a checking/savings with NFCU now. 

 

As as for the car, everyone's experience and profile is different. When I purchased my first car after BK, I called the dealer and told them of my credit situation. They assured they could get me financed.....and they did. 10.5% with WFDS, definitely not the best or the worse, but I walked away with a new car of my choosing. 

 

Good luck! 

BK 5-2012 Revolving Rebuild Started 6-2016
AMEX ED & SPG | BOA CR | PenFed PR & CR | NFCU FS | Discover IT | Cap1 QS & VENTURE | LOWES | Barclays AVIATOR
Regular Contributor
Posts: 207
Registered: ‎11-09-2016

Re: Credit building After BK7 Questions

Agreed on the waiting. Let the dust settle and see what remains. My student loans took a while to report correctly, but did on their own. As far as a car, to me buying new is crazy. There are tons of used cars out there coming off leases with very little miles that are thousands less than new. They're well taken care of because no one wants to pay for damage or mileage overages. I bought a 2014 Escape in January (3 months post discharge) with less than 10K miles (7600? 8600?) on it for many thousands less than new. Still on original warranty and still smells new.


Justagirl73 wrote:

I personally would wait till after discharge to start cleaning up reports. 

 

You can can definitely open a checking/savings with NFCU now. 

 

As as for the car, everyone's experience and profile is different. When I purchased my first car after BK, I called the dealer and told them of my credit situation. They assured they could get me financed.....and they did. 10.5% with WFDS, definitely not the best or the worse, but I walked away with a new car of my choosing. 

 

Good luck! 



 Capital One fincanced me at 4.24% for 72 months. They have a prequalifier that is a soft pull that will give you an idea where you stand. I did it within the first month of discharge to see where I was and the rate was a little more than double what I was able to get a couple months later.

CH7 BK Discharged 10/16
Oct/Nov 2016: EQ 632 TU 532 EX 573
Feb 2017: EQ 695 TU 673 EX 670
March 2017 EQ 702 TU 676 EX 673
April 2017 EX 683 (TU & EQ unknown)
May 2017 EQ 695 TU 685 EX 693
Established Contributor
Posts: 852
Registered: ‎09-04-2012
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Re: Credit building After BK7 Questions

Congratulations on starting the path to rebuild.

 

The first thing I would do is start a relationship with Navy Federal as soon possible. Don't open a single credit account until your get your discharge. Open a checking/savings account and a CD. I would save every last penny to buid up for a down payment. They day you get your discharge, I would apply for a credit card, take what they give you including a secured card. Since you said your were going to be traveling, I would put a deposit of $2500 for secured deposit.

 

Secondly, I'm not an expert on liens, but I would talk to your lawyer to see if it goes away when your bankruptcy discharges. If it doesn't find out how to get it gone legally. This will impact your ability to a get loan. I would also work on cleaning up all your CR's.

 

Thirdly, you already know you will have to put some work into getting the best deal. I was lucky in that I was able to put off buying a new car until 4 yours after my bankruptcy. From what I have seen, NFCU tends not to  make car loans until after a year minimum after bankrupcy. I would check CapitalOne for the auto loan prequalifer for their best rate. If their rate and terms are decent to you, I would go that route. If not, let the car dealership find the best deal for you. I would try to have saved enough for a decont down payment to show them you are serious about getting a car loan. After 12 months of perfect payment history, I would refinance at NFCU.

 

The fourth and final thing I would do is save money and address the reasons that caused your bankruptcy and late payments. I would make sure those issues never happen again. As you rebuild your credit, you can never have a another late payment. It will kill all your efforts of the rebuild. Also with NFCU, you are consistently late on your payments, they will start to automatically debit those payments and late fees out of your accounts. 

 

Best of luck and you will get this done. 

 

Guyatthebeach

 

New Member
Posts: 2
Registered: ‎04-10-2017
0 Kudos

Re: Credit building After BK7 Questions

Thanks for the responses. 

 

Regarding the lein, it was a one time thing where they locked the account down and removed all of the money that was in there. After around 20 days the bank set the account to auto close. I have had that account for 15 years so I deposited a small amount of money once I filed my BK to keep it open. I also opened a second checking account that I have been using as my primary since. 

 

My goal is to open a Navy Fed account and close my new primary (US Bank) but leave my old account (Suntrust) open for the time being. The only thing holding me back from opening the Navy Fed at this moment is I recently moved to a new state and I have not transfered my drivers license yet. From what I have read, you want to make sure all of your information matches so you do not have the account questioned or closed.

 

And I understand that a new car depriciates as soon as you drive it off of the lot but I have never had good luck with buying used and with the amount of miles I drive in a week I need something that is rock solid. Besides from speaking with the finance guy at the dealership my (now Ex) girlfriend works at, he said it would be far easier to be financed on a new car.

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