Still confused how chapter 7 hurts you when I see people getting new credit

[FocusedAndDetermined]

Every situation is different, and how card issuers view credit profiles varies, even for those without many blemishes. 

I believe you are focusing on people getting credit w/BK on record, and not looking at the big picture.  Yes, it is possible to obtain credit after BK, but what kind and how much varies.  I declared BK7 in 07; I have had a spotless record ever since.  I bought a car this year, and yes, I was given a pretty good rate, but it wasn't the lowest.  Had the BK not been on my file, I could have saved 2 percentage points.

I have prime cards, but again, the APRs are high, which doesn't matter, since I always PIF.  If an emergency arises, and I have to use the card and carry a balance it will cost me big time. I also have been turned down for cards that without the BK on record, I almost certainly would have been approved.

So, what I'm saying is whereas your credit file will be free of tarnish in 2yrs, and you will have the ability to obtain the credit you want at excellent rates. Those who have declared BK will continue to feel the effects for years to come.  Over time the impact of the BK does diminish, but it still hurts.

[danny4l]

Thanks you helped clear my confusion up.

So what you are saying is that even with the BK, you can get a credit card but the BK is still on file for the whole 10 years and that may or may not be a big problem depending on what kind of future credit you are looking for.

And you are saying that in my situation, I will struggle with the DMP on file for the next two years, but the DMP won't haunt me after that time.

[FocusedAndDetermined]

I'm not that familiar with DMPs, but from what I've read, yes - you will be in a better position once you make your final payments.  You need to speak with some one who is well versed in DMPs to be certain, but what is certain is BK7s stay on file for 10 yrs.  It's the price to be paid for filing.

I wish you well, once you clear the hurdle of your final payments.  Struggling through financial difficulties is never easy, but it's also not all there is to life, and with hard work, and lessons learned, things do get better.

[guiness56]

I am pretty sure FICO does not score the comment about being in a DMP so it shouldn't impact your score in the least.

Where the problem lies is, number one, while in a DMP, many of them will not allow you to apply for new credit and if you do it could cost you by them discontinuing the program.  Second, most creditors will not extend credit to you while on a DMP, whether your particular program allows for applying or not.  A new creditor will see you are in a DMP and think you have enough on your plate.

Once the debts are repaid, the DMP comment should be removed.

FIling BK removes all your debt.  The BK will stay on your report for up to 10 years but each individual account that is IIB will still be excluded based on the original DoFD.  Also, everything IIB will be wiped out showing a 0 balance.  There are many creditors that are BK friendly and some that are not.

A DMP doesn't work like that.  The debt is still on your report and shows it is being paid through a DMP.  All balances will show what they currently are.  All accounts will be closed and this affects your AAoA and possibly mix of credit.

[enharu]

Another thing you have to take into consideration.

Certain lenders will blacklist you whenever they're included in the bankruptcy. American Express, Chase and Citi are known holding their "grudges" for a long long time. It's going to be a YMMV situation for how long it'll take for the individual to get off the blacklist, if ever. Some continue to be blacklisted even after 2+ decades.

If you value your accounts with them, don't burn those bridges down.

Some banks on the other hand, such as GE, are BK friendly, even if they were included in the BK.

[CreditCardDiva]

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@enharu wrote:

Another thing you have to take into consideration.

Certain lenders will blacklist you whenever they're included in the bankruptcy. American Express, Chase and Citi are known holding their "grudges" for a long long time. It's going to be a YMMV situation for how long it'll take for the individual to get off the blacklist, if ever. Some continue to be blacklisted even after 2+ decades.

If you value your accounts with them, don't burn those bridges down.

Some banks on the other hand, such as GE, are BK friendly, even if they were included in the BK.

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This. This is why a BK should never be viewed by anyone as an "easy way out" of financial responsibility. Yeah, a person can get credit again, but sometimes they never reach their former glory.

[fishbjc]

I can 'touch' on this as I'm enrolled in a dmp.  While paying the dmp, you're 'rewarded' with lower interest while you're paying them off.  The payments are all being paid ON-TIME.  So for five years, you have positive payments.  After the completion of the payments, your credit is good and the 'managed by dmp' should be removed from the notes.

[danny4l]

This is good info.  I am learning so much.

I think now I am seeing how a BK does affect you.  The blacklisted part makes sense and that is pretty scary.  I wonder if creditors in a DMP blacklist you too.

Two more years doesn't seem too bad and I guess I can do without anymore credit till that time.  I wanted to know if you have a BK on file, can you still buy a car or a house?

[guiness56]

When it is a BK it all depends on whether the creditor is BK friendly or not.

You can buy a house or car while on a DMP, it is just a good idea to have the company doing the DMP help you get it.

As far as blacklisting, when you are finished with the DMP, the remark is removed from your CR.  A BK isn't until it is excluded in 7 to 10 years.

[danny4l]

Can you just give a general idea when to go the DMP route or BK?

I had 30000 in unsecured debt and I could easily afford that even working part time.  That is why I chose the DMP.

Do you need to have six figure debt to choose BK?