topic Re: Post Chapter 13 Order of Operations in Bankruptcy

Post Chapter 13 Order of Operations

Eppie1983 — Sun, 01 May 2022 10:44:57 GMT

Hey everybody. I am making the last payment to a chapter 13 this week. I am looking to know what the order of things are. As far as rebuild. I did not do anything in the 5 years during my plan, my attorney never said I could and I assumed I couldn't. Being that I haven't been able to get credit for so long, I need some things. This include cash out refinance for an addition, probably a car or two. And probably a credit card or two for my rebuild. What I am asking is what do you guys think about how I should go about that? With no debt and everything hunky-dory should I start with the house because I don't have any debt right now? Then cars then credit cards? My credit scores are in the 600s which is good and I have zero debt to income ratio so that should work in my favor, one would think. What do you guys think about how I should attack this?

Re: Post Chapter 13 Order of Operations

FireMedic1 — Sun, 01 May 2022 09:08:57 GMT

What are you current credit card accounts and any open loans? In other words. Whats in your wallet? Congrats on getting it all done!

Re: Post Chapter 13 Order of Operations

Eppie1983 — Sun, 01 May 2022 10:41:32 GMT

Thank you brother, its a great feeling.

I have absolutely nothing in my wallet other than a Navy Federal debit card haha

During my Ch13, my attorney made it sound like I could't get cards and loans and I never asked. I just assumed it wasnt allowed and I didnt need them anyways. I just worked with the money I had. I now know it was possible with court approval but I just never needed it.

Thats why I want to do it right.

My Fico scores for mortgage 2,4,5 are around 720. Regular scores are in the 600s. Just tryiing to get some advice on how to attack this. The home addition is important and I also want to build credit. Just not sure whats going to happen when I try to refinance or get a home equity loan. Looking for some guidance, mentorship, whatever you want to call it.

Thanks for any help you can give me.

Justin

Re: Post Chapter 13 Order of Operations

FireMedic1 — Sun, 01 May 2022 15:54:14 GMT

Well with the scores you posted. Shouldnt be a problem getting the addition done first. Grabbing cards will just lower your score as new accounts hit your reports. After the addition stuff is complete. Then start looking for some cards. Dont know what you had before. But good ole Cap1 is a good start out of the gate and go from there. If it aint broken. No need to fix it.

Re: Post Chapter 13 Order of Operations

DaveInAZ — Sun, 01 May 2022 22:05:17 GMT

Yes, "grabbing" credit cards will temporally lower your score, just space them out. I never use debit cards because they're linked to you bank account, and with a merchant data breach or good fraudster they can empty your bank account and you're left begging the bank for your money back. Credit cards have a maximum liability of $50, but few enforce even that. That's great you're with Navy Federal, why not start with them for a credit card? Your banking history with them should help in getting an approval. Capital One is also good.

Mortgage rates have jumped in the past month or so to around 5.5% - historically still low, but likely to continue to rise as the Feds raise rates further to try to tame inflation. So I think a Home Equity loan or line of credit might be the better way to go. I prefer a Home Equity Line of Credit because you don't pay interest until you use it, and then pay it down when you have excess funds, and then draw on it again when needed for unseen expenses.

Good luck, and remember rebuilding your credit is a marathon, not a sprint race.

Re: Post Chapter 13 Order of Operations

Eppie1983 — Sun, 01 May 2022 22:11:45 GMT

Hey Dave, thanks for the info. Only reason I'm hesitant asking NFCU would be that I burned them in my Ch13.

Do you know anyone that had success with mortgage or Home Equity Loan directly following successful 5 year Ch13 order of discharge?

Re: Post Chapter 13 Order of Operations

DaveInAZ — Sun, 01 May 2022 22:33:45 GMT

@Eppie1983 wrote:
Hey Dave, thanks for the info. Only reason I'm hesitant asking NFCU would be that I burned them in my Ch13.
Do you know anyone that had success with mortgage or Home Equity Loan directly following successful 5 year Ch13 order of discharge?

I had a Chapter 7 BK back in 2010, all off my credit now for several years and I have around a 750 Fico. But I'm not really that familiar with Ch. 13. We say "burned them" for Ch. 7 because the debt was completely discharged w/no repayment. For your Ch. 13 did you repay Navy Fed, or even partially? And credit unions usually have a "cross collateralization" clause, meaning any funds you have on deposit with them can be seized to offset any credit losses. So I assume you at least partially repaid them?

I have a Home Equity Line of Credit with Penfed credit union. I got it in 2017, when my Ch. 7 BK was still on my credit reports. I really like it as it's currently only 3.75% APR and interest only payments, but I always pay more then just the interest.

Re: Post Chapter 13 Order of Operations

Eppie1983 — Sun, 01 May 2022 22:37:25 GMT

Thanks Dave that makes me feel better. Mine is ch 13 and will be discharged when I apply with Pen Fed. My mortgage fico with Equifax is 720, income is 150/yr and I have 0 debt. My fico 8 is low (560 for Equifax) but not sure if they look at fico 8 as well. Do you?

Re: Post Chapter 13 Order of Operations

Eppie1983 — Sun, 01 May 2022 22:37:57 GMT

Dave they did get paid but pennies on the dollar

Re: Post Chapter 13 Order of Operations

DaveInAZ — Sun, 01 May 2022 23:47:45 GMT

@Eppie1983 wrote:
Thanks Dave that makes me feel better. Mine is ch 13 and will be discharged when I apply with Pen Fed. My mortgage fico with Equifax is 720, income is 150/yr and I have 0 debt. My fico 8 is low (560 for Equifax) but not sure if they look at fico 8 as well. Do you?

Oh yeah, the vast majority of lenders for credit cards use Fico 8, only mortgage lenders use mortgage Fico 2 or 4. But I don't pay for my Fico score, I get TU Fico from my Discover card, EX Fico once a month from my Experian free account, and Penfed gives me EQ Fico 9. Penfed seems to use Equifax Fico 9 for all credit decisions, and they give an EQ Fico 9 every month or two. I also have a Credit Karma account. They use a score called Vantage 3 which is pretty much useless, but it's worthwhile for looking over your credit report to make sure everything is correct & accurate.

I recommend you apply for 1 credit card, you'll get a small hit on your score for the inquiry & new account, but a CC is better to use than a debit card, and it will build your score up over time. I still think you might try Navy Federal, that they've continued your bank accounts is a good sign. But Capital One is also very good at overlooking "glitches" on your credit report. I avoided them as I burned them for thousands of dollars in my 2010 BK 7. But once I found MyFico and read that they're very forgiving of that I applied for Quicksilver in 2014, just 4 years after my BK. I nearly fell out of my chair when they approved me for $10k credit limit.

Chapter 13 Credit Cards / Loans

Eppie1983 — Wed, 04 May 2022 11:40:10 GMT

Hey was anybody successful getting cards or loans right off the bat at discharge from Chapter 13? Want to rebuild ASAP. My middle FICO is 639. My Transunion is wicked low compared to the other two, maybe look at credit report and find out why?

Re: Chapter 13 Credit Cards / Loans

coreyb80 — Wed, 04 May 2022 19:07:42 GMT

Most recommend waiting 4-6 weeks after discharge to let the reports get updated and then you can make any changes as needed. I just tried Wells Fargo and a preapproval for Discover, AMEX, and FNBO. No dice, so I'll be in the garden for at least a year moving forward now.

Re: Chapter 13 Credit Cards / Loans

Eppie1983 — Wed, 04 May 2022 22:19:53 GMT

Thank you Corey. I noticed my TU is way lower than my other 2 scores. I'll have to look at CR. Is there a notation that changes on CR from active to discharged? And then 2 years later it's gone from what I can tell.

Re: Chapter 13 Credit Cards / Loans

coreyb80 — Thu, 05 May 2022 00:37:57 GMT

@Eppie1983 wrote:
Thank you Corey. I noticed my TU is way lower than my other 2 scores. I'll have to look at CR. Is there a notation that changes on CR from active to discharged? And then 2 years later it's gone from what I can tell.

Yep my reports all show discharged now. TU allows early exclusion so you can request that it be removed 6 months before the 2 year mark. That's my plan next year.

Re: Chapter 13 Credit Cards / Loans

TRC_WA — Thu, 05 May 2022 21:51:55 GMT

@Eppie1983 wrote:
Hey was anybody successful getting cards or loans right off the bat at discharge from Chapter 13? Want to rebuild ASAP. My middle FICO is 639. My Transunion is wicked low compared to the other two, maybe look at credit report and find out why?

I actually started getting cards 3 years into my 5 year plan. I have the handful you can see below in my sig. As a result, I haven't applied for any new CC's since discharge in March. I did get a new auto loan a week later at a nice interest rate.

My TU is also low compared to the others... it's just the way that CB operates I guess. I've looked at all my reports and they have the same info.

If you have no CC's I'd first check with preapproval sites like Cap One and Discover. If that doesn't work... try lower quality lenders. Gotta start somewhere.

Re: Chapter 13 Credit Cards / Loans

Eppie1983 — Thu, 05 May 2022 21:56:50 GMT

TRC,

Thanks for the information. I just found out now a month before last payment in these forums that people got credit during their chapter 13. My lawyer didn't tell me I could and I didn't ask. Wish I could have to rebuild all this time. Not sure if it makes their life easier not to ask for court approval maybe? I am lucky that the trustee when I filed allowed early payment of Ch13 because the new one doesn't. The new one is allowing only because I filed before his time. How do I check those sites for pre approval?

Re: Chapter 13 Credit Cards / Loans

TRC_WA — Fri, 06 May 2022 00:01:17 GMT

@Eppie1983 wrote:
TRC,
Thanks for the information. I just found out now a month before last payment in these forums that people got credit during their chapter 13. My lawyer didn't tell me I could and I didn't ask. Wish I could have to rebuild all this time. Not sure if it makes their life easier not to ask for court approval maybe? I am lucky that the trustee when I filed allowed early payment of Ch13 because the new one doesn't. The new one is allowing only because I filed before his time. How do I check those sites for pre approval?

Just google "capital one credit card preapproval" and you'll find it. Do the same for Discover and any other lenders you think you'd like to try.

This is my 2nd Ch 13... unfortunately. The first one I did exactly what you did... waited till discharge and found out people were applying while still making payments. This time I did the same thing and got approvals. I never asked the trustee or my attorney... I just did it. I never heard a bleep from either until the month of the last payment and that was only because I had to send some additional money to close everything out.

The trustee only cared about my monthly payment. Obviously. My last new CC was 5 months ago... and the oldest one is 2+ years old and I was just discharged a month ago. On cruise control now till everything falls off and my scores jump to 700+ because that's what they did the last time when everything fell off.

Don't worry about waiting till now to get cards... you will still be able to build a solid history while waiting for everything to fall off in 2 years. I did the first time.

Re: Chapter 13 Credit Cards / Loans

womanonfire — Fri, 09 Sep 2022 22:36:18 GMT

I filed my Chapter 13 in November of 2021, in a 3-year plan and I've already been approved for the following:

Venmo $2800 - 3% cash back

Misson Lane $750

Credit One $5000 - 1% cash back

No annual fees. I also got an Openskyy secured card shortly before I was approved for Venmo. I called them to get my deposit back, they said they would waive the annual fee if I stayed. I agreed to stay, they credited the fee and then I called back and closed it. I know closed accounts can lower scores but I am not super worried about that right now. But five weeks to get the deposit back? Ugh! I do not recommend them!

I am only using these cards to pay regular monthly expenses that I would otherwise pay with a debit card or bank draft. No more running up debt for me and not incurring any new debt.

Re: Chapter 13 Credit Cards / Loans

FireMedic1 — Fri, 09 Sep 2022 23:08:18 GMT

Welcome to the forums @womanonfire from a Firefighter! LOL!!!!!!!!!!!

Congrats on your recovery! Nice job.