topic Re: Rebuilding from Chapter 7 in Credit Cards

Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 15:07:59 GMT

Good morning,

Long story short my business went south and was forced to file for chapter 7 and just completed the process, so Im in a bad spot. Im immediately trying to jump on building credit as fast as possible advised by my lawyer who said you want to make a large amount of good credit reports on your score ASAP to atleast in assist in the fact theres a red flag on me now. He mentioned my most recent activity is really what creditors look at, and to do what I can to make it look good. Ive started by doing the following:

Continued to make car payment(s) on time (car loan was reaffirmed when filed) with Lexus

Authorized user on family members credit cards with long outstanding credit history at same billing address Qty 2-Citibank/Mastercards and 1 Discover card with 5 year life span

Federal student loans continued to be paid on time (govt loans cant be touched by chapter 7 not 100% sure if federal loans are reported or benefit from)

Am I off to a good start? Should I do more or sit on this?

Also as I mentioned some of this in a previous post, Im debating on being an authorized user on a HSBC/best buy card to finance a purchase and help my credit. No one's 100% sure if HSBC reports AUs, not even HSBC as Ive called had 2 answers and had my family member call in regards to her account and the rep flat out said, "you know Im not really sure".

Re: Rebuilding from Chapter 7

DanielF — Wed, 28 Dec 2011 15:21:38 GMT

I'd start by signing up to myfico so u at least have ur equifax report and score to start with. U should try preapprovals with orchard and cap 1. If u can't get unsecured u should get secured card until your score starts improving and u get some time between the discharge.

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 15:25:46 GMT

At this time I highly doubt anyone would do a pre-approved unsecure. Since my credit card debt is now $0 I get tons of pre approved offers with high interest rates and annual fees. I do have a savings account with Harris. Should I inquire about a secure? I just dont want to go overboard, assuming that is possible.

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 15:57:06 GMT

I was also in the same situation. I have been approved for capital one card and hsbc card. If you go to cap one website they will do a pre approval and it doesn't take a hit on your credit good luck

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 16:07:38 GMT

@Anonymous wrote:
Im debating on being an authorized user on a HSBC/best buy card to finance a purchase and help my credit. No one's 100% sure if HSBC reports AUs, not even HSBC as Ive called had 2 answers and had my family member call in regards to her account and the rep flat out said, "you know Im not really sure".

There is no reason to make a large purchase when you are rebuilding from bankruptcy to "rebuild your credit". Hard enough explaining to a potential creditor why you filed bankruptcy while maintaining a Lexus, let alone immediately building up new balances.

I'll also give a +1 to using the cap 1 and orchard bank pre-approval sites. You said something to the effect of "I doubt anyone would pre-approve me"... Why would you spend the time writing that here when in the same amount of time you could have checked the pre-approval site and found out for sure? People here will offer you some of the best FREE advice you can find anywhere in the world... You should probably take it to heart if you are serious about rebuilding! We (collectively) have faced just about every credit challenge under the sun... There is no specific formula that works for everyone, but collective experience and recommendations will be your best bet.

Merrick Bank (if they still exist?), Household Bank, and local credit unions are also useful and effective ways to rebuild shortly after a BK.

Good luck! And don't get yourself into more debt, yet!

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 16:35:05 GMT

I think its great info, I apologize if that came off as if I felt it was useless information. I have a mindset of "get used to hearing no" after the mess I made. Being more than financially stable and doing something you love running a business -to creditors asking where payment is on your business credit card and dealing with bankruptcy lawyers due to the recession is a painful process and gets you down. I will give a the Cap 1 a shot thanks all that contributed. To elaborate on the HSBC/Best Buy im trying to finance ~$400 to meet the minimum 18 months no interest financing and spread the payments out over time. I have the funds now and a stable job but Id rather take a route that can build my credit if possible. Thats why I was asking if anyone can confirm if authorized users on a HSBC/Best buy are reported because HSBC cant even give me a clear answer. I obviously cant get approved for a HSBC Best buy card as it is all automated and will flag the chapter 7. That gave me the idea to be an AU on a family members long existing BB card but I dont want to waste their time adding me if it wont report.

Re: Rebuilding from Chapter 7

aussiesareforever — Wed, 28 Dec 2011 16:51:44 GMT

Not sure about the AU reporting but I was able to get an unsecured Cap1 card three months after my BK discharge. It came with a $300 limit and a $19 annual fee. My CL was increased to $500 after three billing statements and I'm currently sitting at $2500. I know that Cap1 gets a lot of hate on these boards but it has been a lifesaver in rebuilding my credit and I will recommend giving them a shot!

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 16:56:22 GMT

Daisy,

Just out of curiousity, not sure how long youve had the card now, was the annual fee ever dropped? I know its only $19 but just wondering.

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 17:05:52 GMT

Not everyone gets the annual fee, on either HSBC orchard or cap1. Ymmv, so definitely worth checking out. My $300 unsecured cap1, and 3 HSBC cards never had an AF and grew with me until I was eligible for non-rebuilder cards. I highly recommend them!

Re: Rebuilding from Chapter 7

StartingOver10 — Wed, 28 Dec 2011 17:48:28 GMT

@Anonymous wrote:
Good morning,
Long story short my business went south and was forced to file for chapter 7 and just completed the process, so Im in a bad spot. Im immediately trying to jump on building credit as fast as possible advised by my lawyer who said you want to make a large amount of good credit reports on your score ASAP to atleast in assist in the fact theres a red flag on me now. He mentioned my most recent activity is really what creditors look at, and to do what I can to make it look good. Ive started by doing the following:

Continued to make car payment(s) on time (car loan was reaffirmed when filed) with Lexus

Authorized user on family members credit cards with long outstanding credit history at same billing address Qty 2-Citibank/Mastercards and 1 Discover card with 5 year life span

Federal student loans continued to be paid on time (govt loans cant be touched by chapter 7 not 100% sure if federal loans are reported or benefit from)

Am I off to a good start? Should I do more or sit on this?

Also as I mentioned some of this in a previous post, Im debating on being an authorized user on a HSBC/best buy card to finance a purchase and help my credit. No one's 100% sure if HSBC reports AUs, not even HSBC as Ive called had 2 answers and had my family member call in regards to her account and the rep flat out said, "you know Im not really sure".

Have you checked your report yet to see if the Lexus tradeline is reporting since your discharge? They are not obligated to report, even if you reaffirm. Some of the auto lenders will and others won't, but you have to check to see. I was in your position Jan '09 and its possible to rebuild, but it does take time.

I have the Best Buy rebuilder card and got it in June 2010. It was easy to get, but a low limit of $500. I had a recent CLI to $800. I don't think it is a very good card for getting decent credit limits and I plan to close it after I am able to get something prime. YMMV.

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 17:59:05 GMT

According to the letter I received from Lexus, to keep it short and sweet, it stated they wont report it and/or send statements until reaffirmation is finalized. Im literally a few weeks into discharge and have had made 2 payments over the phone "willingly" as they put it. Now that you mentioned your situation should I double check or give it some time IE wait to see if statements start coming?

Re: Rebuilding from Chapter 7

StartingOver10 — Wed, 28 Dec 2011 18:07:03 GMT

Reaffirmation is a very formal process. It must be completed and signed off by the debtor and the creditor prior to discharge in order to be an official reaffirmation.

Look at your reaffirmation paperwork to see if you have the creditors signature as well as yours. If you don't have it, check with your attorney to see if he has a copy. If he doesn't then you probably don't have an official reaffirmation.

An unofficial reaffirmation is where you continue to make payments and the tradeline reports as iib and zero balance. This is also called a "ride through".

Some lenders, notoriously FORD Credit, will repo your vehicle if you don't have an official reaffirmation on file - even if you are current. The BK is considered default. I don't know about Lexus, but check your paperwork first.

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 19:24:15 GMT

Wow thanks for clearing that up. I did sign reaffirmation paperwork that was to be sent off to Lexus well prior to discharge, and that was the last I heard of it. I wouldnt have known those were the circumstances. I will be contacting my attorney in regards to it. He advised it would continue to report to the CBs but that was from the get go. The way you put it, seems like this is more in Lexus's hands. Fingers crossed its just all still being finalized seeing how the discharge was very recent and the creditor has signed off

Re: Rebuilding from Chapter 7

Anonymous — Wed, 28 Dec 2011 23:39:29 GMT

Sounds like a pretty rough alternative :-( Good luck!

Re: Rebuilding from Chapter 7

StartingOver10 — Thu, 29 Dec 2011 01:08:12 GMT

@Anonymous wrote:
Wow thanks for clearing that up. I did sign reaffirmation paperwork that was to be sent off to Lexus well prior to discharge, and that was the last I heard of it. I wouldn't have known those were the circumstances. I will be contacting my attorney in regards to it. He advised it would continue to report to the CBs but that was from the get go. The way you put it, seems like this is more in Lexus's hands. Fingers crossed its just all still being finalized seeing how the discharge was very recent and the creditor has signed off

Yes, it's in the hands of the creditor. From what I have seen, most BK attorney's don't really get involved with the proper credit reporting after BK - unless you have something severe like a violation of the discharge order. There is nothing in the law that can force them to report, but if they do report, they have to report correctly.

Did you see a reporting requirement in the reaffirmation? I am sure its not there automatically (in the standard form). You will need to check your reports anyway for accuracy since you have been recently discharged. When you check your other accounts, check to see how Lexus reports. Contact them directly if they don't report correctly. Good luck.

Re: Rebuilding from Chapter 7

Anonymous — Thu, 29 Dec 2011 14:14:49 GMT

I did confirm that the creditor signed the reaffirmation and it is all filed. My lawyer advised the 2 payments Ive made wont report because they were done willingly before offical discharge, and it will take some time before they start reporting as he put it "its still very early, but start setting up for rebuild". I also intend to double check with Lexus. As far as I can tell it should * fingers crossed* Itd be a shame to finish off the rest of the loan and not get it reported. As of now it seems to be in order with the reaffirmation being offical signed by credior and the notice I received from Lexus indicating they wont report to CBs until reaffirmation is completed. Thanks again StartingOver