BK7 Discharged but not closed question

[Countingpennies]

Can't seem to find much info on this situation. It's for someone else, but I'm curious. If a 7 is discharged, not closed (appears this way on CR's) (asset case), how does this affect Fico scores, and how do lenders view this status? Case may not be closed for a year, and this person can't seem to get a secured card right now. Thanks for the info.

[ezdriver]

Never heard of a case remaining open after it has been discharged. My own Ch 7 case closed with my discharge a few months ago. Can you explain why the case you reference would remain open after a discharge has been granted by the judge?

[Countingpennies]

Chapter 7 asset cases can remain open until the trustee deals with the assets in question, determines the value, sets a price for buyback or auction. This particular case is expected to stay open for about a year. Most of us are/were no asset 7's.

[SoulMaster]

Your person needs to read the 7 to 700 rebuild-guide.  He/She should NOT be applying for secured cards anyway, and since the discharge sounds like its pretty recent, I'd guess that they haven't done the "make sure IIB/$0" part yet.

Closed is a court thing, not a credit thing (it will never appear as "closed" on a CR, just discharged).  All it means is that the debts are discharged, but the trustee is still dealing with the asset liquidation.

-SM

[Countingpennies]

Hi SM, I specifically asked how it was reported on his CRs, and it IS reporting discharged not closed. I had never heard of a discharge being reported as not closed either. I've already pointed him in the direction of this forum and that thread. I was just curious myself about this, and wondering how a 'not closed' report would impact a lender's view and fico scoring.

[SoulMaster]

Wow.

In my years of doing this and thousands of cases, I can honestly say I've never seen (or even heard of) it reporting as such.  Even when I know it's an asset case that's going to take a while to close.  On the other hand, I've only personally reviewed about a hundred credit reports post discharge, so there's that.

Theoretically, an underwriter may shy away from this status because there is a remote possibility that the judge/trustee will toss the case until it's the Final Decree is entered (that's what closes the case).  I've never seen it happen, but it is possible under the law (especially if there's a creditor appeal).

Your friend is going to want to talk to his/her attorney because there are usually requirements of compliance that the filer must follow (like handing over assets).  My guess is they've already done this, simply because it's an asset case.

I have some friends who are underwriters (for mortgages) who I usually see every week or so.  I'll ask them about this.  My BK attorney expert is in a 341 right now, too... so I'll get her answer about applying for credit post-discharge, pre-final decree when she gets back.  AFAIK, that's totally allowed, but she'll know better.

-SM

[SoulMaster]

Verified that you can apply post-DC pre-closed.  In fact, she said people do that all the time and there's never an issue.

Make sure your friend's report is 100% accurate, then have him follow the rest of the guide... starting w/ CreditOne.  If he applies for another secured card, go slap him for me!  BK people shouldn't ever get secured cards. (actually, no one should, but that's a different thread).

-SM

[Countingpennies]

Thank you SoulMaster, I really appreciate the effort. I've had great help on my rebuilding, just trying to pay it forward, and I'm always curious. Thanks again.

[Anonymous]

For several years I had one of the credit bureaus not showing my BK7 discharged (pending or something like that). I did not catch that on the report and it created challenges for me in trying to obtain credit if the bureau in question was sourced. Strange it never surfaced and for some reason I dug into it and found the error. The bureau would not correct it so I had to obtain a formal official copy from the Federal Court of the BK7 several years later. Then I had to have them formally correct the CR error. Actually, the CR was NOT helpful until I got good and mad and then went to the Executive Corp Office and explained the need for them to correct their error. After it was corrected, life was much simpler. So glad all that is gone and in history as not a good memory.

[ezdriver]

I recommend seeking followup assistance from the bankruptcy attorney that handled the case. I'm doing that in November and my Ch 7 discharge was back in April of this year. For a small fee, any good bankruptcy attorney would help with ascertaining that all post-dicharge stuff is being reported correctly. Since they know your file inside out, it is just makes sense to me that post-discharge verification should start there. Just my opinion and recommendation.