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Chapter 13 Rebuild

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Chapter 13 Rebuild

First time posting but long time reader. Filed Chapter 13 in January of 2014 jointly with my wife on a 5 year plan set to complete in January 2019. Lost significant income due to pay cut post recession from 2009 to 2014. Wife also lost thousands in income due to an accident and months of disability.
We had just bought our home in 2008 so the loss of income, coupled with medical bills in the thousands post insurance beyond insurance coverage just put us in too deep despite solid joint income of $110,000.
Joined NFCU and obtained a secured credit card in 2015 with $2000 down. Obtained Trustee permission to obtain unsecured credit cards with the stipulation that we do not carry a balance month to month that incurs finance charges.
After reading the forum and having a new track record with NFCU now unsecured card I went on an app spree in late 2017.
Approved for Target Red card with an SL of $1000 (currently $1600), Toyota Rewards $3000 (denied CLI to date), Lowe’s Store card (SL $1000 but cut to $150 on 1/18 due to drop in TU fico from new accounts and inquires), Walmart store card SL $500 (still the same), True Value Store card SL $500 (recent CLI to $3500), Santander Ultimate master card SLI $7500, (still the same), and NFCU now unsecured with CLIS now at $8000.

Current FICO 8 scores are Experian 699, Equifax 694, Transunion 651. Recently approved for Bank of America secured card after an application for unsecured. Will call soon for a recon since I don’t want a secured card at this point in the rebuild.
Joint income now is $180,000 after a job change for me. I think at this point I am firmly in the garden until post discharge in early 2019. My AOA has taken a hit with the new accounts, but I have two 20 year old student loans included in the chapter 13 that will survive it with about 2k each left that will help once they come back online next year.
It has been a long road but there is hope at the end of the tunnel. We will need a car loan next Spring so my goal is to obtain a decent rate post discharge. Good luck to everyone working hard to get back on the road to 720!
Message 1 of 3
Valued Contributor

Re: Chapter 13 Rebuild

Congratulations!   This is truly remarkable.   Most people in chapter 13 have no new credit of any sort.   I assumed that this was because the trustees generally prohibit it -- kind of an additional punishment for being in the Chapter 13, I guess.


How did you go about geting the trustee to approve each and every one of these cards/loans?   Your advice would prove invaluable for lots of people currently in chapter 13s and sitting with 500 FICO scores.


Please elaborate and thanks.

FICO 08: EX-698, EQ-738, TU-721 - [8/2/2019]
FICO 09: EX-748, EQ-785, TU-770 (8/2/2019)
Mortgage: EX-737, EQ-769, TU-761 - [8/2/2019]
NFCU NavChk 15K | NFCU Visa 50K | CapOne Venture Visa 50K | CapOne Savor 30K | Barclay Aviator MC 12.5K | Discover It 32K | Alliant 3% Cash Back Visa 25K | BECU CLOC 10K | BofA AK Air Visa 5K |Amazon Prime 10K.
239.5K Total Revolving. Alliant Car Loan 15K/31K
BK 7 Filed 8/23/2013 - Discharged 11/27/2013.
Message 2 of 3
New Member

Re: Chapter 13 Rebuild

I contacted my attorney and he contacted the Trustees Office. At the time of filing in 2014 the attorney indicated that secured credit cards are allowed without approval, car loan requests would be reviewed and the Trustee would issue a no position letter if the terms were acceptable to the Trustee, and all other financing requests would require a motion to incur debt.

I realized that secured cards could and often do graduate to unsecured during the long 5 year chapter 13 term. I asked about unsecured cards. The attorney contacted the Trustee and indicated that any unsecured card was ok provided that we use the card as a charge card and pay it off in full. We obtained this approval after about 3 years and 9 months into the plan. He made it clear that carrying revolving balances on the charges incurring debt or interest was strictly prohibited without approval.

We charge and PIF each statement using the cards as a proxy for cash. Obviously every Trustee and bankruptcy is different. Local rules and practices vary widely. We are greatful to have begun our rebuilding process, but even with the cards our budget is cash only as the cards are just a proxy for cash with the PIF requirement.

One thing I have learned about the chapter 13 process is that there are no precise or one size fits all answers. The right answer is whatever your Trustee says depending upon plan and district.
Message 3 of 3
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