Chapter 7 - How to rebound? This is REALLY bad

[Deyon22]

Oh mercy me where do I start?? 

Well, I  joined this site almost 10 years ago. I cant seem to find any of my old post from when I started building back then. After building back then ended up with:

- Discover IT

- Amex(X2)

- Capital One

- Chase (X2)

I started getting behind on all of the cards and made the horrible decision to do a consolidation loan with ACHIEVE. The payments where almost $700/month and I then fell behind on that. It was sold and transferred. 

I waited some time and was able to open a few more cards:

- Merrick

- First Premier

- Aspire

- Capital One (again)

- Avant

- NFCU (I cant remember but I want to say this was a secured card)

- Comenity Bank (VS)

- First National

- Tilt (payday loan)

- Credit One (X2)

- Ace Cash Express 

- MoneyKey

and two or 3 more payday loans. Things got really bad. I was borrowing money to make payments to others cards and it snowballed out of control. 

I officially filed Chapter 7 on May 7, 2026. I'm just getting started with the process. My MOC is June 5th. Objections to discharge due by August 4, 2026. 

I already know that I messed up big time with my finances. I know what I did wrong and I need this fresh start. My goal is to buy at least a Townhouse one day. What steps should I take to rebuild? Where should I start? 

Scores:  Equifax 558 (according to MyFico)

                  Experian (? not sure)

                 Transunion 638 (Credit Karma)

[Varsity_Lu]

@Deyon22 

First, I am sorry you are in this situation.   It sucks.  But, you have a chance to get out from some of the pressure and start again.  

My only advice is this: learn to live within your means.  That's it.  If you were my son or daughter I'd tell you to forget credit cards and loans all together for now.  Just use a debit card for everything.  It will force you to be disciplined because if you don't have the cash in the bank, the transaction will be denied.  You need that kind of hard feedback in your life right  now.  Get an app like YNAB or just a spreadsheet and start sorting your paycheck into categories or buckets for the things you NEED: housing, food, medical expenses, transportation, insurance, etc.  NEEDS, not WANTS.  You don't have the luxury of funding many WANTS right now, so learn to properly fund your NEEDS.  If I were to guess, you got into this mess because of the things you wanted but didn't need.  Differentiating between wants and needs and saying no to a purchase are life skills you need to master.

Learn to be disciplined without credit for now.  Credit is an easy way out but you see where it leads.  Learn to make the difficult decisions and NOT buy things for your financial health.  Give it a few year and then reevaluate if you are ready to properly handle credit.

[JoeRockhead]

Hopefully everything goes well with your bankruptcy and you get your fresh start.  Once you do get that fresh start you'll need to focus on changing your spending habits, and more importantly the way you view the use of credit cards.

Credit, and more specifically credit cards should be viewed and acquired based on what you can get out of them (cash back, rewards), not what they can get out of you.  Acquiring multitudes of cards and credit lines don't help you build a good credit profile any better or faster than having fewer cards and using them responsibly.  There are plenty of people who have built strong profiles and high scores with a minimal amount of cards.

The credit lines shouldn't be viewed as extra money you have to spend because in reality they are only potential debt you can't afford.  They should be treated like they're debit cards.  In other words, if you don't have the money in your bank account to pay for the purchase with a debit card, then you're only asking for more problems putting it on a credit card. 

Once you're BK goes through let us know and I'm sure people will help you on a solid rebuilding path. 

[Deyon22]

You and Joe Rockhead are both right. Believe it or not, this all started with a trip to New York. I was only supposed to be there for 3 or 4 days. I ended up staying almost 3 weeks. Thinking I could pay my credit card off later. And it was all downhill from there. Then my apartment flooded and I was displaced. Insurance paid for some things but not everything. So I spent money trying to get my new apartment ttogether. 

My lawyer said my bankruptcy total is about $57,000. $29,000 of that is from the consolidation loan from ACHIEVE.

I do have a question though. The total my lawyer gave me includes 2 student loans. Thing is, all of my student loans were dismissed due to being 100% P&T with the VA. As far as I knew they were all dismissed and I havent seen them on my credit report in a few years now. But when he pulled up my Credit Karma report, it still listed 2 student loans. Im not sure what to do about that.

So yes, I am able to pin point when this all began. I downloaded a spreadsheet based on the 50/30/20 budget rule. Is that a good place to start? 

Can anybody recommend any other spreadsheets? I now understand that I need to track and watch every penny I earn and spend. I am on a tight budget.

[ScoreHarbor]

My advice would be to start living by a budget. Get financially educated. That's what changed my financial life during my bankruptcy era. Read I Will Teach You To Be Rich. It's actually quite practical. Focus on living within your means and learning how to budget. The biggest thing you can do is produce margin between your monthly income and expenditures. Budgeting will help you get there. Try YNAB. It's not free, but it personally changed my life, so I think it's worth it. Don't get anymore credit until you build up some margin. Then start small with a single card for a few months, always paying off the balance in full and only spending up to 10% of the limit.