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New to boards...Filed Chapt 13..what to do now to rebuild credit???

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Established Member

New to boards...Filed Chapt 13..what to do now to rebuild credit???

Hello All...Well My husband and I actually go tommorow for our Creditors Meeting..We filed Chapt 13 about a month ago...story is ( probably like a lot of people across the nation) my husbands hours got cut drastically @ work way back in March...thankfully he does still have a job...Well up until this time we had never missed a payment on anything...We tried working with all CC companies ....it just wasnt happening.....well then in July we got a frightening phone call from someone from Citi saying there going to be taking us to court, come take our stuff, etc..etc....and they had to do this because they had been trying to get a hold of us for soooo long and wasnt able too..This infact in a LIE because i kept in contact with them at least every two weeks or so and I kept them updated on our situation and said I would pay as soon as I get the $$$...Well this frightening interaction made us look into the unthinkable Filing Bankruptcy....We were trying to avoid it all costs but what else was there to do...I can honestly say it was a VERY Hard road for us to take but im glad we are doing it..It was like a boulder was lifted off our shoulders and we are finally able to save $$$ even with my husbands hours being cut back still...With our Chapter 13 plan we r paying $$100.00 a month for two and half years and then 420 for six months toatling a plan of 3 years ( reason for jump is my husbands truck will be paid off so that $$ goes into the plan) my ???'s are will the payments in the plan help my credit score and how else can I rebuild my credit?? We arent allowed to get a loan on a vehicle until the plan is over ( unless its 3 or 40000 and its approved by the trustee) Honestly I dont want to get another credit card in my life!!! but I know I will probably have to..We do have a mortgage and a vehicle loan which has always been current so Im guessing that will help a lot right?? Any input apprecitated and sorry for the link thought since I was new here I would give my story....
Message 1 of 7
6 REPLIES 6
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Established Member

Re: New to boards...Filed Chapt 13..what to do now to rebuild credit???

I meant to say 4000 not 40,000!!! and sorry about the length...Man I should really use spellcheck lol!!!
Message 2 of 7
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Moderator Emeritus

Re: New to boards...Filed Chapt 13..what to do now to rebuild credit???

Yep - you bet that mortgage and car loan will do you good.  As long as it's paid on time and doesn't show any lates, it will help your credit history and your FICO score.

 

You can monitor your credit reports while you're in bankruptcy - it's not uncommon to have accounts reporting improperly and you can keep that straightened out.  When you've completed your bk, you can apply for a credit card or two if you like (they'll help your score).  I think it varies by state, in my state the policy is no new credit can be applied for - it can trigger a discharge of your bk.  Except, of course, car loans approved by the trustee.

 

But paying that mortgage and car loan always on time will be golden for you.  Payments in the plan don't count for your credit history - but on manual reviews (i.e. a mortgage) Ch. 13 fares better than other BK's because a good portion (or all) of the debt is repaid.

Good luck!

Just puttin' syrup on something, don't make it pancakes.
Message 3 of 7
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Frequent Contributor

Re: New to boards...Filed Chapt 13..what to do now to rebuild credit???

About the best (and nearly the only) thing you can do to improve your credit standing during a Chapter 13 is make sure you make every payment to the trustee/court on time through the course of your plan -- and any payments, of course, such as a mortgage -- paid outside the plan, particularly during the final two years. Other than that, you're better off not even thinking about credit -- even with court approval -- outside of a health- or life-threatening emergency. You'll want credit again someday -- for another mortgage or autos, for example -- but you don't want it now! So, there really isn't much point to constantly monitoring your credit reports and scores until the final year or so before discharge, because you're not going to be applying for credit till after your discharge anyway. Look at your free credit report mandated annually by federal law, but don't waste money yet on a monitoring service. Good luck.
Message 4 of 7
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Moderator Emeritus

Re: New to boards...Filed Chapt 13..what to do now to rebuild credit???


oldhack62 wrote: 
So, there really isn't much point to constantly monitoring your credit reports.  Look at your free credit report mandated annually by federal law, but don't waste money yet on a monitoring service. Good luck.

oldhack is right - you don't need to spend money on a monitoring service - that doesn't suit your needs during bk.  But you should monitor your credit reports periodically - using the annual free credit report is a great choice.  You also don't have to wait til the last year you're in bk to clean up credit reports.  They're often full of inaccurate information (especially when you file bk) and you can get that taken care of as you move along - no need to wait and try to do it all at the end.  Keep it cleaned up as you move along, and there will be less stress as you complete your bk.  I had over 30 errors to correct on my 3 reports, and DH had another 30+.  When we found we were in an emergency situation in the middle of BK - we didn't have the time it takes to clean them up.  Having those errors on the reports prevented us from pursuing some very appropriate actions.  If you find you're in an emergency situation, or you're discharged through some clerical error (happened to us) you will want those records to be correct.  My advice is to be absolutely aware of what's on the credit reports and clean up errors - it's in your best interest whether you're in bk or not.

 

As far as improving your credit standing during Ch. 13 - payments to the trustee do not show up on your credit report.  (Of course, if you do not make them, the CH 13 will be discharged and that does show up on your credit report as a discharge and stays for 7 years).  Payments to your mortgage and truck loan - anything outside the BK - will help you tremendously.  Make sure they are never ever late - they are gold to you right now if you pay them, and a huge negative if they are late.  You are in a good position because these accounts are already in place and you can show a positive payment history on them.  Best wishes!

Just puttin' syrup on something, don't make it pancakes.
Message 5 of 7
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Established Member

Re: New to boards...Filed Chapt 13..what to do now to rebuild credit???

Personally what I did was to continue to pay my mortgage and car payments and opened a $500 SECURED credit card with my bank. I paid my cellphone bill automatically every month with the CC (10% savings on bill for auto pay) and paid it in full every month to keep the card active and show activity. I didn't get a single thing until the discharge and I was at a 685. While the car payments and the mortgage will help your score, having a single revolving credit line will show that you can manage both types of credit, plus the sooner you open it the longer the "credit history" on that card will be by the time you discharge helping to build your score that much more.

 

As others have said, the best thing you can do if you choose not to get a secured CC is to never, ever, ever be late on your mortgage, car or trustee payments.

Ch 7 BK Nov 2007
Nov 2007 - 445 EQ
Nov 2009 - 606 EQ
Dec 2009 - 645 EQ
Lender Mar 2010 652 EQ - 676 EX - 682 TU
700 club here I come! If I can do it so can you!!
.
Message 6 of 7
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Moderator Emeritus

Re: New to boards...Filed Chapt 13..what to do now to rebuild credit???


@Acidsniper wrote:

Personally what I did was to continue to pay my mortgage and car payments and opened a $500 SECURED credit card with my bank.


+1.  Golden! 

Very savvy (and another good reason to make sure your credit reports are cleaned up and reporting accurately).

Just puttin' syrup on something, don't make it pancakes.
Message 7 of 7
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