Bankruptcy Question

[Anonymous]

I have a chapter 7 which is due to be discharged in June 2012. I owe $1100 monthly on my mortgage and $190 monthly on my car which will be paid off in 6 months. I have 2 GE Money credit cards with 0 balance and no other cards. My current FICO is 727. My question is will I see a decided differemce in my score once the bankruptcy is discharged and will it make that much difference if I try to purchase a new car now or after the discharge? In other words how much will trhe discharge affect my score?

[pizzadude]

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@Anonymous wrote:

I have a chapter 7 which is due to be discharged in June 2012. I owe $1100 monthly on my mortgage and $190 monthly on my car which will be paid off in 6 months. I have 2 GE Money credit cards with 0 balance and no other cards. My current FICO is 727. My question is will I see a decided differemce in my score once the bankruptcy is discharged and will it make that much difference if I try to purchase a new car now or after the discharge? In other words how much will trhe discharge affect my score?

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Hi, and welcome to the forums !

When your BK finally shows on your credit reports it will be a major derogatory which will seriously ding your scores, see the chart below.

[Anonymous]

Thanks for the quick reply. However I took that hit when I filed and in June of this year the BK will be discharged after 10  years. So is there a reverse chart of what you posted? And again am I better off waiting to apply for a new car loan until the discharge even tho my score is 727? Thanks

[pizzadude]

Ok I misunderstood ~ I thought you were saying that your bankruptcy was about to be discharged but it was filed & discharged 10 years ago and it is about to drop from your reports....

There is no corresponding chart to the one above ~ at least FICO hasn't published one yet. You will gain points but how many depends on what your reports look like after the BK disappears.

If the BK was the only negative then you might gain more points ~ but that is just a guess.

[Revelate]

Unfortunately there's no way to tell: if it was the only negative it may even have a negative impact on your FICO score (rebucketing) when it drops off; negative marks that are nearly 10 years old aren't likely to be hurting your score that badly anymore, and FICO is a comparaitive model such that you're compared against people with similar credit profiles.  It'll likely be a small change, but it may be a negative rather than an increase.

That said, I wouldn't worry about that at all, and if possible I'd wait for the BK to fall off if I could in your situation before pulling the trigger on a new loan.  Scores are not the only factor when it comes to getting a loan approved, and no BK is going to be much easier for underwriting to approve regardless of what the FICO score is in your case.

[Anonymous]

When my BK aged off my TU report with no other baddies, my FICO went from 716 to 791.

So in my case, 75 points.  Of course, YMMV.