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Could a "Trust" Shield one from a "Bad Credit History?"

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    Question Could a "Trust" Shield one from a "Bad Credit History?"

    Hi All! Long time, no type!

    I wanted to ask this question here, with the hope that there are enough of us with the right knowledge that could help. It could span a number of different topics, but I identify it mostly as a matter of "Rebuilding Credit," as that's what I'm trying to do, and why I ask it.

    As we all work as hard as we can to rebuild that credit, there is something that still gets in our way... that "bad credit history" of ours. All the "adverse" report entries that stay on the credit report for years, not to mention the bankruptcy itself that can stay on as long as 10+ years after the discharge. It makes it really difficult to do things like open new checking accounts, or rent apartments, or even apply for some jobs, as many of these activities will require a "credit check" as part of the application process. I know... it's "my fault." I got myself into this mess, I have to deal with it the best way I can.

    Enter, the "Trust..." that financial vehicle a lot of wealthy people use to protect assets and hide them from other people, creditors, etc. etc. There's a lot of YouTube content out there on how to use them, create them etc., along with LLCs, and other things. There are land trusts, real-estate trusts, etc. The "Living Trust" is a rather important one for "Estate planning" as it can replace a Will and help you avoid probate. Not that I have a whole lot to "probate" at this point, but ya never know... I could always hit the mega-zillion dollar Powerball Lottery! When you create a trust, there are 3 entities involved, normally... the "Grantor" or Settlor, who creates the trust and funds it with cash and other properties. There is the "beneficiary," to which the proceeds of the trust will go to, eventually, and there is the "Trustee" who manages the trust and does all the transactions. They can be individuals or LLCs or any sort of entity.

    My question: Could creating such a trust have the added benefit of shielding/protecting a grantor or beneficiary from the ill effects of their own "bad" credit history? Could the trust, for example, obtain its own Tax ID # (or FEIN) and then do things like open new checking accounts, based on that new tax ID#? The beneficiary would then be given access to the account, the ATM cards, etc. Or, would that not be permitted due to all the SOX and 9-11 legislation that requires an "individual" to act as a "fiduciary" and open any such checking accounts in their name and on their Tax ID # (Soc. Sec. #)? This, so they can "follow the money" and track any potential "terrorist" activity. I know that's how it works for "corporate entities" like an LLC. The LLC itself cannot open checking accounts, etc., as a corporate entity. The LLC must name a "registered agent" (an individual) who becomes the fiduciary and opens all the accounts on their tax ID and credit history.

    At best, one could use a trust, per the above. At worst. one might need the "Trustee" to be the fiduciary and open the bank accounts on their personal Tax ID and credit history. Either theirs, or that of the "Registered Agent" of the LLC if an LLC is acting as the Trustee.

    Please understand. No one is advocating or attempting anything "fraudulent," here. The objective is to be able to recover a bit quicker from that bad credit experience and start over again, rebuilding their lives.

    Thoughts? Thanks!


    #2
    I do not see how such a course of action would be viable vis-à-vis an individual rebuilding his or her credit. Even if one could use a trust to indirectly open deposit and credit accounts, they wouldn't be in the individual's name, and as such, have no impact on said individual's credit history.

    Long story short, rebuilding one's credit is a marathon and not a sprint, and there are virtually no short cuts.
    Chapter 13 (not 100%):
    • Burned: AMEX, Chase, Citi, Wells Fargo, and South County Bank cum Bank of Southern California
    • Filed: 26-Feb-2015
    • MoC: 01-Mar-2015
    • 1st Payment (posted): 23-Mar-2015
    • 60th Payment (posted): 07-Feb-2020
    • Discharged: 04-Mar-2020
    • Closed: 23-Jun-2020

    Comment


      #3
      Originally posted by shipo View Post
      I do not see how such a course of action would be viable vis-à-vis an individual rebuilding his or her credit. Even if one could use a trust to indirectly open deposit and credit accounts, they wouldn't be in the individual's name, and as such, have no impact on said individual's credit history.
      Correct, they wouldn't. But they would allow one to function in the "real world" a little bit sooner/faster than having to wait for one's personal credit history to recover "organically," if at all possible. Part of that "organic" process being to keep constant watch over one's credit report/history and filing complaints with the bureaus to get adverse information "removed" when possible. Some things can't be removed easily, though. You'll recall my previous "Unicourt" thread. I've learned that my request to have that entry expunged has been denied. The only way I can do it is to have a motion filed in court to have it expunged. I'll talk with my attorneys to see if that's viable.

      Originally posted by shipo View Post
      Long story short, rebuilding one's credit is a marathon and not a sprint, and there are virtually no short cuts.
      Understood. And I'm not trying to "short cut" that process at all. I'm just trying to thrive, while that process happens organically.

      Comment


        #4
        Well, there is a short cut to being able to function in the "real world", and I chose this option after my Chapter 13 was discharged. What is it? A secured credit card; many financial institutions offer secured cards with limits up to $5,000 (and a few even higher).
        Chapter 13 (not 100%):
        • Burned: AMEX, Chase, Citi, Wells Fargo, and South County Bank cum Bank of Southern California
        • Filed: 26-Feb-2015
        • MoC: 01-Mar-2015
        • 1st Payment (posted): 23-Mar-2015
        • 60th Payment (posted): 07-Feb-2020
        • Discharged: 04-Mar-2020
        • Closed: 23-Jun-2020

        Comment


          #5
          I did the same as shipo but had a secured card during the Chapter 13 (for business travel expenses) and another after the Chapter 13.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog

          Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

          Comment


            #6
            Originally posted by shipo View Post
            Well, there is a short cut to being able to function in the "real world", and I chose this option after my Chapter 13 was discharged. What is it? A secured credit card; many financial institutions offer secured cards with limits up to $5,000 (and a few even higher).
            I appreciate that. But I'm not looking to establish any more credit. I'm more concerned with being able to open a new checking account and pay for things with "cash" via the ATM card. Will the people offering secured cards also offer checking accounts in that same context? I mean, I already have a checking account, but I opened it during the height of my troubles. Not sure if there would be any remaining "baggage" while using that checking account after I'm declared "debt free" and my credit history clears itself, "organically.". Furthermore, if the bank that issued the checking account ever wants to "audit" me and sees the credit history as it is now, they could, conceivably, cancel the checking account. And then I'd really be in trouble. I don't know how often that happens, but I have to consider it.

            Comment

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