Credit Reestablishment Plan

[RBisDebtFree]

Hello everyone,

My discharge date is Nov-09 and I am expecting / hoping that everything should go through well. I am already creating my credit reestablishment.

My plans were to get 3 secured CCs and an installment loan. For CCs, I was planning to use US Bank, Plains Commercial and Bank of America (if they approve me) or Alaska USA FCU (if BoA declines me). The reason for this selection is that these are the only banks that I found that would open a joint credit card account, I want to be rebuilding my wife's credit history as well, not just mine.

As for an installment loan, I was thinking to get a $1000 secured personal loan from Alaska USA FCU. Basically, I deposit $1000 into savings and then they loan that money to me and lock my savings account. I would be paying about 2% interest rate on that. Which is ok with me.

Neither car loans nor credit card debt led me into bankruptcy (I used up credit cards to finish house construction but before I always paid them off in full every month) so I am pretty sure that we're safe especially with the minimum credit limits we hope to get from the CC companies.

Also, we need to buy a car and we have been saving up since we filed (living with no house payments, etc.) and getting help from friends and relatives so we can either buy a car outright or get an auto loan instead of a personal loan and keep the money to be ready to pay off the loan if / when needed.

I would greatly appreciate your comments on my thoughts / ideas and definitely let me know if you see that I am "not thinking straight" on some of the things I am planning / wishing to do.

Thanks!

[RBisDebtFree]

P.S. We have solid auto loan history so hopefully that will help our auto loan.

[Flamingo]

Hello everyone,

My discharge date is Nov-09 and I am expecting / hoping that everything should go through well. I am already creating my credit reestablishment.

My plans were to get 3 secured CCs and an installment loan. For CCs, I was planning to use US Bank, Plains Commercial and Bank of America (if they approve me) or Alaska USA FCU (if BoA declines me). The reason for this selection is that these are the only banks that I found that would open a joint credit card account, I want to be rebuilding my wife's credit history as well, not just mine.

As for an installment loan, I was thinking to get a $1000 secured personal loan from Alaska USA FCU. Basically, I deposit $1000 into savings and then they loan that money to me and lock my savings account. I would be paying about 2% interest rate on that. Which is ok with me.

Neither car loans nor credit card debt led me into bankruptcy (I used up credit cards to finish house construction but before I always paid them off in full every month) so I am pretty sure that we're safe especially with the minimum credit limits we hope to get from the CC companies.
Also, we need to buy a car and we have been saving up since we filed (living with no house payments, etc.) and getting help from friends and relatives so we can either buy a car outright or get an auto loan instead of a personal loan and keep the money to be ready to pay off the loan if / when needed.

I would greatly appreciate your comments on my thoughts / ideas and definitely let me know if you see that I am "not thinking straight" on some of the things I am planning / wishing to do.

Thanks!

I admire your proactiveness as that is what gets the job done but your comment (which I highlighted in red above) raised a red flag for me inasmuch as debt causes bankruptcy. What exactly led you into BK? It appears from your posting something caused a big financial change in your life but then you ran up your credit cards to finish off a house construction?

No matter what caused your BK, a BK is a BK on a credit report and makes some creditors run just seeing it. You need to reestablish yourself credit wise slowly after discharge (time is your friend) and not apply for too much credit, pay all utilities and other bills on time and do not be late with anything, and that all works in your favor. You will get denials so expect them, moreso than approvals. Racking up inquiries on your credit reports works against you so soon after discharge. BK solves the money issues as to debt but it stays on your records for 10 years if a Chapter 7 is filed and can work against you when you least expect it.

[RBisDebtFree]

Thanks Flamingo, I appreciate your outlining of somewhat questionable statement I made -- that's exactly what I wanted.

I'll try to explain, not to excuse, and see if that makes sense or it's really smelling like an excuse.

At the time we had credit card debt maxed out, we had enough resources to pay them down but because we knew our mortgage bank would take us to court unless we filed for bk, we decided to not pay off anything and stop paying for all accounts. We used the cash we had to pay off all joint accounts we had with somebody else to prevent ruining of their credit, that included paying deficiencies on returning two of our cars back to the dealer and buying cash cars for ourselves. We knew that cash would have been taken away and didn't want that as we knew that we need cars to drive after bankruptcy but didn't want to keep upside down car loans.

Everything started with a bad real estate investment at the worst time possible, I was advised into this by my friend, who is a real estate agent, not blaming him, I have a head with brains (hopefully) of my own and needed to use that.

After we BKed, our financial views are completely different, we have already managed to cram down our monthly expenses / bills down to a very reasonable amount and to save up for up to three months worth of living expenses plus paid up our rent one month upfront. And with credit cards, if I could, I would never use them at all, if I can rebuild my credit history w/o CCs, I'd be happy to. In fact, my plan was to setup monthly auto-payments for those CCs and then either store them away or even shred them and just keep paying monthly statements. I agree that I didn't manage my credit wisely but after BK, something had to change in my mind and heart in regards to credit, if it didn't, too bad.

[RBisDebtFree]

Also, the reason we are *thinking* about an auto loan is that it might work two-way. Help us rebuild credit and let us keep the money we have saved up for 3 months of living expenses and not dump it into a car.

[RBisDebtFree]

P.S. I don't care for a car loan or credit cards, I'd like to avoid them all possible ways, just don't think it's a good / worthwhile type of credit but I have to rebuild my credit somehow, if there are other ways, let me know, I am very interested. The reason I want to rebuild my credit is that we want to have no problems renting a place in the future as well as getting employed / changing jobs, etc. Potentially, buying a house in the future, only if prices will be reasonably, only if it will be close to what we pay for rent, only if we will be able to pay for that mortgage if the prices fall even further, and that's maybe...

[tanya0525]

Hello everyone,

My discharge date is Nov-09 and I am expecting / hoping that everything should go through well. I am already creating my credit reestablishment.

My plans were to get 3 secured CCs and an installment loan. For CCs, I was planning to use US Bank, Plains Commercial and Bank of America (if they approve me) or Alaska USA FCU (if BoA declines me). The reason for this selection is that these are the only banks that I found that would open a joint credit card account, I want to be rebuilding my wife's credit history as well, not just mine.

As for an installment loan, I was thinking to get a $1000 secured personal loan from Alaska USA FCU. Basically, I deposit $1000 into savings and then they loan that money to me and lock my savings account. I would be paying about 2% interest rate on that. Which is ok with me.

Neither car loans nor credit card debt led me into bankruptcy (I used up credit cards to finish house construction but before I always paid them off in full every month) so I am pretty sure that we're safe especially with the minimum credit limits we hope to get from the CC companies.

Also, we need to buy a car and we have been saving up since we filed (living with no house payments, etc.) and getting help from friends and relatives so we can either buy a car outright or get an auto loan instead of a personal loan and keep the money to be ready to pay off the loan if / when needed.

I would greatly appreciate your comments on my thoughts / ideas and definitely let me know if you see that I am "not thinking straight" on some of the things I am planning / wishing to do.

Thanks!

I have yet to find anyone right after Bankruptcy to get approved by any of the major banks or CC (bank of america included). Heck I know alot of people who can't get approved with a secure card. Not trying to burst your bubble just letting you know the facts. Your best best is wait to get a preapproval offer in the mail. Don't take the first one that shows up in your mailbox. Wait it out. The better ones will come sometime later.

Tanya

[RBisDebtFree]

I obviously don't have too much experience but I do see quite a few people get secured CCs from banks. Plains Commercial is a small bank, Alaska USA FCU is a small credit union, US Bank -- probably a large bank, don't know if they will approve, same with BoA -- but I do have a few friends that did get CCs and even unsecured CCs right after BK discharge, maybe we just have to do more of "going and asking". Wish you luck in your credit repair and hope everything goes well for you!

[Flamingo]

Your best bet is to try to get a card via Orchard Bank which is very BK friendly and start from there. As to auto loans...what may work for you is trying to obtain a car loan via a past place where you paid off the car loan in full with no late payments (i.e., GMAC, Ford Credit, etc.). But there is no guarantee. Some places just blacklist folks who file for BK and they are included as a creditor and they will never extend credit again even after it falls off credit reports.

I would not rush like gangbusters trying to establish your credit. Go slowly to prove to creditors that you can reestablish yourself and handle funds after filing. Anyone with a BK on their records is a credit risk to a creditor and that fades in time as one proves they are again creditworthy.

Best of luck to you.

[liz417]

Capital One approved me for an UNsecured credit card two weeks after discharge.

Good Luck!

[RBisDebtFree]

Thanks both of you for the info, didn't know that banks can blacklist you forever

[famlena]

i just activated my unsecured card with capital one & the rep informed me that i could add a family member to my card. they will report both card users to the credit burearu.

i have a bk7 discharged in dec 08. i thought my credit was completely ruined but it turns out that the impact wasn't that bad. i just recently ran my credit check and my fico was 686 & 701.

capital one uses transunion. thanks to this forum that is where i found out about capital one. this was the only card i had applied to since my bk. good luck.

[RBisDebtFree]

I haven't thought of Capital One, maybe that's what I should try once I receive my discharge.

Thanks famlena!

[reb512]

FYI US Bank (Elan Financial) secured credit cards are not BK friendly, it says if there is a bankruptcy on your credit report will not be able to open an account for you.

[RBisDebtFree]

Wow, that's good to know. I guess it might be a little more complex than I think but it is whatever it is. Now I won't have to waste my inquiry on applying with them.

Btw, everyone recommends Orchard Bank Secured CC but they don't do joint applications, only individual ones. However, somewhere I've read that there's a law that allows husband's credit history to be reflected on wife's credit history -- is that something that actually works? That's what happened to my WaMu CC, I only had it in my name but somehow, my wife got it too. I definitely want to be rebuilding both of our credit histories...