Keeping home... will its payments help reestablish credit?

[backtoschool]

exactly, the month after I filed I had to travel on business. The hotel I was staying at wanted a credit card. I turned over my debit card and they put a 350.00 hold on my account for possible incidentals.. Now keep in mind my company was covering the room. You need some credit.

I agree that you need some credit post bankruptcy, if only to re-establish good mortgage and car rates moving forward. Business travel is very difficult to do on a debit card only. Often companies will take a month or more to repay you for business travel, and that is money that is out of your checking account for that long. Also, holds put on your checking account for hotel incidentals and car rentals, etc can really add up, forcing you to keep a large buffer in your account if you do not want things to bounce.

I see nothing wrong with responsible use of credit post bankruptcy.

[LSUTiger32]

I just went to Miami for the Super Bowl because get this I had the money to go because I wasn't paying it to credit cards!

Anyway, I stayed at a very nice hotel for $329 a night (hey, it's the Super Bowl) and get this.....I used my DEBIT card. They put the hold on there, and when I checked out they removed the hold and charged the card for the actual balance owed.

I am not sure why people are having trouble with using a debit card. I never have any problems with it whatsoever and it's becoming more and more now where I notice people don't even ask if it is a debit card or a credit card.

A secured card I guess is not that big of a deal because it is secured, but why pay them an annual fee and interest on your own money when your debit card works just as good. I just find it hard to believe that people want to go back to these credit card companies. After the way I was treated by them I would never give them a cent of my money.

[LSUTiger32]

I see nothing wrong with responsible use of credit post bankruptcy.

You know how much I respect you BTS, I just disagree on this point. I know myself and I know that just about everyone on this board made that statement when they first got credit. "There is nothing wrong with credit, I am going to use it responsibly." Then we all wound up here.

Things that make you hmmmm.................

Why play with fire again?

[backtoschool]

You know how much I respect you BTS, I just disagree on this point. I know myself and I know that just about everyone on this board made that statement when they first got credit. "There is nothing wrong with credit, I am going to use it responsibly." Then we all wound up here.

Things that make you hmmmm.................

Why play with fire again?

Because it all comes out the same as using a debit card if you pay in full each month, only you get to repair your fico.

You have your home and kept it as part of the process, but for people like me who need to purchase a home in the next couple of years, the only way to get my credit score and credit report high enough, is to rebuild with a few cards.

Paying in full on a credit card each month, and using a debit card are both about using cash. But one, lets you rebuild your score so that you can have decent interest rates for a house and a car. I know that there are a lot of Dave Ramsey fans here but I simply do not think that a cash only life style needs to be about only using debit cards.

[LSUTiger32]

Because it all comes out the same as using a debit card if you pay in full each month, only you get to repair your fico.

You have your home and kept it as part of the process, but for people like me who need to purchase a home in the next couple of years, the only way to get my credit score and credit report high enough, is to rebuild with a few cards.

Paying in full on a credit card each month, and using a debit card are both about using cash.

If if was a skif we could go rowing bro! You know how many times I told myself I was going to charge something and then pay it off at the end of the month? Let's just say that if I had a nickel for each time, I would not have needed to file BK!

Anyway, I do understand the dilemma of wanting to own a house again. I just do not believe that you need to get credit in order to get a mortgage. There are plenty of companies out there that will do manual underwriting of a mortgage and FHA's guidelines even say that you either need to have worked on rebuilding your credit OR decided not to take on any new credit obligations.

As far as my FICO is concerned, the quicker I can get it to 0 the happier I will be. I wasted way too much money and time worried about my FICO score. Never again.

And yes......I am a Dave Ramsey fan. No, I don't worship in his words and follow him like a sheep. I just happen to agree with him on this. I just will never forget the feeling of opening those credit card statements to see my rate jacked to 30% and the way they made me feel when I asked them why they were doing this to a loyal customer. I'll take that feeling with me to my grave.

[backtoschool]

If if was a skif we could go rowing bro! You know how many times I told myself I was going to charge something and then pay it off at the end of the month? Let's just say that if I had a nickel for each time, I would not have needed to file BK!

Anyway, I do understand the dilemma of wanting to own a house again. I just do not believe that you need to get credit in order to get a mortgage. There are plenty of companies out there that will do manual underwriting of a mortgage and FHA's guidelines even say that you either need to have worked on rebuilding your credit OR decided not to take on any new credit obligations.

As far as my FICO is concerned, the quicker I can get it to 0 the happier I will be. I wasted way too much money and time worried about my FICO score. Never again.

I hear you LSUTiger32, really I do. But working in financial services, I know that you need a FICO of at least 620 and at least 3 positively reporting tradelines to get an FHA mortgage in most cases.

The small tradelines offered after bankruptcy are not going to get anyone in trouble. I try not to make fear based decisions, and I don't want my fear of credit to ruin my future chances at a home.

But, that being said, I certainly understand where you are coming from. We all have our post-bk roads to follow.

[LSUTiger32]

I hear you LSUTiger32, really I do. But working in financial services, I know that you need a FICO of at least 620 and at least 3 positively reporting tradelines to get an FHA mortgage in most cases.

The small tradelines offered after bankruptcy are not going to get anyone in trouble. I try not to make fear based decisions, and I don't want my fear of credit to ruin my future chances at a home.

But, that being said, I certainly understand where you are coming from. We all have our post-bk roads to follow.

You work in the field, so you may know than me.....but I have already spoken to a few brokers who told me that once a year passes (since I have extenuating circumstances) to let them know and they will do manual underwriting on the loan for credit purposes if my FICO score deteriates. Of course, I have my house and I have my car and I also have school loans so I have several open tradelines still reporting.

As far as the credit cards, it's not fear based. I am not going to be pressured into a credit card because of the common misconceptions and thoughts that you can't live without one. I am thankful for my fresh start and the last thing I am going to do is make the same mistakes over again. It's not that I can't handle a credit card from a financial standpoint, I just don't want one.

Like you said though, to each his own. I am just going to take every oppurtunity I can to rebut comments such as "there is no other way."

[backtoschool]

You work in the field, so you may know than me.....but I have already spoken to a few brokers who told me that once a year passes (since I have extenuating circumstances) to let them know and they will do manual underwriting on the loan for credit purposes if my FICO score deteriates. Of course, I have my house and I have my car and I also have school loans so I have several open tradelines still reporting.

As far as the credit cards, it's not fear based. I am not going to be pressured into a credit card because of the common misconceptions and thoughts that you can't live without one. I am thankful for my fresh start and the last thing I am going to do is make the same mistakes over again. It's not that I can't handle a credit card from a financial standpoint, I just don't want one.

Like you said though, to each his own. I am just going to take every oppurtunity I can to rebut comments such as "there is no other way."

For someone with a home and a car, there is another way. Cash will work in that situation.

For someone who needs to get a mortgage, 3 or more positive tradelines will need to be reporting post bankruptcy and ficos will have to be above 620. It will be almost impossible to get ficos above 620 without establishing positive trade lines.

I have a car, my student loans, and three credit cards reporting now. I only use the cards for small purchases that I pay in full each month and I only use them at all because I don't want them to be closed by the lender for lack of use.

Trust me, if I were in your situation, I would not have re-established credit either because there would have been no need.

[lovebirds]

We haven't filed yet but before our wedding, my husband and I rented a car since his vehicle was totalled as our "get away" vehicle. My car is the smallest thing ever and my hubby is 6'5. Anyways...He had to come back home to find a credit card b/c they refused to accept my debt card. We were doing the cash-only lifestyle after we got engaged.

Also, the resort we went to in Jamaica would only accept credit cards to keep on file to use for excursions, room purchases, and spa treatments. (I know! I know! But it was our honeymoon and we paid in cash)

[OhioFiler]

For someone with a home and a car, there is another way. Cash will work in that situation.

For someone who needs to get a mortgage, 3 or more positive tradelines will need to be reporting post bankruptcy and ficos will have to be above 620. It will be almost impossible to get ficos above 620 without establishing positive trade lines.

I have a car, my student loans, and three credit cards reporting now. I only use the cards for small purchases that I pay in full each month and I only use them at all because I don't want them to be closed by the lender for lack of use.

Trust me, if I were in your situation, I would not have re-established credit either because there would have been no need.

You got a Starbucks card didn't you!?

[backtoschool]

You got a Starbucks card didn't you!?

Actually I have bought a starbucks card with one of my visas. I buy a $50 card a month. I also buy a card for my local liberal non-chain coffee house.

[SleeplessMI]

Getting back to the OP's question about reaffirmation

The majority of this board is pretty anti-reaffirmation. Reasons include property values going down, not up, so there's the risk you could be signing on to pay for a house that might be underwater in the future. Also, times are uncertain, and if you lose a job, you're still liable for the debt and can't walk away if things take a turn for the worse.

I asked my attorney about reaffirming. I'm not underwater on my house and have a job that covers all of my expenses once I get my Chapter 7 discharge. Here's the reasons he gave me for reaffirming:
1. Your lenders will report your payments to credit bureaus, so you'll be rebuilding credit.
2. You can resume a "normal" relationship with your lender, meaning you get your grace period for late payment, regular monthly billing by mail, online banking, etc. If you ride through, there's a lot more checking up involved on your part to get the payment there on time (paying by mail can be sketchy) and making sure it's applied on time. If it's even one day late, all bets are off, because in a ride through you don't really have a relationship with your lender anymore.
3. Since some mortgage notes list bankruptcy as a default event regardless of whether you're current, there might be a risk of your lender changing the terms of a note. A reaffirmation locks in all of the terms of the old note.

If you're underwater and/or unemployed, these are small benefits not worth the risk of reaffirming. For me, I was 100% certain I wanted to reaffirm. Your attorney can arrange a reaffirmation on your mortgage if you decide to go that route.

[blessed]

Can someone tell me what reaffirm means and how I'd go about doing that?

The others answered the basics about this. But I wanted to add that my attorney advises against reaffirming anything for various reasons. I would suggest you talk to yours and get their take, weigh the pros and cons of reaffirming. If it's solely to rebuild credit by having the timely payments reported I'd find another way to build credit and not reaffirm.