How long does it takes to rebuild your credit after a chapter 7 bk?

[averagejoe]

I would like to get and idea from everyone's experience who went through a chapter 7 bk.

Thanks

[last2cents]

Well, I think I'm probably the oddity, rather than the norm...but I obtained two unsecured cards before my case was closed (but after discharge). Orchard $300 limit and Cap One $750 limit.

Cap One increased the line automatically after six months of on time payments, and then offered me another card just this year with a $1000 limit.

I have NOT been able to secure additional credit with the other two applications I made (Wells Fargo Financial {store card} and Care Credit {dentist}) due to the BK.

I do not know what my score is right now (and its really immaterial to me), but my report is clean (meaning that all IIB's are reporting correctly and there's no screwy louie stuff going on), but I have close to a ten year history of perfect credit still showing on my report and I'm betting that since all the delinquent stuff happened in such a short period of time (hung on as long as I could before I filed), that the history is outweighing the BK and the bad stuff.

Now, once all that good stuff starts to fall off (and it does, doesn't it???, since the accounts are long since paid and over with? We're talking older cc's that are closed and car loans / prior mortgages) I'm not sure what will happen.

Just remember, everyone is different and YMMV.

[btbeme]

A good portion of your "credit" score (actually a debt score) is based on time - time since last late, time since last issue, time since BK, etc.

That aside, you can make the case that you are a good credit risk by opening a line of credit or two (secured credit cards, car loan, etc) and paying them on time for a half year or so. You won't make it into the 800's for a couple of years at least, but you can get decent scores in the upper 600's fairly quickly - and therefore stay out of the lowest pool for credit, insurance, etc.

Your mileage may vary.

[tobee43]

i agree time is the best healer for one's credit after bk.

we started out with orchard and cap one...we get offers all the time. but decided for our 2nd card for best buy. cap one we have a 3k limit now, it went up and up and best buy made us an offer we couldn't resist with a fixed 13.99 and a 2k limit.

now, as far as using them. i at first used them as much as possible to establish a payment history, but after much discussion in this family we decided no more...we now only use them i.e. like to day we have a rather major expensive car repair. we have the money saved, however, just in case the mechanic is not good..(we are new to the area and have had soooooooo many problems finding someone good, LOL!!like finding a new doctor), we decided we would use the card to protect ourselves in case the repair is not ok. at least it buys us 30 days to assure the work was done correctly.

other than that, we rarly use the cards, just enough to keep them "alive", because once again we are true believers in putting time between our closing bk date and credit.. best of luck!

[BROKEDED]

We are reaffirming our two vehicles but not the house or CC's so I know the vehicles will keep reporting but I realize we'll take a hit with the BK. But like "last2cents", my score is really immaterial to me but I know at some point I would regret it if I didn't try to rebuild our credit. Having said that, what I am going to try and do is take $1000 cash and deposit it into my savings account and explain what I need to in order to get a $1000 loan using my cash as collateral and having the payments drafted directly from my savings account like a secured loan. Then take that loan money and do the same at another bank and possibly a third bank. I will essentially be borrowing money and paying interest for nothing other than to build credit but the loan won't be for more than a 6 month term to keep interest payments fairly low. Even at 18% interest, I shouldn't have to pay but about $53 in interest charges in 6 months on $1000 borrowed. Two or three loans per year autodrafted should help us rebuild credit without having an open ended temptation like a credit card or having to pay $150 or more in annual fees per card.

Oh yeah, I had a secured credit card offer in the mail box the day after our 341 and had a second non-secured offer within a week after that.

[IBroke]

If you are pro-active after discharge (a few new accounts and a "clean-up" to ensure the IIB-accounts are reporting correctly), you should be out of the woods after 2 years.

[IBroke]

Having said that, what I am going to try and do is take $1000 cash and deposit it into my savings account and explain what I need to in order to get a $1000 loan using my cash as collateral and having the payments drafted directly from my savings account like a secured loan. Then take that loan money and do the same at another bank and possibly a third bank. I will essentially be borrowing money and paying interest for nothing other than to build credit but the loan won't be for more than a 6 month term to keep interest payments fairly low. Even at 18% interest, I shouldn't have to pay but about $53 in interest charges in 6 months on $1000 borrowed.

Having one secured installment loan is sufficient more than that could backfire because it reduces your average age of accounts. 6 months is a bit short - I recommend a minimum of 1 year which I did at my local CU with $1,000 as well.

[BROKEDED]

IBroke - Thanks for the advice. I was wondering if it was too short but I hated the thought of paying one loan for any length of time. My thought was that more loans for shorter terms might be the better way to go, especially if done through different institutions.

[keepmine]

Your credit score can be meaningless to some lenders post bk.
Many will have a criteria that, they won't touch you for a few years post bk and others won't do business with you as long as a bk is on your credit report.
I filed in 05 and, it was easier to get credit post bk then .
I just shredded all offers for a secured card or one loaded with fees. About 4 months post discharge, I got an unsolicited offer from HSBC with no fees. I applied and was approved with a $2K limit and a 19.99% rate. 6 months later, I got another offer from them with no fees. I applied and got approved with a $2500 limit and 19.99%.
A year later, I applied for the Barnes & Noble rewards card from Juniper and was denied due to recent bk. At the 3 year mark of my bk, I reapplied and was approved with a $3500 credit limit and a 21.99%. Needless to say, I don't run balances on any of those cards.
About 6 weeks prior to the two year mark of my bk, my wifes car just died. I got turned down by two local lenders that I'd had accounts with for years. Both cited a "recent bk". I then applied for the Cap 1 blank check program with my wife as a cosigner. I'm the primary on the loan and used my bank account info. We were approved for a $12.5 loan at 8.2% for 48 months to buy a used car. We spent $10K and bought a 1 year old fleet car from the local Hertz dealership.
Anyway, that's my credit journey post bk. I'd just say be careful. Don't take a deal loaded with fees. Never charge something you can't pay off at the end of the billing cycle.