After bankruptcy, get a credit card. Get a couple.
Getting back to good credit is one of the five ways bankruptcy gives you a new start. The bankruptcy itself helps quite a bit, because the old debts stop chasing you. But to really improve your credit score you have to get and use two or three after bankruptcy credit cards every month. Using credit reponsibly leads to a higher credit score, than just having no debt.
Getting an after bankruptcy credit card, using it, and paying in full, is a good way to improve your credit.
I reccomend getting about three after bankruptcy credit cards, using them each month to charge something you need, like gasoline or groceries, and paying them in full.
About the time of your bankruptcy discharge, you will get some after bankruptcy credit card offers in the mail. But you should compare those with offers you might find on the internet. I think bankrate.com is a good place to shop for credit cards for people with bad credit. (Right after bankruptcy you are a person with bad credit; if you follow these steps, you soon won’t be.)
When deciding what card to apply for, keep in mind that you are planning to pay the card in full every month. That means you really do NOT care what the interest rate is. You won’t be paying interest because you’ll be paying it off each month. What you want to low or no application fee; and low or no annual fee.
If you can only get approved for one card as soon as the bankruptcy is discharged, that’s ok. Using that first after bankruptcy credit card for a few months, charging and paying off, charging and paying off, will raise your score. So better offers will come your way.
Most people have a credit score of about 620 a couple months after bankruptcy. That’s from a study by the Philadelphia Federal Reserve Bank, a few years ago. (I saved the complete study here.) And here’s the full size Chart that shows how scores recover.
Study shows how credit score bounces back after filing bankruptcy.
What’s your after bankruptcy credit score? One free place to check is Lendingtree. Here.
Now I can’t guarantee that your score will be 620. But, if I handled your bankruptcy case and your score is NOT what it should be, follow these instructions and send me your credit report. We’ll see if there’s something hitting your credit that shouldn’t be there.
After Bankruptcy Mistakes: Navy Fed does the Right Thing; Wells Fargo Makes More Excuses.
Everybody makes mistakes. Banks do, too. When you file bankruptcy, the banks you owe money to don’t always do what they are supposed to do. This is a true story of Navy Fed admitting their mistake and fixing it. Wells Fargo making excuses and more excuses
After Bankruptcy, Navy Federal Hit Rob’s Credit So He couldn’t Buy a House.
Rob, not his real name, and his wife Daisy, filed Chapter 13 bankruptcy with me in summer of 2011. One of the debts that was partially paid and mostly discharged—wiped clean—was a third mortgage to Navy Federal for $39,157. The chapter 13 was paid off in July 2014.
By the fall of 2016, Rob and Daisy are back to good credit. They sold their house to buy a new one. In fact they signed a contract to have a house built.
That’s when they find out Navy Fed is still hitting Rob’s credit. Rob’s Experian credit report shows that years three years past due on now $39,000 to Navy Fed. Rob called and complained to the credit reporting department. He was told the credit report was right. Rob called Jeremy in the Navy Fed bankrutpcy department. Jeremy said he agreed with Rob (!) but he couldn’t change credit reporting. Rob went to the branch. That did nothing.
Finally, someone at Navy Fed whispered to Rob that he should talk to his bankruptcy lawyer.
We Ask Navy Fed to Tell It to the Judge
January 6, 2017 I filed papers with the bankruptcy court. We asked the Navy Fed to come to court on February 2, and explain to the judge why they were still trying to collect a discharged debt.
It didn’t get that far. I heard first from Jeremy, in the bankruptcy department, and then from Emily, their lawyer. Most importantly, they sent a correction over the Experian, and the other credit bureaus, too.
(Rob wondered why this problem showed up only with Experian. Each credit bureau’s computer programs are slightly different, so a small mistake might show up with one, but not the others. But, I don’t think that’s the problem here. Under the Terri White class action settlement, the credit bureaus are supposed to show your debts are discharged in bankruptcy—even if the creditor keeps reporting them as late. My best guess is that Navy made the mistake with all three credit bureaus, but only Experian let is slip past.)
February 1, 2017, we were able to confirm with each of the three credit bureaus that the Navy Fed loan was now showing “discharged in bankruptcy.” That fixed his Experian credit score, his loan was approved, and Rob and Daisey will be moving into their new house in a few weeks.
As a tangible apology, Navy Fed also agreed to make a small payment—we agreed to keep the amount secret—for Rob and Daisy’s sleepless nights and for my legal work. Although they had given Rob the run around, Navy Fed was all over it when they heard from me. So we did not squeeze them to make a big settlement.
Wells Fargo takes 9 months to fix their mistake, while Veronique drives on expired tags.
Wells Fargo Won’t Let Veronique Renew the Tags on Her Car
Veronique, not her real name, filed Chapter 13 with me in April 2016. We needed to prevent the repossession sale of her car. (Veronique traveled to two or three different job locations every day. She had to have a car.)
Wells Fargo stopped the repo sale, and gave Veronique her car back, exactly like they were supposed to. But, when she went to renew her tags in June 2016, Veronique was in for a shock. Wells Fargo had taken her name of her title, so she couldn’t renew her tags.
This was no ordinary screw up
I thought this screw up could be easily fixed. After all, Wells Fargo has four million car finance customers. They know how to fix a car title. Wrong.
She updated me on June 20. Still not fixed. July my office started calling. No luck. August, Wells Fargo insisted that the title was right. Not true. September they asked for a power of attorney for us. Then they told us it had expired. How could this be? they just needed to correct her car title.
Finally, September 30 we drew up paper to take this problem in front of the bankruptcy judge. Called them again on October 3. “Can’t you get this fixed; we’re suing you because you can’t fix this lady’s car title.” Transferred all over the place. Four hours! on the phone. No results.
Wells Fargo Tell the Judge They Fixed it: Two months Before They Really Do
October 17 2016, Wells Fargo files a copy of what they claim is Veronique’s title with the bankruptcy court. I tell Veronique to take it to the DMV and see if that works. It doesn’t. “Wells Fargo invalidated this title back in April,” we’re told.
On November 8 Wells Fargo’s lawyer went in front of the Judge and told the court that Wells Fargo had done everything possible to fix Veronique’s title. The Judge believed them. (I didn’t.)
Finally, January 18 2017, Veronique’s title as fixed. She was able to renew her tags.
It took Wells Fargo, the world’s second largest bank, with four million car loan customers, nine months to correct their mistake on Veronique’s car title.
Wells Fargo Promises a $10,000 Settlement Payment—So Far, No Check
Wells Fargo also offered in January, to pay Veronique $10,000 for her trouble—hours on the phone, multiple pointless trips to the DMV, and driving eight months on expired tags!
We agreed to accept the $10,000. They said they’d send it as soon as we submitted her W-9. That’s been three weeks ago. Still no check.