Bankruptcy

7 Replies

Hi, my dad filed a chapter 7 bankruptcy in 2006. He was given I believe 7 years until he could establish his credit again. Since then, he has bought everything cash. Since we both want to invest in real estate, he wants to know if anyone in here has had a situation like this before or know of any tips or advice on how he can build his credit again the best and quickest way possible? We plan to invest in a single family home within the next 2 years or so. 

Thank you for any information in advance! 

Hey, I am not an expert, but here is my two cents.  First I think having something you make payments on and do a good job at it will help your credit.  Whether it is a car, a set of tools from Sears, credit cards you pay off in full each month , etc.Bankruptcy does not really ruin your credit for 7 years.  In fact you can only file every 6 or 7 years, I do not recall exactly.  often folks can get credit immediately after a bankruptcy because lenders know they cannot file again for many years.  I hope that helps a little, and again I do not know much about how to build credit.  You also need a good debt to income ratio.  Good luck.

I don't know much about bankruptcy but a credit card would definitely be a great place to start establishing credit. I would recommend Capital One, they accept pretty much anyone. They start you off with $300 limit but after you use it for a month or two you can get it bumped up. Hope that helps. Good luck and best wishes.  

Thank you Jerry and Igor for the advice. I will tell my dad your advices. For building credit for the first time (I  am 19), do you recommend me store credit cards like target, walmart, etc? Or another type of credit card? 

I'm just about your age too, I started with a Capital One as my first credit card, then opened a Citi Card as well, if they see you paying off your balance in full every month they will gladly increase your limit and you will start getting tons of cards in the mail, don't go too crazy though as applying for too many cards in a short period of time will negatively impact your credit score. 

He needs to find out where he is at right now. Have him pull his credit reports at www.annualcreditreport.com and pay for a credit score from one of the credit bureaus (reports are free- credit scores are less than $10).

He might be pleasantly surprised. Most of my bankruptcy clients are between 630-680 in a year or two of filing their cases. Credit scores primarily consist of how much debt he has and his payment history. Both should be great for him. The bankruptcy is a negative for 10 years but is a small percentage of his score. 

Make sure to dispute anything wrong on the reports which will also help his score. There should not be much left after 6-7 years. 

I don't have much advice for building credit. When you play with snakes you are more likely to get bit. (Courtesy of Dave Ramsey) If you have a healthy down payment and zero debt, you should be able to find a bank willing to finance real estate. 

Paul Choate JD | 405‑426‑9677

Thanks for the advice Paul. I've heard that theres somewhere, i belive government webpage where you can run a credit score for free once a year. Do you know if its true?

PNC secured card is excellent start, put $250 - $500 on and DONT use the card. in 3 - 6 months apply for cap 1 card.

additionally figure out if you belong to any credit union, they will accept a letter of explanation in regards to the BK and give a lot more credit than the big banks / card companies.

With the knowledge i have from working at a large bank I have helped a couple family and friends go from a bk to a very high 700 score in two years so if you have any other questions pm me.

I am not claiming to be an expert but have gone through this twice with people very close to me and they are both in incredible credit standings now.

Regards,

rob