How to repair credit/FICO score after foreclosure??

[blssed2bme]

My FICO score is 720 (up from 590 in Jan 2010). I'm considering a strategetic default due to a 35% negative equity on my home.

My plan is to pay myself the current mortgage amount and put it in a savings account. I have 2 store credit cards and 4 major credit cards (3 Visa and 1 Mastercard) with a total credit limit of $18K. My total balances are $3K. I plan to also pay down the $3K CC balances.

I know my credit score will drop from 720 down to 520 or lower. What steps should I take either before or after the foreclosure to rebuild my credit?

[Alex Ferreras]

These links below provide information essential to repairing your credit score. The first link addresses bankruptcies. The affects of your credit from bankruptcies and foreclosures are very similar.

https://www.loansafe.org/can-i-get-a...ter-bankruptcy

Whatever cash you have lying around keep it saved. Any money you have to your name you will need
·Start rebuilding your credit immediately
·With any amount of cash left, immediately open a savings account
· Get a secured credit card
·Acquire small lines of credit, such as to a department store or gas station
·If you need a loan, get a secured loan; don’t try and get an unsecured loan
·As far as living spaces go, find a place to rent
·Start being organized personally and financially
·Always pay back on time
·When you apply for any type of credit, have your anything be sent to all three credit bureaus
·Get into credit counseling. This service will help you to rebuild your credit, and you’ll learn a lot you maybe didn’t know before. Most non profits will offer this service, so watch out for scammers.
·If you have a good employment history, try and use this to help and rebuild your life financially

What does a foreclosure do to your credit? | LoanSafe.org

Here are three easy tips to begin rebuilding your rating:

1. Budget all of your monthly expenses. Make a plan on how you must spend your money in order to fit all of your financial needs. You will probably find there is many expenses that you can avoid.
2. Continue to pay all of your other debts on time. By doing this you will slowly begin to regain your credit score.
3. Apply for an affordable credit card. Use this card only to make small purchases so you are guaranteed to pay the payment each month. This will also help rebuild your score.

Credit cards after bankruptcy and foreclosure

Credit Cards

If you have credit cards, you need to pay them on time if you want to improve your credit scores. If you do not have a credit card then you can apply for a bad credit credit card that are specifically marketed to people such as yourself. Major lenders will not want offer you credit but you can get a card from a subprime lender. The please be aware that the interest rate will be very high, but is probably the only way that you’ll be able to start rebuilding.

Also make sure to watch out for scams! be on the lookout for credit card scams that charge loan shark interest rates and almost impossible repayment terms. There are a lot of scams out there that you have to be alert for. Especially on the Internet. You can apply for a gas card, a department store credit or most subprime lenders.

[lisasxr]

One of the best ways to rebuild your credit is to use future credit wisely. Once you begin the repair mode, put one monthly recurring charge against your credit card and PIF the card monthly. This will show use of the credit and good payment habits. (Put a budget item - electric or internet - so it's a built in payment on your budget)

[shobam]

Can I dismiss a myth here that I have never heard anyone address regarding repairing your credit after a bankruptcy. In 1989 I went through a divorce that left me with a huge child support payment and all the credit cards. I struggled for a year with credit counseling while living like a hermit and finally couldn’t take it any more, I filed BK7.
Shockingly discover Card offered me a credit card over the phone several days after discharge knowing full well that I could not file for another 7 years or whatever it was. I thought like lots of folks here seem to think that if I would only pay on time, open another account and do the right thing that in time lenders would overlook my BK7, my score would go up and all things would be fine. So I opened a secure CC account through Capital One. I had a small apartment that I got before BK7. So a couple of years went by and I never missed a payment, used my cards, paid all my utilities and so on. In 1994; 3 years latter my financial situation improved and I tried to get another apartment – Wrong! BK7. Some time after that I tried to get a car loan from an outfit that advertised financing for everyone; even bankruptcy! Yeah for 10 points higher than everyone else and a huge down payment. In short it was not until 8 years later 1998 was I able to get anything and that was a mortgage and that was a few points over the going rate.
In short it didn’t matter what I did or how punctual I was with those new cards, I couldn’t open a checking account, get a loan or unsecured CC until that BK7 fell off my credit report.

[cmass122]

If you foreclose, they will cut your lines cards with 0 balance probably. I did opposite, I have 90k in limits for credit cards. I have about 2 k used. I pulled out 0%offers 12 months and now will pay min balance back on those for 12 months after foreclosure to build credit, then payment 13 -----depending on situation, pay off in full with the same money I pulled out from the card. very little paid out of pocket doing this strategy 3-4% 1 time fee now a day

[boricua65]

@shobam - I too went through a BK7 but it was in 2003. In my case, I was able to get a vehicle fresh out of BK (which I still own today) even though I knew interest would be a killer. Initially, it was 20% but after a year I refi-ed down to a 15%. I even manage to get two credit cards after the BK. I'm just saying times have changed. You are correct that creditors know you can only file BK after a certain period of time, and that's how they get you. Once you get that CC or car payment, you're stuck with it until the next time you can file BK. Of course, that's when it's a good time to rebuild your credit (like I did).

[shobam]

boricua65 - All that I can say is that after BK7 , for me I was not able to get or do anything. Maybe its a state to state thing I don't know. But after my BK7 was discharged I was unable to get anything other than a secured CC. I fell for the line that "O - you can start to rebuild your credit with a secured CC" So I made the deposit, payed the yearly fee and not only was I unable to get a unsecured CC, but Capital One the bank that I had the secured card with wouldn't even make that care unsecured after couple years of stellar paymeny history like they said they "could, might, can do " so I closed the account. I still would do a BK7 in a heart beat if I had to. I'd just prepare a little more before I pulled the trigger.

I hear these stories about all these folks who get loans from local Credit Unions after BK7 with bad credit and I was never able to do it. It always came back as either my score was below some limet or that BK7. Until I see it first hand, its an urban myth to me. Right now my score is 538 down from 805 because of some late payments leading up to a short sale, that in spite of 23 accounts in great standing and another current mortgage. All that matters is those late payments. The accounts in good standing don't count. In fact, I paid off a CC in Oct and then pulled my CR in Nov and my score went down even more and all that I did was close out a CC, all other payments in full and on time.

good Luck

[goodyphilips]

You can find some nice knowlege base in these links:
Post-Foreclosure Credit Repair - How to Repair Your Credit After a Foreclosure
Rebuild Credit After Foreclosure

[cmass122]

those two articles have very poor info honestly, those are not the best ways or even close to a good way to repair credit.

[flippinwacko]

One of the best ways to rebuild your credit is to use future credit wisely. Once you begin the repair mode, put one monthly recurring charge against your credit card and PIF the card monthly. This will show use of the credit and good payment habits. (Put a budget item - electric or internet - so it's a built in payment on your budget)

Hey Lisaxr, Are you still able to help me figure out how to find which trust my loan was securitized in? email me at variant_13@hotmail.com

[MyHAMP]

boricua65 - All that I can say is that after BK7 , for me I was not able to get or do anything. Maybe its a state to state thing I don't know.

I doubt it depends on State. Just look at how many people filed for BK when you did and how many people are filing these days. Today, credit for individuals with a BK on file has created a whole new industry. There are just too many people who file that they can simply be left out.

I've heard of several people who where discharged and drove off in a brand new vehicle a month later at a 5% interest-rate.

There are many "traps" you need to know about when trying to improve your score. Knowing WHEN to pay off a CC is one of them (paying off a CC when you receive your statement is too late already).

[hope67]

I doubt it depends on State. Just look at how many people filed for BK when you did and how many people are filing these days. Today, credit for individuals with a BK on file has created a whole new industry. There are just too many people who file that they can simply be left out.

I've heard of several people who where discharged and drove off in a brand new vehicle a month later at a 5% interest-rate.

There are many "traps" you need to know about when trying to improve your score. Knowing WHEN to pay off a CC is one of them (paying off a CC when you receive your statement is too late already).

Hi MyHAMP! Anything new about the 2nd mortgage? As I mentioned in my previous posts, BOA sold my 2nd to Green Tree, I didn't contact them, I do not answer their calls. Eventually I will need to deal with them. At this point I don't have money to even offer a settlement! So I'm wondering how long I can push it until I get some money!

[MyHAMP]

Hi MyHAMP! Anything new about the 2nd mortgage? As I mentioned in my previous posts, BOA sold my 2nd to Green Tree, I didn't contact them, I do not answer their calls. Eventually I will need to deal with them. At this point I don't have money to even offer a settlement! So I'm wondering how long I can push it until I get some money!

Hi hope67,

No, the 2nd mortgage still sends out the monthly statement and calls every couple of weeks - but that's about it. As I found out, cH13 won't be an option for my mother due to the high unsecured debt so we are probably going the CH7-route with a settlement-offer to the 2nd mortgage for release of lien once she is discharged. Although stripping is not an option in CH7, we would be rid of the debt right away instead of making payments to the trustee for 3 years and the first mortgage would be discharged as well.

If they don't go with the settlement, we will wait a few years and strip them in a CH13 afterwards. In our district (FL Middle), it is required to receive a CH13 discharge in order to strip a 2nd mortgage - so an immediate filing after the CH7 discharge (aka "CH20") is not an option. But hey, I don't think the prices will go up that quickly..

In a couple of days, the judge will decide if SPS has to compensate us for our legal expenses. Let's see how that works out. I'll keep you updated in my special thread.

[hope67]

Hi hope67,

No, the 2nd mortgage still sends out the monthly statement and calls every couple of weeks - but that's about it. As I found out, cH13 won't be an option for my mother due to the high unsecured debt so we are probably going the CH7-route with a settlement-offer to the 2nd mortgage for release of lien once she is discharged. Although stripping is not an option in CH7, we would be rid of the debt right away instead of making payments to the trustee for 3 years and the first mortgage would be discharged as well.

If they don't go with the settlement, we will wait a few years and strip them in a CH13 afterwards. In our district (FL Middle), it is required to receive a CH13 discharge in order to strip a 2nd mortgage - so an immediate filing after the CH7 discharge (aka "CH20") is not an option. But hey, I don't think the prices will go up that quickly..

In a couple of days, the judge will decide if SPS has to compensate us for our legal expenses. Let's see how that works out. I'll keep you updated in my special thread.

Hi MyHAMP..what's the judge decision? I hope you get your legal expense back, it's the only fair resolution!

I qualify for either Chapter 7 or 13. However, I believe a settlement route would be better except I don't have any money to offer at this point. I don't answer their calls, I received a letter from them that if I don't contact them, possible accelerated action of collection activity will be pursued.

I'm not sure if it's better to talk to them or should I simply ignore them?!

BTW, you said that the 1st mortgage will be discharged as well in Ch 7, since the modification was confirmed, wouldn't you want to reaffirm the 1st mortgage?

[MyHAMP]

Hi MyHAMP..what's the judge decision? I hope you get your legal expense back, it's the only fair resolution!

I qualify for either Chapter 7 or 13. However, I believe a settlement route would be better except I don't have any money to offer at this point. I don't answer their calls, I received a letter from them that if I don't contact them, possible accelerated action of collection activity will be pursued.

I'm not sure if it's better to talk to them or should I simply ignore them?!

BTW, you said that the 1st mortgage will be discharged as well in Ch 7, since the modification was confirmed, wouldn't you want to reaffirm the 1st mortgage?

Hi hope67,

Sorry for my late reply - I've been on different forums over the last couple of days.

Well, our hearing was rescheduled because - according to their lawyer - they had a conflict with the date and time due to a second case. It is now scheduled for February 28th. The good news is that our lawyer told us that he was contacted by the other party and that they are interested in settling this case outside of the court. We will contact our lawyer again next week if there are any news.

If you go the CH7 route with settlement, you do not have to offer a settlement right after discharge. Time is on your side. I wouldn't be too concerned about their calls and letters. If you are upside down on the first, it's very likely these letters and calls are just hot air. You can also talk to them and tell them like it is: You don't have any money to pay them and you might be filing BK in the future.

Although the modification was confirmed, there is absolutely no reson to reaffirm. All agreements of the modification (monthly payment etc.) stay in place. The reaffirmation would make us liable again for the huge balance in case we should ever decide to move out - that would be a dumb idea - especially in a recourse-State like Florida. In addition, I would even doubt that the judge and/or attorney would approve such a reaffirmation because this agreement which would put us upside down by several $100Ks again certainly wouldn't be "in our best interest".

In most cases, a reaffirmation of a mortgage is a VERY BAD IDEA - especially these days.

[hope67]

Hi hope67,

Sorry for my late reply - I've been on different forums over the last couple of days.

Well, our hearing was rescheduled because - according to their lawyer - they had a conflict with the date and time due to a second case. It is now scheduled for February 28th. The good news is that our lawyer told us that he was contacted by the other party and that they are interested in settling this case outside of the court. We will contact our lawyer again next week if there are any news.

If you go the CH7 route with settlement, you do not have to offer a settlement right after discharge. Time is on your side. I wouldn't be too concerned about their calls and letters. If you are upside down on the first, it's very likely these letters and calls are just hot air. You can also talk to them and tell them like it is: You don't have any money to pay them and you might be filing BK in the future.

Although the modification was confirmed, there is absolutely no reson to reaffirm. All agreements of the modification (monthly payment etc.) stay in place. The reaffirmation would make us liable again for the huge balance in case we should ever decide to move out - that would be a dumb idea - especially in a recourse-State like Florida. In addition, I would even doubt that the judge and/or attorney would approve such a reaffirmation because this agreement which would put us upside down by several $100Ks again certainly wouldn't be "in our best interest".

In most cases, a reaffirmation of a mortgage is a VERY BAD IDEA - especially these days.

Thanks for your reply MyHAMP!

I'm happy to hear that they are interested in settling the case out of court..please keep us posted..

I guess I need to get a free consultation with a BK lawyer as I'm not really sure if I qualify for chapter 7. I did the BK means test, however, it is a bit confusing so I definitely need reassurance from a lawyer that I do qualify.

You know what?!! I just received a letter from BOA that the servicing of my 1st mortgage will be transferred to "Great Western Business Services". I have no clue why they did that, I have been current since they modified my loan.

BTW, has anyone heard of that company?