Credit During Chapter 13
Can you rebuild credit during a Chapter 13?
How to build good credit during a Chapter 13
Don’t believe it when they tell you that you can’t!
You CAN get credit during chapter 13. I urge all of my chapter 13 clients to begin the process of rebuilding their credit as soon as their case is confirmed. This is generally 8 weeks after we file. You can get credit during chapter 13, just like you would if you were rebuilding credit after a chapter 7.
Getting credit during chapter 13 will help you build good credit. I’ve been coaching my clients in chapter 13 through this process for years.
When you follow certain guidelines, it is a safe and effective way to build credit as you are getting out of debt in your chapter 13 case.
It’s very confusing to read the numerous warnings against getting credit in chapter 13. In fact, some trustees actually provide written warnings against obtaining credit without permission. This is not exactly true.
What this really means is that you are not to incur a credit debt in excess of $1,000 without first obtaining approval. It does NOT mean that you cannot get a credit card, or build credit, if you “follow the rules.”
By following my proven program for rebuilding credit during chapter 13, many of my clients have attained credit scores of 650 or higher even before their case is done. A number of them have scores in the 700’s. All of this is completely consistent with rules governing use of credit in chapter 13.
There is absolutely no good reason to wait until after your chapter 13 discharge to begin the process of rebuilding your credit. You can do both at the same time. You just need to know what to do, how to do it, and when (timing is important!) in order to recover credit as you get out of debt.
Why nobody rebuilds credit during chapter 13
So, why do so many attorneys and some trustees tell consumers in chapter 13 not to obtain credit? I imagine it’s because they’re afraid you might get into trouble, which could, in extreme cases, result in a failed case.
Of course, that is possible. But that seems to me like telling someone that they can’t use a knife to cut their food, because they might injure themselves in the process.
Of course, the focus of your chapter 13 is to control your debt. But that doesn’t mean you should be penalized by putting your credit on the back burner. You can accomplish both at the same time.
Don’t waste 3 to 5 years – rebuild credit during chapter 13, not AFTERWARDS
There is no good reason to wait until your case is discharged to rebuild credit, when you can rebuild credit during chapter 13.
For larger amounts, credit debt over $1,000, you do need to obtain trustee approval. This is spelled out in the local rules.
But there is no need for trustee approval or permission if you are opening small credit accounts for the purpose of rebuilding credit.
Even though many trustees and attorneys discourage this practice, I have found it to be incredibly valuable in making sure my clients really get a financial recovery.
I’ll show you how to get credit, initially, and then how to build on it. There is a specific way I recommend you use credit. And, there is a timeline I’ve found to be optimal for rapid credit score recovery.
What’s the cost of this proven program for credit recovery? NOTHING. For my clients, it is a service that is provided at no additional cost.
My goal is to see you obtain a Full Financial Recovery. Just getting out of debt is NOT enough.
You also need to restore good credit. You can do both, at the same time, if you have the right program.