What I find the most humorous about this whole ordeal, and something i feel is not being talked about enough, is not the bankruptcy itself but the aftermath if he manages to pay it off.
Phil seems convinced once he has done his repayment, which will likely not happen barring like twenty pig roach Christmas miracles, that everything will return to normal. What he doesn't seem to understand is that his amazing credit, which he probably did have due to making so many payments over so many years, that enabled him to have all these loans, lines of credit, etc. is gone.
No financial institution with even a degree of professionalism will touch him with a ten foot pole for the entirety of his bankruptcy repayment. After he is done, his credit is still going to be tanked for years and he will have to settle for stupid high interest rates, absurd terms and limits, and the inability to get a mortgage for a minimum of Five years after that. This is going to be the case even if he does well and actually demonstrates financial responsibility.
Too many people think that the bankruptcy itself will ruin Phil, but its really going to be the aftermath that does him in.
First thing here is we do not know if he will get a payment plan at all, He would only get a payment plan if he gets converted to a chapter 13, chapter 7 does not include a repayment plan of any kind. Right now I see there are probably 4 possible outcomes here, there might be more but I see at least these 4.
1. This current filing is accepted with some minor changes but it basically goes on through how he dreams that it will. He keeps the house and gets a chapter 7 discharge.
2. He has to amend his filing dramatically, Wakando ends up being sold, a fair amount of his property is sold but he still gets a chapter 7 discharge.
3. Filing is amended, it is found he cannot do a chapter 7 and is converted to a chapter 13 and is put on a payment plan for 3 to 5 years.
4. This case is dismissed because of all the crap he tried to pull, and his creditors eat him alive.
If he gets a chapter 7 he will have credit available to him pretty much as soon as he gets the notification of discharge. His credit score will jump several hundred points those 2 to 3 months post discharge as all his old accounts get cleaned up. As others have pointed out his mail box will be over flowing with offers to buy and finance a car. He will be able to get credit cards right away, in fairness that first year or two those cards will not be great. Some will likely be secured and have pretty bad interest rates but they will be available to him. There are guides all over about how to build back to a 700 credit score two years post chapter 7 discharge. Within two years things could be mostly back to normal and even those first two years should not be that terrible.
One interesting thing is that he has burned a couple of banks that have real long memories. He might never be able to get an AmEx ever again, best case its 5 to 10 years. Citi its hard to say best case it'll be 4 or 5 years, but given he owes them about 35k, they might be a never again also. Chase will probably be 4 to 5 years before they speak to him. Apparently Capital One doesn't care too much and some people have been approved for Capital One cards within a few months even when including them in a chapter 7. What he should have done already and should now do when he gets the discharge is to open a new bank account with a bank he did not burn in the BK, Wells Fargo or a local credit union as examples. Build a relationship with that new bank and they will give him access to some of their better cards quicker because he has a bank account with them.
If he does get converted to Chapter 13, you are correct, his credit life for the term of the repayment plan is miserable. He actually cannot get new credit without the approval of the trustee. If he makes it to the end of the payment plan and to discharge, it starts to look like the same as post chapter 7 discharge.
false hope trap that so many others have before me.
