cancel
Showing results for 
Search instead for 
Did you mean: 

Bankruptcy verses debt settlement

New Visitor

Bankruptcy verses debt settlement

Hi, Please share and advise which avenue, 600 credit score , would like a mortgage someday. However, there are two negative things impacting my credit score and old medical debt. Should I go bankrupt or at least try to close out the negative stuff on the credit report?

Thanks

Message 1 of 10
9 REPLIES
Senior Contributor

Re: Bankruptcy verses debt settlement

More info is going to be needed in order for you to receive suitable advice. How much debt do you have? Are you having difficulty meeting the payments? Are you employed?


Gardening until tomorrow.
Message 2 of 10
Moderator

Re: Bankruptcy verses debt settlement


Ouch101 wrote:

Hi, Please share and advise which avenue, 600 credit score , would like a mortgage someday. However, there are two negative things impacting my credit score and old medical debt. Should I go bankrupt or at least try to close out the negative stuff on the credit report?

Thanks


^^^As the prior poster stated, more info is needed.

 

From the little bit you posted, it doesn't sound like you need to file Bk at all.

 

Getting a mortgage with a 600 credit score (mortgage mid-score) is possible.  FHA will insure loans with scores in that range if you meet the other criteria. 

 

Old medical debt should not be a problem at all. Talk to a good mortgage lender and get your options. Stay away from the big box banks as their overlays are much more restrictive than what FHA requires.  

 

Visit the mortgage section to get more detail and ask mortgage related questions. 

 

Describe what you have on your report here to explain why you think you need to file Bk. 

 

You can rebuild without filing Bk. Check out the rebuilding section. 

Message 3 of 10
Frequent Contributor

Re: Bankruptcy verses debt settlement

Most likely you will have to get an FHA or USDA loan (depends on where you live or want to buy a house if you can get a USDA 0% down) - Sometimes if you have negative marks on your credit they can pay those off for you in the purchase of your home, if there is enough equity. You should locate a mortgage broker in your area and inquire what's needed as they will be the best to help you.

Also paid off is better than SIF on a credit report.

Ch7 BK filed 7/5/16, DC 10/12/16
Message 4 of 10
New Visitor

Re: Bankruptcy verses debt settlement

Hi, Thank you for your reply, that is good advice. I talked with a mortgage person once before, and he wasn't all that and a bag of chips. He didn't explain much of anything.

Message 5 of 10
New Visitor

Re: Bankruptcy verses debt settlement

Hi, Thank you so much for your advice, it makes good sense. I think it's the bankruptcy lawyers that seem to pressure me the most as that is how they make their money selling their product. All my regular bills are paid, like rents, utilities, insurances, etc... The big costs, like current medical, dental and other pop up expenses get paid cash on the barrel head on the spot. I've never borrowed money for things. (no plastics) It's the older medical and the two negative marks that are holding me back. Now I have some good advice, I need to re examine the debt to income and get actual facts about things. It all goes back to improving my education on these things. Thank you again Smiley Happy

Message 6 of 10
Moderator

Re: Bankruptcy verses debt settlement


Ouch101 wrote:

Hi, Thank you so much for your advice, it makes good sense. I think it's the bankruptcy lawyers that seem to pressure me the most as that is how they make their money selling their product. All my regular bills are paid, like rents, utilities, insurances, etc... The big costs, like current medical, dental and other pop up expenses get paid cash on the barrel head on the spot. I've never borrowed money for things. (no plastics) It's the older medical and the two negative marks that are holding me back. Now I have some good advice, I need to re examine the debt to income and get actual facts about things. It all goes back to improving my education on these things. Thank you again Smiley Happy


^^^You are so right.  The Bk attorney's make their money when you file so they push that avenue, even if it isn't warranted.

 

The phrase in red illustrates an issue you have that you may not be cognizant of - you need to have revolving accounts (credit cards) in order to generate a decent score. Take a look at the Understanding FICO Scoring forum here to get a firm idea of your best course of action.  Start in the stickies with the Frequently Requested Threads. You may be surprised at how quickly you can increase your score with a little bit of credit management. You don't have to pay interest or leave a balance month after month at all and you don't need large credit limits. It's a matter of managing the credit you have been granted. Not having credit cards makes it more difficult for you to prove your credit worthiness to others. 

Message 7 of 10
New Visitor

Re: Bankruptcy verses debt settlement

Hi, Thanks, I know not having some sort of plastic hurts in the long run. For example, my Mom used to have one credit card, (only one). She would charge like 20 bucks every so often then pay it before the end of the month. Over a period of time she established good credit in her own name. I'm looking at doing a very small prepaid card and charge a small amount then pay it before the end of the month the same way. The other thing is I was thinking of having my landlord report my payment history (which is excellent) and that might help? Thanks again, and yes I will start with the frequently asked questions and keep reading Smiley Happy

Message 8 of 10
New Visitor

Re: Bankruptcy verses debt settlement

Hi, Thanks for the response, yes I need to review my debt again in full. (Emotionally draining) No difficulty meeting payments, but I am not working due to an injury. I'm afriad the job thing might hold things up too.

Message 9 of 10
Established Contributor

Re: Bankruptcy verses debt settlement


Ouch101 wrote:

Hi, Thanks for the response, yes I need to review my debt again in full. (Emotionally draining) No difficulty meeting payments, but I am not working due to an injury. I'm afriad the job thing might hold things up too.


You also want to investigate just how old this debt is and whether it may be close to falling off of your reports.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards - $46k total revolving
Message 10 of 10