waiting it out vs declaring bankruptcy

[Anonymous]

I'm currently 22, and I was stupid while I was in college, and had several credit cards with relatively small limits. I also had a large unsecured loan which was part of the Army ROTC program that I was contracted in. I was injured, and lost my ROTC scholarship which doubled as my income, and wasn't able to make payments on any of these accounts for extended periods of time. All of the accounts, including the loan, have been charged off, and most of the charge offs were about a year ago. I still get collection phone calls, but not nearly as many as I used to.

The debt totals about $40,000 - 25 of which is the unsecured personal loan. The loan was NOT used for educational purposes, nor was it intended for education.

My first question - given the period of time that has passed since the charge offs, what is the likelihood than any of these creditors will take legal action? I'm hoping I can simply wait the 7 years total for this all to fall of my credit report, but I'm very scared that years down the road I'm going to be sued by creditors.

Second question - since it's already been ~1 year since the charge offs, would I just be better off waiting 6 more years until these accounts fall off my credit report, or should I look into bankruptcy?

Thank you for any advice you can offer, it's a very frustrating and stressful time right now, and obviously my credit is terrible and finding an apartment to live in has been a nightmare.

[Anonymous]

 luckstyl

Since you are so young I filled bk at age 23 myself I will be 25 years old this year. Yes you can wait but then you risk the creditors re-selling your debt to other people which can legally come after you for 7 years. If you intend to unemployed for this time then you have nothing to worry about they cannot garnish disability nor unemployment benefits. The thing is you do not want to be living in the shadows.

I recommend you file bankruptcy yes all your accounts are in charge off but the would eliminate the wondering. Plus you will be able to rebuild credit and buy a home in the future credits rather see a bk than collections and charge offs. Once you file your credit will report included in BK instead of collection or charge off.

I hope this has helped you.

P.S. you cannot write off any student loans

Blossom

[HindSight_20_20]

NO! I'd stay as far away from BK's as I could, (I filed Ch 7 in 2004) and wish I hadn't especially after seeing my CC's and Loans that were the reason for the filing in the first place falling off in 9 months!!!!!!! But guess what.... that BK will still be there for another 4 years AND insurance companies, jobs, rental companies, any type of military reserve, or govt. Positions, private sectors contractors ALL look at that BK and it matters!  I know.... I could show you the rejection letters, rate increase letters, and bank percentage increase letters along with the rental companies who all said that 'black line' BK makes you a risk.

Bottom line, it's easier waiting 7 years for things to fall off and STILL have a chance of re-instating CC's once your on your feet than kissing them all goodbye, starting over AND waiting 10 years before you can get a decent rate on anything from car insurance to decent jobs.

You'll hear people say (sure you can start over after two years) yes this is true 'I'm doing that now' but it's still waaaaaay better to just let them sit and fall off (if you can't pay, then you can't pay!) working or not! At least this way you can negotiate PFD's later when your'e working again than to let them kill your credit for 10 years. 

Your young, and you'll be 29 before you know it, with clean credit (because the derogs will have fallen off) even the collections due to DOFD, BUT, if you file you may as well sit it out another 3years until the BK falls off!

Just my opinion.

[chasmith]

You don't say whether you're working, and what your income, expense and living situation is.

A chargeoff means little as far as what will happen with collection activity - it just means the lender has charged it off to their reserve for uncollectible accounts.  The lender will continue to use collection agencies, then sell the debt, and it may be resold again and again.  But those collection agencies, whether they are working for the lender or bought the debt for pennies on the dollar, will look at what their chances of getting money from you are - if you don't have an income to garnish or assets to seize they may not sue.

The seven year period relates to when the debts roll off your credit report.  Be sure you have good records of when each item became delinquent as that's when the seven year clock starts.

Chances are that well before seven years the Statute of Limitations will bar the lenders from suing to collect.  The SOL is set by state law (the state you live in).  You have to be very careful not to do anythong to restart the SOL like making a part payment, or even verbally agreeing you owe the debt.  It's possible that in another year to three years the debts won't be able to be enforced in court.  Doesn't mean you don't owe them, it means you can't be sued for them.

So if you can wait it out with a bad credit report affecting your ability to rent an apartment, buy a home, get a job etc., you don't need to file BK.  Otherwise you should talk to an attorney, because you have options to consider including settling the debts (the lenders have to weigh your current income against their hope you'll make money in the future).

[Anonymous]

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@Anonymous wrote:

I'm currently 22, and I was stupid while I was in college, and had several credit cards with relatively small limits. I also had a large unsecured loan which was part of the Army ROTC program that I was contracted in. I was injured, and lost my ROTC scholarship which doubled as my income, and wasn't able to make payments on any of these accounts for extended periods of time. All of the accounts, including the loan, have been charged off, and most of the charge offs were about a year ago. I still get collection phone calls, but not nearly as many as I used to.

The debt totals about $40,000 - 25 of which is the unsecured personal loan. The loan was NOT used for educational purposes, nor was it intended for education.

My first question - given the period of time that has passed since the charge offs, what is the likelihood than any of these creditors will take legal action? I'm hoping I can simply wait the 7 years total for this all to fall of my credit report, but I'm very scared that years down the road I'm going to be sued by creditors.

Second question - since it's already been ~1 year since the charge offs, would I just be better off waiting 6 more years until these accounts fall off my credit report, or should I look into bankruptcy?

Thank you for any advice you can offer, it's a very frustrating and stressful time right now, and obviously my credit is terrible and finding an apartment to live in has been a nightmare.

---

Were it only the negatives appearing on your credit report, then filing for bk may be overkill.  Although negatives can remain on your credit report for up to 7 and 1/2 years, bk remains for ten. 

The time during which you may be sued over these ebts is called statute of limitations.  Usually a state's SOL for unsecured or open-ended credit debt is less than 7 years.  Which state are you in?