financial mess.....

[tongrad]

Loss of income caused me to reprioritize and as a result my current credit card status.... default for 3 1/2 months. I have 8 total of which I had always paid them on time, over the minimal due, and have established great history with my accounts by doing this. Been recieving collection calls for about 2 months now. Im looking to returning back to my financial stability as of Sept 1st in which I have let them all know, I'd be willing to negotiate at that time. I know my credit scores WERE somewhere in the high 600's. Question #1 is all of my accounts have been hit with late fees and a couple with overlimit fees. I have been offered reduction of interest rates along with extreme minimal payments as a solution to my issue however it closes the accounts. How bad does closure of CC ding the credit after aprox 3 months of lates? What about settlements? I have been offered settlements as well but dont understand if it is something that I can recover from quickly. would it be wiser to just end it all and file BR? total debt is around 8k. What about "credit consolidation" they have told me to look into credit consolidation as well as a possible solution. However I dont know if that is the right way to go either.

Bottom line i know it will take some time to recover and bring all accounts current, I just dont know which way to go that will be the easiest and quikest to recover from. anyone have any experiance in either of the scenarios? with outcomes or advice for me please???

[Anonymous]

3 months of lates killed your credit.

So closing the accounts and getting a rate/paymemnt reduction is a pretty good thing anyway.

The world of credit is closed to you right now because of the lates, it really does not matter at this point.

[guydiver]

Sorry to hear about your situation tongrad. I too was there about 3-4 years ago. Your problem is that you are dangerously close to 120 days delinquent where your creditors will probably do a charge-off and then still send to collections. I still have one of those and it is a Major ding on your credit profile. I went with a CCC service that put a halt to the high interest rates and late fees, lowered the monthly payments to something much more manageable, and helped me pay things off much earlier than possible otherwise. I still have the 7 years from DOFD on everything, but am over half way through that now. My Fico scores have recovered a bunch, and I am right under 700 on all now, even with multiple 30-60-90 lates and the charge off. Time and perfect credit for the past 3 1/2 years has helped. IMHO, that was the best route for me. Didn't want the bankruptcy thing hanging over my head for the next 10 years, and I had the income to weather the storm.

Whatever you do, if you decide to negotiate, you have a very short time window at 3 1/2 months late before the charge-offs start piling up. After that it's a catch 22 scenario even if you do pay(but that is another story).  Be sure you get everything in writing if you play Let's Make a Deal with any of them.  They could take your money and still charge-off. That's why I let the CCC do the negotiating for me.  Downside is all of my accounts were "closed by creditor" as part of the agreement.  Upside is I still got reported as current and paid as agreed on monthly CRA reports.  Others on this forum can give you the Pro's and Con's of the bankruptcy route.  Good luck to you.

[tongrad]

so am I right by thinking that after 120 days they close the accounts? so it doesnt matter anyhow which way I go? or is there a chance that they close them sooner? BTW thanks for the responses

[guydiver]

tongrad, my guess is that they will close the accounts at 120-150 days, as they are probably already in-house collections and effectively closed your available credit anyway. Then they will most likely charge-off the accounts as a loss, and send them to outside collections.  I paid my charge-off to the outside collection agent, which can and will be argued by others as to the pro's and con's of doing so as your score would probably be the same either way due to the charge off on your report.  I don't think the credit counseling services can help you at that point from my personal experience, as they usually deal with the original creditor before the account is charged off, although there may well be exceptions to that.  That is the point at which you must decide if bankruptcy is a viable option, as your credit will already be damaged severely enough to contemplate such a drastic measure.  10 years is a long time, and a lot of doors will be closed to you during that time, but at this point a lot of doors are already closed anyway.  You can search these forums for CCC agencies. IMHO try that first and see what your options are. They might be able to help. Good luck and God bless.

[Anonymous]

My mother is actually in a similar situation to yours, though she only has two credit cards with balances on them and both are through Chase. If all eight of your credit cards has been past due for more than three months, it is likely that the accounts have already been closed by grantor. I personally don't think $8000 in debt is worth filing for bankruptsy, unless you feel that you will not be able to pay all eight cards on time every month until PIF. Then, I suggest going the CCC route, which is what my mother did one month ago. However, make sure you go through a non-profit organization. The one my mother went through is, "Money Management International" where they have been extremely helpful and friendly from day one. Here is their website: www.moneymanagement.org

Going through a CCC Company does require you to close all open credit card accounts, and you are not allowed to open any credit accounts until the current debts are PIF.

I hope this helps!

[tongrad]

Thanks so much for all the info. I greatly appreciate it. Im right at the crossroads point for each of the possibilities. I think that after my situation changes in Sept. when they call I will #1 find out if my account is open, if it is great, I'll negotiate payment hopefully it will keep may account open, if it isnt open i will have to add that account to the back burner till my active accounts are paid up and stable. only one that has introduced themselves as "inhouse" third party collections was walmart with NCO, or something to that effect. thats a whole other story (they lied) all my other accounts state their name as whatever it is. So hopefully im not that bad. Silly question.....PFD is that to much to ask on a 3 month past due account? i seriously thought 3 months wasnt bad but it is something i can recover from faster then a BR which i dont believe 8k is enough to file BR for. its just an option.

[creditwherecreditisdue]

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@tongrad wrote:

Thanks so much for all the info. I greatly appreciate it. Im right at the crossroads point for each of the possibilities. I think that after my situation changes in Sept. when they call I will #1 find out if my account is open, if it is great, I'll negotiate payment hopefully it will keep may account open, if it isnt open i will have to add that account to the back burner till my active accounts are paid up and stable. only one that has introduced themselves as "inhouse" third party collections was walmart with NCO, or something to that effect. thats a whole other story (they lied) all my other accounts state their name as whatever it is. So hopefully im not that bad. Silly question.....PFD is that to much to ask on a 3 month past due account? i seriously thought 3 months wasnt bad but it is something i can recover from faster then a BR which i dont believe 8k is enough to file BR for. its just an option.

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Have you pulled your CBR's so you can see exactly what is reporting and how? If you want to take command of your destiny start right there. You can use annualcreditreport.com for one free report per CRB per year. Forget about the scores. Do not buy them, they are worthless and you do not need them. If you are in 90-day late territory that is not good. Try to work something with the OC's to get these accounts current before they are CO'ed and sent to CA's. That will become a nightmare. Use any resource at your disposal to get on top of this before CO! $8K does not really justify a BK filing. Until you get to CO you would be looking to GW the lates, which may or may not happen. After CO it's a whole other ballgame. Come back and post if you get to that point.

[tongrad]

I talked to one creditor this morning. My account has been closed. I think im grasping at straws and being unrealistic to think that any of them would have remained open....Did i read correctly one time on these boards that someone had done a BR and then wrote letters to all neg reporting accounts on their reports and had the neg removed by stating that the debt was no longer valid thus increasing the credit score?

[creditwherecreditisdue]

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@tongrad wrote:
I talked to one creditor this morning. My account has been closed. I think im grasping at straws and being unrealistic to think that any of them would have remained open....Did i read correctly one time on these boards that someone had done a BR and then wrote letters to all neg reporting accounts on their reports and had the neg removed by stating that the debt was no longer valid thus increasing the credit score?

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This would only be done on a GW basis and that is not likely. A properly reported account account that has been BK'ed away will reflect Included In Bankruptcy (IIB) for a status and will remain on your CBR until the statuatory fall off date. The BK itself will report as a PR until 7 or 10 years after the filing date depending on the type. Get the CBR's as I suggest above so you know exactly where you stand. No guesswork!