Fico scoring and bankruptcy vs. taking care of debts

[Bankrupt2019]

Does anyone else find it disturbing that one can file a bankruptcy, completely eliminate their debts and start over and have a 700 fico score in less than a year, but others pay off all of their charged off debts and satisfy past due accounts and have to wait years to improve their scores? Am i just a little crazy? or does the system seem a little broken?

[Anonymous]

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@Bankrupt2019 wrote:

Does anyone else find it disturbing that one can file a bankruptcy, completely eliminate their debts and start over and have a 700 fico score in less than a year, but others pay off all of their charged off debts and satisfy past due accounts and have to wait years to improve their scores? Am i just a little crazy? or does the system seem a little broken?

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It generally takes about 2 years to break 700, but the drawback is that you won't get much above that for ten years after filing date, versus seven for regular derogs.

And with regular derogs - you can get into the 700 within a few (2-3) years, as long as everything is paid off, and no further derogs are posted.

[Bankrupt2019]

Thanks for that Norman, that makes sense.

[Anonymous]

Depending on how bad your derogs are and how you are able to deal with them - without a BK you can get over 700 in a matter of months.   (I went from low 5's to low 7's in 6 months)  

A BK is going to take WAY longer than that - not to mention just the fact that you have a BK will turn many lenders off  for several years as well. (mortgages have to wait at least 2 years) 

[Anonymous]

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@Anonymous wrote:

Depending on how bad your derogs are and how you are able to deal with them - without a BK you can get over 700 in a matter of months.   (I went from low 5's to low 7's in 6 months)  

A BK is going to take WAY longer than that - not to mention just the fact that you have a BK will turn many lenders off  for several years as well. (mortgages have to wait at least 2 years) 

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Yup! Got to keep in mind its not *all* about the scores. Quite a few lenders will not even give you the time of day if you have a BK, no matter your score.

[Anonymous]

I would want nothing to do with a BK. I've fought my way up from the high 400s/ low 500s and though the path was long, it only took 5 years. BK's and 10 years of that black mark is definitely not for me.

[cem13]

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@Anonymous wrote:

I would want nothing to do with a BK. I've fought my way up from the high 400s/ low 500s and though the path was long, it only took 5 years. BK's and 10 years of that black mark is definitely not for me.

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To each his own applies here.  I DC over $80K in CC debt, $100K underwater Mortgage.  My scores were 700 in 22 months.

While I will agree that my scores are still 700-710 even after 5 years of filing; I have almost $200K in unsecured credit, I did a short sale to myself and dropped my Mortgage balance about $40K.  I will be completely debt free before my BK7 ages off.

It was impossible for me to "get ahead" paying the high interest credit cards as I was barely paying the minimum; for over 10 years I might add.  But now, I have ZERO CC debt, a new car loan and the student loans that survived the BK7.

So while I respect those that choose to stick it out, I was at the best financial point of my entire life 2 years post DC and it is only getting better with each passing year.  I will now be able to retire before 60, have a retirement home in the Carolina's and maybe enough money to travel the world.  BK laws are their to help rebuild.

[OMW2_HighAcheiver]

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@cem13 wrote:

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@Anonymous wrote:

I would want nothing to do with a BK. I've fought my way up from the high 400s/ low 500s and though the path was long, it only took 5 years. BK's and 10 years of that black mark is definitely not for me.

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To each his own applies here.

So while I respect those that choose to stick it out, I was at the best financial point of my entire life 2 years post DC and it is only getting better with each passing year. 

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That's right on time cem!

It's becoming a lot judgmental on here. I think myFICO is getting "away" from what it's "supposed" to be. JMO. Turning all Facebook-like....