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New Member
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Registered: ‎09-07-2010
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Pay Credit Cards, declare bankruptcy, or what?

For years I had good credit then a perfect storm hit where I had student loans come due, an ARM adjust, and a 15% pay cut. For about a year it was bad. My score went from the mid 700's to 600. I am not back to a point were I could pay down balances on cards ( about $15,000) currently outstanding. These accounts are all closed and in collections. My question is, they show as poor marks on the credit report for 7 years from what I understand. I can undo that. So if thats the case what if any benefit to my score is paying it down? Most the the debt has been sold to a collector. I would rather give the money to a homeless person on the street than some collector trying to make a buck off acquiring my debt. So with the ability to pay, my credit already toast, what should I do? Thanks.

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Posts: 17,306
Registered: ‎07-14-2009
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Re: Pay Credit Cards, declare bankruptcy, or what?

Hi John and welcome to the forums.

 

There are ways to get some or all those negatives removed early but there are also no guarantees. One place I would start to educate yourself is this thread: What Steps Do I Take?. It can give you some idea of where to begin.

 

You'll get lots of great advice and suggestions here. Take it all in, read as much as you can and decide what you think will work best for you.

 

 

 

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work


New Member
Posts: 24
Registered: ‎09-04-2010
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Re: Pay Credit Cards, declare bankruptcy, or what?

If you can't afford to PIF which I'm assuming you can't because of the outstanding balances. Start with the most recent ones first and work backwards. Work out some kind of arrangement with the CA to make payments until you can afford to pay the remaining balance in full. Chances are if your balances are high, once you get the balances down to a PIF level that you can easily afford, the CA has already made their profit because they have purchased your debt for very little sometimes even just literaly pennies on the dollar. So once you get it paid down to certain amount the CA now don't need a reason to help you settle the debt the way you want. Basically you loose the leverage. However if you have the money say pay one in full you have lots of leverage and the CA with usually work with you to resolve the debt. Be it a PFD in some form or fassion. You can try a DV but that will usually just lead to the CA selling the debt to another CA and the process starts all over again.

 

Start with paying down the ones that havent gone to collections first and DO NOT CLOSE THEM!!!!!

 

Then go after the collection accounts. If you can PIF, DV first then if they DO validate then PFD. Or if you want you can just PFD. Make them validate first though. Cause if they can't now you have leverage if you want to take care of it. Even if they cant validate and you force them to remove it from your CR they will just sell it again to another CA and it starts again. So make them validate first if they cant you have leverage, if they do validate you still have leverage just not as much. Either way you still have what they want...Money. Don't give any money to them until they agree to what you want done.

 

 


Starting Score: Ex - 545, Eq - 566, TU - 552
Current Score: Ex - 720, Eq - 711, TU - 718
Goal Score: 3 - 850's


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Moderator
Posts: 17,306
Registered: ‎07-14-2009
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Re: Pay Credit Cards, declare bankruptcy, or what?

A word of caution. I wouldn't offer a PFD unless you have the funds to PIF or you are outside the SOL (Statute of LImitations) for your state. Creditors have been known to answer a PFD with a lawsuit.

 

 

 

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work


New Member
Posts: 24
Registered: ‎09-04-2010
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Re: Pay Credit Cards, declare bankruptcy, or what?

This is true. Thats why i suggested the PFD alternate method. Your just for the most part asking for them to stop reporting the debt and purge their records of your debt in exchange for PIF.

 

 


Starting Score: Ex - 545, Eq - 566, TU - 552
Current Score: Ex - 720, Eq - 711, TU - 718
Goal Score: 3 - 850's


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Registered: ‎09-04-2010
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Re: Pay Credit Cards, declare bankruptcy, or what?

This way your not asking them to delete your just asking them to stop and purge THEIR records.

 

This makes collections deletion a gaurantee when you dispute with CRA's because there is nothing to validate. Genius!


Starting Score: Ex - 545, Eq - 566, TU - 552
Current Score: Ex - 720, Eq - 711, TU - 718
Goal Score: 3 - 850's


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Senior Contributor
Posts: 3,626
Registered: ‎10-13-2009
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Re: Pay Credit Cards, declare bankruptcy, or what?


stevenmixon wrote:

This way your not asking them to delete your just asking them to stop and purge THEIR records.

 

This makes collections deletion a gaurantee when you dispute with CRA's because there is nothing to validate. Genius!


Genius?  Not.

 

You fail to understand that there is no such thing as "purging" their records.  Sarbanes - Oxley Act is a cute little law with very sharp fangs which mandates a five-year retention of all business records -- electronic or otherwise.  If by chance SOX does not apply to the CA, there are also IRS records retention requirements which apply to all legal entities.  If a CA does not respond to a CRA dispute, it is not because they have no records; it's because they simply do not want to reply.

IAALBNYL
Senior Contributor
Posts: 3,626
Registered: ‎10-13-2009
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Re: Pay Credit Cards, declare bankruptcy, or what?


stevenmixon wrote:

If you can't afford to PIF which I'm assuming you can't because of the outstanding balances. Start with the most recent ones first and work backwards. Work out some kind of arrangement with the CA to make payments until you can afford to pay the remaining balance in full. Chances are if your balances are high, once you get the balances down to a PIF level that you can easily afford, the CA has already made their profit because they have purchased your debt for very little sometimes even just literaly pennies on the dollar. So once you get it paid down to certain amount the CA now don't need a reason to help you settle the debt the way you want. Basically you loose the leverage. However if you have the money say pay one in full you have lots of leverage and the CA with usually work with you to resolve the debt. Be it a PFD in some form or fassion. You can try a DV but that will usually just lead to the CA selling the debt to another CA and the process starts all over again.

 

Start with paying down the ones that havent gone to collections first and DO NOT CLOSE THEM!!!!!

 

Then go after the collection accounts. If you can PIF, DV first then if they DO validate then PFD. Or if you want you can just PFD. Make them validate first though. Cause if they can't now you have leverage if you want to take care of it. Even if they cant validate and you force them to remove it from your CR they will just sell it again to another CA and it starts again. So make them validate first if they cant you have leverage, if they do validate you still have leverage just not as much. Either way you still have what they want...Money. Don't give any money to them until they agree to what you want done.

 

 


A CA is never required to respond to a DV per the FDCPA and they do not have to cease collection activities pending a response to a DV unless the DV has been made within 30 days of first dunning.  If the debtor's DV request is made more than 30 days subsequent to first dunning, it's an old wives tale that they must cease reporting. 

IAALBNYL
Regular Contributor
Posts: 152
Registered: ‎08-20-2010
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Re: Pay Credit Cards, declare bankruptcy, or what?

file bankruptcy. in a year, you'll have better credit than you will a year from now if you pay them all back. trust me. i've done it both ways. fico actually rewards people better for filing bk.


Starting Score: 505
Current Score: 556
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Re: Pay Credit Cards, declare bankruptcy, or what?


John35 wrote:

For years I had good credit then a perfect storm hit where I had student loans come due, an ARM adjust, and a 15% pay cut. For about a year it was bad. My score went from the mid 700's to 600. I am not back to a point were I could pay down balances on cards ( about $15,000) currently outstanding. These accounts are all closed and in collections. My question is, they show as poor marks on the credit report for 7 years from what I understand. I can undo that. So if thats the case what if any benefit to my score is paying it down? Most the the debt has been sold to a collector. I would rather give the money to a homeless person on the street than some collector trying to make a buck off acquiring my debt. So with the ability to pay, my credit already toast, what should I do? Thanks.


You'd need to see first if you fall under bankruptcy (Ch. 7) guidelines.  If you have the ability to pay, you may not be able to file Ch. 7.  Filing Ch. 7 will stay on your credit reports up to ten years and at least for a couple of years there are many prime lenders who will not touch you.  If you will not need reliable access to credit for a while, this may not be something to worry about.

 

On the other hand, what will the creditors do about the $15k they are owed?  If you give the money to a homeless person on the street, you may end up paying double if the creditors sue you and obtain a judgment. 

 

You may be able to have the best of both worlds: those accounts in collections may be settled for a lot less than what you owe and in the process you may be able to have the negative tradelines deleted from your credit report.

 

 

IAALBNYL
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