Paying debts after a couple of years...

[ficonelsons]

Backstory: I went through a divorce a few years back and my excellent credit got decimated. I wasnt in a position to pay anything off (I had 3 credit cards charge off at over 10K each - I had to live on those while going through divorce) but I make a very good salary, and I'm in my 40's and had perfect credit for over 20 years, so even with that I was able to get a secured card with USAA for $5000.00 that I pay off each month and a car loan that I essentially secured myself by giving the bank the cash for the car and then paying them each month (used car not a large amount of cash). Beacuse I had 23 years of perfect credit before the divorce and make a large salary my score is at 587 even with a 500K real estate short sale, a 100K second mortgage charge off and 30K of credit card debt charge offs plus 12 collection accounts. I also was able to buy a home privately with a private mortgage, which was a miracle - all in all, I'm very lucky. I'm in finance/investments, so I did know some things to do, which have helped.

My question is this -- I'd like things to go back to the way they were before the divorce -- unsecured lines of credit so I could be investing the money that is securing the card, and a higher credit score...upon doing some digging, from what I can tell -- it makes no sense to pay any of that old debt off -- meaning the credit cards - is that right? Because they are years old, at this point it could actually hurt my credit because there would be recent activity? Is this right? I've read a number of things that say paying old debt might be "the right thing to do" but does nothing to improve your credit and even hurt it...

For me -- paying 30K if it isnt going to result in a huge boost would just be...well....not very smart...but it seems to go against what I'd learned along the way...I'm new to this...frankly things were so bad for a few years I just did the ostrich and now I'm finally emerging and dealing with it -- I've got secured credit card with all the limit I need, a car loan, a mortgage and money in the bank. I'm proud of being able to finagle all of that, and now I feel ready to deal with the dreaded score that went from 820 to 411 in 2 years and has crept up to the 580 range in the last year...I'm ready to tackle this!

[ficonelsons]

Just to add on -- I dont want to come accross as someone who saved all this money that I could have paid back -- it was self preservation...I learned what can happen very quickly, and prior to that I had not been a very good saver...a good earner sure, but I hadnt adequately saved. That will stay with me forever. I realized that if I paid that back but saved nothing, I could very quickly be in the same spot again were something to happen that I wasnt expecting (you never know when you might lose a job, have a medical crisis etc..). I had thought I'd tackle paying those when I had an emergency fund and my own net worth and cashflow were in the black and that is where I started this...thinking I'd try to settle and pay.

That's when I learned that from a score standpoint, it might not help and probably would hurt. To me...money is money...I'd rather save it for myself than pay them and get nothing in return. That being said - my credit score has risen well over 100 points without paying anyone a dime - is it possible to raise it more without paying them? My goal is to get to 750...

[Shogun]

Sorry to hear about your situation, but major life changes can have that affect.  There are a few issues involved here, and I'll weigh in my thoughts on those.

You've managed to get some finances back in order, and that's good.  But you've left behind a wake of bad ones that's causing problems.  So, my conerns are.  How old are these debts?  What's the DoFD of them and are they still within the SOL of your state where they could get a judgement on you?  If so, then there's a huge potential problem there.

Just paying these will not result in a score increase, paying/settling in return for deletion would.  It would be up to you to decide that path.

What creditors did you burn and do you want a relationship with them again?  Some have long memories, so that could come into play.

[ficonelsons]

Thank you for your reply! Funny that you bring that up, because its something I've been wondering about. I am in the state of Virignia. I've looked for the SOL for credit card debt and the "consensus" is that it is 3 years from DoFD...but a couple of sites have 5 years. I even linked to the state state itself, and it is ambiguous to me - but I *think* it is three years, which is important bc all of them either just hit or are about to hit the 3 year mark. My husband left me in 2010 w/ a huge mortgage, child and loads of bills -- its amazing it isnt worse. Anyway - I kept it going until early 2011 and it collapsed on me.

One is Wells Fargo it was a credit card about 10K. They charged it off to a company called LVNV Funding LLC. Oddly I told them when they first started calling that I wasnt planning to pay them and that there options were for me to declare bankruptcy or take what I offered them when I was ready to think about it. They never called me again. Ever. They pulled my credit I saw right after that and that was the last I heard from them. It shows on my credit every month and the balance has gone up to over 13K?! Wells shows it as a charge off in March of 2011. DoFD is actually 11/12.

Next is a credit union TMG/Altria MC - just over 11K. They never even called or tried to collect even once. They JUST charged it off a month ago. Havent heard a peep.

Last one was Chase, but I realized I actually did settle with them and American Express -- I'd forgotten it was 2 yrs ago. Chase offered to settle it for 2500.00 and I owed over 14K so I took it/ paid. I didnt know to ask for deletion so its there as "paid settled" account - lists like my short sale on the house and 2nd mortgage. Same for Amex. I owed them 5K they took 1500 -- stupidly I did that rather than pay the whole thing bc they offered to let me keep the card if I paid in full bc I'd had a card for 23 years and never been late. Should have paid them back and kept that card. Sigh.

There are a bunch of smaller collection accounts for things I didnt even know about much of the time -- most of it was my ex's and I probably should have paid what I could bc they are all under $1000, but collectively they likely equal $3K or so...seems silly to pay them now though - or should I and ask for a deletion in return? Thank you!!

[Teardrop]

You may want to try sending goodwill letters to some of the creditors that you settled with to see if you can improve things for your self.

As for your recent accounts that have been charged off and/or settled, please know that those accounts will stay on your credit report and haunt you for the next 7 years or less dependent upon your DOFD.  For some it seems they will stay on until 2019.  

You also may want to try PFD with some of the remaining items on your CR that you can just pay off.  IDK a long time ago when I was younger and had charge offs it just made my conscious feel better to pay the folks I owed; especially with my credit cards.

Read the forums for other things that may help you.

Good luck

[Shogun]

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@ficonelsons wrote:

Thank you for your reply! Funny that you bring that up, because its something I've been wondering about. I am in the state of Virignia. I've looked for the SOL for credit card debt and the "consensus" is that it is 3 years from DoFD...but a couple of sites have 5 years. I even linked to the state state itself, and it is ambiguous to me - but I *think* it is three years, which is important bc all of them either just hit or are about to hit the 3 year mark. My husband left me in 2010 w/ a huge mortgage, child and loads of bills -- its amazing it isnt worse. Anyway - I kept it going until early 2011 and it collapsed on me.  There are some that see it as both.  Sometimes it comes down to a judge if they take you to court.  I have it as open ended accounts as 3 years.

One is Wells Fargo it was a credit card about 10K. They charged it off to a company called LVNV Funding LLC. Oddly I told them when they first started calling that I wasnt planning to pay them and that there options were for me to declare bankruptcy or take what I offered them when I was ready to think about it. They never called me again. Ever. They pulled my credit I saw right after that and that was the last I heard from them. It shows on my credit every month and the balance has gone up to over 13K?! Wells shows it as a charge off in March of 2011. DoFD is actually 11/12.Charged off in 2011 and DoFD in 2012, something's not right there.  The DoFD should predate the CO.

Next is a credit union TMG/Altria MC - just over 11K. They never even called or tried to collect even once. They JUST charged it off a month ago. Havent heard a peep.

Last one was Chase, but I realized I actually did settle with them and American Express -- I'd forgotten it was 2 yrs ago. Chase offered to settle it for 2500.00 and I owed over 14K so I took it/ paid. I didnt know to ask for deletion so its there as "paid settled" account - lists like my short sale on the house and 2nd mortgage. Same for Amex. I owed them 5K they took 1500 -- stupidly I did that rather than pay the whole thing bc they offered to let me keep the card if I paid in full bc I'd had a card for 23 years and never been late. Should have paid them back and kept that card. Sigh.

There are a bunch of smaller collection accounts for things I didnt even know about much of the time -- most of it was my ex's and I probably should have paid what I could bc they are all under $1000, but collectively they likely equal $3K or so...seems silly to pay them now though - or should I and ask for a deletion in return? Thank you!!  Save up as much money as you can, so if any of these do pop up, you will be in position to handle them vs getting a judgement.

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Like I stated, I'd start saving what you can, just in case.  Keep gardening what you have.  If possible, post a few of the TLs on here, remove any accnt. numbers or personal information and we will try to come up with a gameplan.

[ficonelsons]

Yes ypure right I listed Wells backward..DoFD was 2011...CO in 2012. I will get it together and list some details taking out personal info. Thank ypu! 

[ficonelsons]

Ok...here are the negative "highlights" (or lowlights if you will)! from my credit report. I'd appreciate any and all guidance on how to tackle what is left. All of these are over 3 years old, which I believe is the SOL in Virginia. When I simulate scores, paying these does NOT help my score. I would prefer to save at this point, as I do not want to end up in this boat ever again. Synopsis of the good on my report: USAA - Mastercard with 5000.00 limit pays as agreed (this is a secured card), CF Financial Car Loan Pays as agreed - I have a mortgage but it is a private mortgage (the owner financed it) so it does not show on my credit report. Thank you!!

The Home Depot –

Charge off Status of $1021.00

DoFD: July 2011

TMG Financial/Atira (Credit Union MasterCard) Charge off Status balance $10,231

DoFD: May 2011

Wells Fargo Charge off status with balance of ZERO

(sold to LVNV Funding looks like date assigned to LVNV June 2012)

Chase Bank Charge off Balance 0 Shows as customer agreed to settlement paid charge off

American Express Paid Charge off balance 0 shows settlement reached

PNC

Charge off status with 0 balance – this was my second mortage short sale

HSBC: Real Estate: 120 past due was last showing before short sale – settled for less than amount due - this was my home sold via short sale after divorce.

Verizon: Collection account 768.00 - they claim they did not receive my equipment return. I've gone back and forth with them 1000 times on this.

7 collection accounts:

1 is LVNV funding for large amount (see above Wells Fargo)

1 DirecTV for just under 1000.00 from 2011

3 Medical Collection accounts – all older and smaller I have no idea what these are….

[ficonelsons]

Also I failed to mention that there are literally pages of credit that are good but older and paid -- I had 4 mortgages that were never late from 1996-2004. I had many credit cards same thing and several credit cards with high limitis all paid never late. Its pretty obvious if one looks that something really bad happened in 2010/2011 timeframe.

I want to get this to 750 -- is this possible? What's the best strategy?

2 reasons for this -- 1) want to be able to obtain credit if I need it without paying crazy interest  and 2) I'm in the financial industry and if I ever need to look for another job I dont want this to be a big issue and prevent my employment.

Thank you so much!

[Shogun]

750 is possible, but it's going to take some time, and probably some money.  It will be up to you to determine how much and  how fast.

Those that are past the SOL,  you could offer a settlement, maybe 25-50% of the bill if they PFD.  This could save  you money and remove the negative.  They may bite on it, they may not.  They may do a counter offer.