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Hi Everyone!
I've been lurking on these forums on and off for a few years now, and I am finally ready to take action towards improving my credit. About me: I'm 23 years old and I'm currently working a full time job making around 50k per year. My credit issues began when I was 18, naive, and made some pretty bad credit decisions. I've basically stayed away from credit the past year and my scores are terribly low.
My Credit Profile:
Current Scores from CreditCheckTotal.com: EX-530, EQ-519, TU-532 as of 9/8/17.
Negatives:
Kia Motors Repossession Charge Off: $13,346. DOFD 9/1/13 (Out of Statute of Limitations)
Santander Consumer Charge Off: $5,076. DOFD 6/1/16 (Car was totaled and I didn't have Gap insurance. Deficiency balance betweenwhat car is wortha nd what car sold for)
Synchrony 76 Charge Off: $402. DOFD 12/2012 (Charged off 76 card. Out of SOL)
Enhanced Recover Collection: $2,078. DOFD 6/13 (Balance due for terminated Sprint Service)
Ad Astra Recovery Collection: $309. DOFD 6/2015 (Collection for unpaid payday loan)
Sentry Credit Collection: $580. DOFD unknown (Collection from Nordstrom account that I'm an AU on)
Portfolio Recovery Collection: $618 DOFD around 12/12 (Unpaid Amazon Collection)
Jefferson Capital Collection: $198. DOFD unknown (Collection from Unpaid Finger hut account)
Midwest Recovery Collection: $197 DOFD unknown (Collection from unpaid Six Flags membership)
Capital One Account: $300 (Settled in Full)
Citi Credit Card: $500 (Settled in Full)
Kay Jewelers: $34. DOFD 2/13 (Closed 60 days past due Paid in full)
A couple of medical collections that aren't reporting but I keep receiving notices for them, around $1100
*Original TL of all these accounts are still reporting with a number of lates*
TOTAL NEGATIVE DEBT (Not including student loan & Medical Debt): $22804
Positive (or not):
Fed Student Loan: $3,151. (No missed payments since 8/29/11)
A couple of paid off installment loans
I'm at a crossroads. I don't know if I should file Ch. 7 and clear these balances and start building a more positive history, or if I should work to pay these balances down over the next couple of years. I really would like to purchase a home by the age of 30. I know I'd be able rebuild my credit after bankruptcy, but I'm not sure if I wan't it on my record 10 years, when a lot of my baddies will be falling off in the next 4-7. I don't currently have a car, and would really like to purchase a reliable vehicle within the next couple of years. I also don't have any credit cards, I've been denied for all the secured and unsecured cards I've applied for. I'm just lost and could really use you guys' expertise!
Thanks so much! If you have any questions, please ask!
@tqua wrote:Hi Everyone!
I've been lurking on these forums on and off for a few years now, and I am finally ready to take action towards improving my credit. About me: I'm 23 years old and I'm currently working a full time job making around 50k per year. My credit issues began when I was 18, naive, and made some pretty bad credit decisions. I've basically stayed away from credit the past year and my scores are terribly low.
My Credit Profile:
Current Scores from CreditCheckTotal.com: EX-530, EQ-519, TU-532 as of 9/8/17.
Negatives:
Kia Motors Repossession Charge Off: $13,346. DOFD 9/1/13 (Out of Statute of Limitations)
Santander Consumer Charge Off: $5,076. DOFD 6/1/16 (Car was totaled and I didn't have Gap insurance. Deficiency balance betweenwhat car is wortha nd what car sold for)
Synchrony 76 Charge Off: $402. DOFD 12/2012 (Charged off 76 card. Out of SOL)
Enhanced Recover Collection: $2,078. DOFD 6/13 (Balance due for terminated Sprint Service)
Ad Astra Recovery Collection: $309. DOFD 6/2015 (Collection for unpaid payday loan)
Sentry Credit Collection: $580. DOFD unknown (Collection from Nordstrom account that I'm an AU on)
Portfolio Recovery Collection: $618 DOFD around 12/12 (Unpaid Amazon Collection)
Jefferson Capital Collection: $198. DOFD unknown (Collection from Unpaid Finger hut account)
Midwest Recovery Collection: $197 DOFD unknown (Collection from unpaid Six Flags membership)
Capital One Account: $300 (Settled in Full)
Citi Credit Card: $500 (Settled in Full)
Kay Jewelers: $34. DOFD 2/13 (Closed 60 days past due Paid in full)
A couple of medical collections that aren't reporting but I keep receiving notices for them, around $1100
*Original TL of all these accounts are still reporting with a number of lates*
TOTAL NEGATIVE DEBT (Not including student loan & Medical Debt): $22804
Positive (or not):
Fed Student Loan: $3,151. (No missed payments since 8/29/11)
A couple of paid off installment loans
I'm at a crossroads. I don't know if I should file Ch. 7 and clear these balances and start building a more positive history, or if I should work to pay these balances down over the next couple of years. I really would like to purchase a home by the age of 30. I know I'd be able rebuild my credit after bankruptcy, but I'm not sure if I wan't it on my record 10 years, when a lot of my baddies will be falling off in the next 4-7. I don't currently have a car, and would really like to purchase a reliable vehicle within the next couple of years. I also don't have any credit cards, I've been denied for all the secured and unsecured cards I've applied for. I'm just lost and could really use you guys' expertise!
Thanks so much! If you have any questions, please ask!
I think the answer is going to depend on what your living expenses are like. $50k is a nice income at 23. If you are living at home or if rent is low, you can really clear this stuff up quickly. You just have to be dligent and not blow $$ on everything I was blowing $$ on at 23 If this is the case, I would say:
*First, get that AU account off of your credit. You're not responsible for it.
*Get on a budget and start trying to negotiate PFDs for these collections. A PFD is best, but a paid collection is still better on your credit than an unpaid one.
*FORGET CAR PAYMENTS. Save and buy a car for a few grand cash. If you truly want a house by 30 (and want to do it RIGHT and be financially comfortable doing so) keep your eye on that prize and SAVE SAVE SAVE for it.
*Get some positive tradelines going. You mentioned being denied for all of the secured cards you've applied for . . which ones were those? I would think someone would approve you for a secured card. If you have to wait a bit until the work on your collections starts to be reflected, so be it.
*You could be heading into 30 with a squeaky clean report, NO bk public record, and $$ in the bank for the downpayment of your house.
If your living expenses are high right now, CAN you move back home and follow the plan above?
Although you have $22k in debt, if you get some $$ together, these creditors will likely settle for a LOT less. It's feasible to think of that total as $11k . . maybe less . . which may be less daunting. You will sometimes receive a settled for less notation on your reports if you go this route, but it's far better than an open item. And it would be enough to get your credit up and let you get approved for some new accounts to get some positive history going. Then everything bad will fall off when it falls off (well ahead of your home purchase at 30) and the 5 years or whatever of good history you've established with the new accounts will be all that remains
I would not file a BK at your age. You get 2 CH 7 in a lifetime, don't burn one now when the $$ is not really that substantial. It seems like it at 23 but really? Surmountable!
To me, I would start with anything I could PFD.
Enhanced Recovery - offer $200 for PFD; it's almost 5 years old; the CA has likely written this off as uncollectible and anything they get is > nothing... also, this CA in particular likes to keep re-upping the aging on the account - keep that in mind
Ad Astra - offer the full $309 PFD; it's not that old, payday loans can/will turn into funny/nasty/illegal calls from weird #s at some point
Sentry Credit - dispute to all 3 CRAs
Portfolio Recovery - offer $100 PFD; it's almost 5 years old and likely the agency has written it off as uncollectible
Synchrony - offer $50 due to SOL as PFD
Jefferson Capital - offer $50 for PFD
Midwest Recovery - offer $50 for PFD
After those are paid, put that money you paid them into an account so you keep building the savings to tackle Kia. When you get about $800 put away and the others are PFD'd, write Kia and ask for PFD with the $800. I'm suspecting that Kia will be about 5 years old at that point and they will accept anything > nothing at all. Santander comes next... let that one age... the older it gets, the easier it is to negotiate with the people.
To me, given your budget and discretionary $$, you could possibly be in position where the PFDs are gone and you're left with Kia and Santander by April/May. You're only offering PFD with Kia because legally, they cannot get a judgment against you and they know it. If you offer something, they might take it and delete the trade line. Or they might accept it and not delete the tradeline but then you can dispute to the CRAs and often it gets deleted.
Again, I would not BK.
"The big Kia balance is what scares me, but that's out of SOL."
Don't even worry about that one if it past SOL. Let it drop in the next few years - you need to take a long term approach. Cleaning up and rebuilding is a two year MINIMUM process. Any item that is PAST SOL should be sent a PFD offer (for 30% on the dollar) stating that it is past SOL and the only incentive you have to pay it at this point is if it will be deleted. If they refuse, wait a few weeks and repat the offer. Do not offer to past pay SOL items if they will not be deleted. Use that money to negotiate settlement for less deals on recent stuff.
There is no lifetime limit on Chapter 7 filings.
You've gotten a lot of good tips here. My input is general advice: With bankruptcy, most of the hit to your credit happens well before you ever file (ask most BK'ers). You will take a certain hit (don't ask me the estimate, I'm not that much of an expert yet :-)) over the amount of time the BK is on your report, yes, but it is smaller compared to the sometimes hundreds of points you lose by missing payments, allowing accounts to go into CO, repo etc.
(I went from six points shy of 800, to high 400's just before I filed, in the span of ~1.5 years. And not all of that was an active struggle - maybe 1 year of it was just my util climbing, then 4-6 months of that was when my payments started being late/missed. )
Just ONE piece to consider - if you are trying to weigh the hit to your credit score, you may have already taken that hit (or will keep taking).
As far as rebuild, you are correct that you would be able to put together a positive rebuild whether you choose BK or not. Other posters are also correct that $50k is an income that you could likely put together a good action plan on. Remember that rebuilding is a long-term strategy whether you are talking about rebuilding around a "dirty" profile or a BK. You can likely see some major score jumps in 1-2y even with those items remaining on your profile, if you wanted to go that direction.
If you decided to BK, depending on your state, you may be right on the borderline of the median income for BK7 vs 13 so that is another consideration. BK13 would not make a lot of sense for you, I don't think, vs taking care of it yourself. But you can find some of this info online (NOLO is a good resource) and attorneys offer free consults.
GL