Rebuilding from Scratch - Where do I start?

[katydid7]

My family went through a rough time financially (auto accident, loss of income, illness) and now that we are getting to a better place I am starting the long process of cleaning up my credit and paying down debts, charge offs and collections, and I need advice on where to start. I am reading lots and lots of posts on these forums and learning all about DV’s, PFD’s, OC vs CA, etc. I probably already made some mistakes by making small payments so I wish I came to these forums sooner.

I could use some advice on what to try first and which creditors to pay first. I can’t afford to PIF all of them right away, but I can make payments or start to PIF one at a time. I’m not sure where I should start. Thanks so much in advance! Here is what I am dealing with:

EQ 503, TU 521, EX 505

Charge Offs/Collections:
Synchrony/Walmart assigned to Monarch Recovery Management for collection. Synchrony reporting $1440 balance. I called and asked to pay them directly, they said I have to pay through Monarch even though they did not “sell” the debt, they just assigned it. Made $145/month payment arrangement with Monarch starting 4/28– should I PIF or offer settlement instead so they don’t report? No collection reporting now. DOFD 11/1/15.

Synchrony/Amazon reporting 0 bal. Midland reporting $1574 as a collection. Assigned to attorneys London and London, they sent letter 2/2017. Made one payment to London and London, $100, 5/1. DOFD 12/1/15.

Synchrony/Lowes reporting 0 bal. Midland reporting $5808 as a collection. Not assigned to attorneys. Made one payment to Midland, $50, 5/1. DOFD 11/1/15.

Barclay’s reporting $3822 bal. Received letter from Capital Management Services in summer 2016, haven’t heard anything since. No collection reporting. DOFD 11/1/15.

Capital One reporting $1799 balance. Received letter from Northland Group in summer 2016, haven’t heard anything since. No collection reporting. DOFD 11/1/15.

Capital One reporting $$2612 Balance. In 2 year payment plan with Cap One. DOFD 11/1/15.

Other Bads:

Mortgage with multiple lates, in 3rd month of trial payment plan under FHA HAMP now, hopefully will have permanent mod in next few months. Not sure how this will report after permanent mod is complete, right now it’s reporting 120/180 day lates.

Frontier, TD Bank Auto – both reporting incorrectly and I will dispute.

Navient – reporting late student loans even though I was in grace period, back in school now. Will dispute.

Goods (that are open):

Credit Card through my credit union. Bal $1000 (100% util) no lates

Vehicle Loan through credit union. Bal $6931. No lates.

[Anonymous]

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@katydid7 wrote:

My family went through a rough time financially (auto accident, loss of income, illness) and now that we are getting to a better place I am starting the long process of cleaning up my credit and paying down debts, charge offs and collections, and I need advice on where to start. I am reading lots and lots of posts on these forums and learning all about DV’s, PFD’s, OC vs CA, etc. I probably already made some mistakes by making small payments so I wish I came to these forums sooner.

I could use some advice on what to try first and which creditors to pay first. I can’t afford to PIF all of them right away, but I can make payments or start to PIF one at a time. I’m not sure where I should start. Thanks so much in advance! Here is what I am dealing with:

EQ 503, TU 521, EX 505

Charge Offs/Collections:
Synchrony/Walmart assigned to Monarch Recovery Management for collection. Synchrony reporting $1440 balance. I called and asked to pay them directly, they said I have to pay through Monarch even though they did not “sell” the debt, they just assigned it. Made $145/month payment arrangement with Monarch starting 4/28– should I PIF or offer settlement instead so they don’t report? No collection reporting now. DOFD 11/1/15.

Synchrony/Amazon reporting 0 bal. Midland reporting $1574 as a collection. Assigned to attorneys London and London, they sent letter 2/2017. Made one payment to London and London, $100, 5/1. DOFD 12/1/15.

Synchrony/Lowes reporting 0 bal. Midland reporting $5808 as a collection. Not assigned to attorneys. Made one payment to Midland, $50, 5/1. DOFD 11/1/15.

Barclay’s reporting $3822 bal. Received letter from Capital Management Services in summer 2016, haven’t heard anything since. No collection reporting. DOFD 11/1/15.

Capital One reporting $1799 balance. Received letter from Northland Group in summer 2016, haven’t heard anything since. No collection reporting. DOFD 11/1/15.

Capital One reporting $$2612 Balance. In 2 year payment plan with Cap One. DOFD 11/1/15.

Other Bads:

Mortgage with multiple lates, in 3rd month of trial payment plan under FHA HAMP now, hopefully will have permanent mod in next few months. Not sure how this will report after permanent mod is complete, right now it’s reporting 120/180 day lates.

Frontier, TD Bank Auto – both reporting incorrectly and I will dispute.

Navient – reporting late student loans even though I was in grace period, back in school now. Will dispute.

Goods (that are open):

Credit Card through my credit union. Bal $1000 (100% util) no lates

Vehicle Loan through credit union. Bal $6931. No lates.

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You can't pay off old debt if you're nursing a maxed out credit card, no matter if there's never been a late and it's current. For one thing, your utilization is killing your score (in addition to all of the other issues) and two, if you've maxed out your only remaining credit card, and carry that balance month to month, there's a fundamental issue with your budget/spending. 

Not trying to be mean, but the first thing you have to do is get your monthly finances in order before you can worry about credit/credit scores. 

My recommendation would be to take a month, and track ALL of your spending, down to the penny. It will be eye opening. I did this when we first started cleaning things up, and let me tell you, I was blown away. Once you have an idea of where your money is going, THEN you can figure out a plan for addressing your old debts/improving credit, etc. 

[katydid7]

Thank you for your reply - I didn't take it as mean. I am just now at a point where we have regular income and can start paying things off/down. The balance has been at that level since our trouble started... and I can definitely pay down that open credit card first, I just wasn't sure if I should pay that before paying the other debts. 

[Anonymous]

Rebuilding is a balancing act ... building new credit, while dealing with old debt. 

Keep that card and its history pristine. It's the easiest thing you can do, in terms of rebuilding. Once you get that paid down, and work through your budget, then you'll have a better idea of how much is left at the end of the month to begin tackling old debts. 

You can do it! 

[katydid7]

Thank you!

[Anonymous]

I highly suggest you use a free app like Mint.com to sign up all your accounts (bank accounts, any active credit cards, etc) and start tracking every purchase.  Then start setting budgets within the app.  During my rebuilding, I ended up cutting my spending by over 70% just by monitoring my spend daily into categories using Mint -- it's really amazing how much money I was spending on things I didn't need.

Step 2 is to pay off your 100% utilization down to under 9%.

Step 3 is to start a saving account so you never get into trouble again.

Step 4 is to get your REAL credit reports from all 3 CRAs and start taking notes on what you owe.  Just because a collection agency says you owe money doesn't mean you do.  Learn what the SOL is in your state for collection activity (and lawsuits).  Depending on where you live, your options on removing negative report information varies.

Step 5 (optional) is to look for new income options.  Part time job?  Drive for Uber?  Mow some lawns for neighbors?  

[katydid7]

Thank you for your reply ABCD2199!  So far I have started tracking my budget and spending, got a good start on a savings, pulled all three credit reports, and picked up a part time job. My husband is looking for extra income now too. I will be able to pay down the 100% utilization on the open card down to 9% by June, then I would like to start tackling the charge offs and collections. 

[Anonymous]

Great!

What's your current AAoA?

[katydid7]

If I am calculating it correctly, I believe my current AAoA is 6 years, 1 month.

[gdale6]

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@katydid7 wrote:

If I am calculating it correctly, I believe my current AAoA is 6 years, 1 month.

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To get the AAoA you use OC accounts only, add them all up (in months) then divide by the number of OC accounts.