700+ ficos filing BK?

[Anonymous]

Is there a better way to eliminate debt and bounce back faster?

To date, I've never been late so my scores are in the low 700's. I 'only' owe about 33k but I need to relieve myself of this debt for various reasons. 

What's the better way to attack this?  I've been told as soon as I file BK the creditors cannot report to the agencies so while I'll have a BK, I won't have any lates.  Would this help me reestablish my credit faster down the line?  I am a lender and had a client with this scenario recently and that person was back in the 700's within 1.5 years after the bk.  That gave me the idea.

Or would it be better to try to negotiate my debt down.  However, I'm told I will have to let my cards go into default before they'll negotiate with me, but will my scores take a lower hit than a BK? 

Or is there even a difference?

Can anyone help?  I'm just trying to do this the best way possible, if that scenario exists....

[lanah]

From my personal experience, Both BK and negotiating credit, hurts your credit,UNLESS, you can negotiate your balance down without using a credit repair service.

If you pay your minimum and don't be late and don't use your cards anymore then your credit should not go down. Then I would call to see if you could possible negotiate lowering your balance. It probably won't work but hey give it try.

Now with that out of the way. Let me tell you what will happen if you use BK and/or a credit repair service.

First the credit repair service,,,,, to me they are the worst things you can do to your credit. Even worse than BK. Although they sometimes negotiate your balances down and/or interest rates. They figure out some payment plan for you to pay but in my case the credit companies listed my accounts as "bad debt" or "in collection" until it was paid in full by the company I was using. I've been told they do this whenever they reduce your interest rates or balances due to you not being able to pay back the whole amount.  The good thing is that you payback less, the bad thing is that your credit takes a beating EVERY month, or at least mine did. I started off with high 700's and while I was on that plan it would drop 20 points EVERY MONTH for like two years. You do the math!

Now FOR BK,  My b/f had to file BK almost 13 years ago. His credit was already bad from missing payments so I think he had high 600's at the time. Once he file BK. It dropped his Credit to High 500's. Now this all depends on individual circumstances but what is common amongst all of BK cases is that it stays on your credit for 7 to 10 years. For him it was 10 years. it was extremely hard for him to qualify for anything other than Predator credit card companies at first. The good part was that he didn't owe the creditors anymore. I'm not sure it still works that way. But anyway he had to still pay for student loans and he got to keep his house.The really good part is that after about a year  his credit kept getting higher every year after his BK.  His credit score seemed to recover quicker than mine did using a service BUT his report had the dreaded BK on it for ten years. He went from high 500's to like mid 600's in about a year and then after that he didn't use much credit at all. Just kept paying on his house and after about 3 years or so his credit score was actually higher that when he started.

If you haven't been late so far. Do whatever YOU can do before using either one  of these options.

[JoeBJay20]

Welcome to the forums!

Filing for BK should be viewed as an option of last resort.  Yes, it's possible to have your scores recover within a few years of filing, but the presence of a BK on your report is devastating, even with high scores you'll be blacklisted by many creditors.  

As far as negotiationg debt, you want to understand the difference betweent a legitimate debt management program (DMP) and debt settlement or negotiation programs.  The latter is a great way to ruin your credit, and are so unethical that they aren't discussed here other than warning people to stay as far away from them as possible.  They're really easy to weed out, any company that advises you to stop paying your bills, or claims they can reduce what you owe, 99 times out of a 100 is a debt settlement program.  I would suggest reading through the FTC's webpage on debt, and what steps to take and what steps not to take.

FTC: Knee Deep In Debt

[jackg]

seekknowledge,

First, have you consulted a BK attorney to see if you qualify for CH 7, if that's the way you are considering.

Next, I planned my CH 7 BK, filed 5/06, by keeping all my acct's. in good shape, no lates. Since I filed I found that it was an advantage, why? Because any lates you accrue will hurt you for 7 years. It seems as though the lates are a seperate thing from the BK. For example, if you have an acct. with lates it will show on your credit report as "Included in Bankruptcy (IIB)" and the lates show as another derogatory item on that account. Both negative comments will remain for 7 years, but the lates are hurting your score in addition to the BK.

Today my FICO scores are: TU-676, EX-701 (the last time I was able to pull it), & EQ-763. I'm convinced my scores would be much lower if I also had lates reported. I hope that I didn't confuse you and that the informatio is helpful in making your decision. The only advice I can offer is that the longer you wait to file the longer it will be before you recover. 

[Anonymous]

Thanks so much.  Yes, I have been to a BK attorney and it's good to hear another personal story about filing with a clean credit history.  I appreciate all comments!