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Registered: ‎08-09-2007
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Attention Teachers ~~~ Student Needs Advice!!

Hi,
 
My husband was ill for a while and his disability payments ran out. I took off work to care for him and eventually my medical leave ran out too after a while. We exhausted our savings and had to start living off of credit cards to survive while our house was up for sale in this soft market. Thank God, it  has finally sold and we are closing on next Wednesday, August 15th. YIPPIE!!!
 
Now, I need advice on how to pay the debts off. We have some late pays on auto and car loan that occurred before I finally caved in to the pressure and started to use the cards to survive. I foolishly fought doing that because I did not know when the house would sell and in the meantime of thinking of about how to do it with limited funds, we had some late pays on our mortgage and car loan. We also had some lates on the credit cards too which I had used. We got back on track after about 4 mos of rough waters and have only one late in the past 90 days. That is the utility company which I did not pay for a while but it was not reported to the any of the CB's. As soon as I caught it up, they hit me with a 90 day late. Creeps!
 
Anyway, I am now going to pay the debts off that we accumalated but I need to know how to pay it off in the best way to make the scores rise the fastest so that we can recover from this and eventually get into another home. We needed to get our equity out of this home before the market totally tanked and we did not have any left over to salvage.
 
My goal is to get the scores back up hopefully in next 6-9 mos. My question is should I pay all the debts off at once or should I pay some and then pay the balance in equal payments for the unpaid. Someone told me that if you pay them all off at once, the score will not rise as fast as it would if you were making payments because a 0 balance does not count for as much as a balance owed. Not sure if this is true or not. This is all new to me as I have always had scores in the mid to upper 700's this never really was an issue for me.  We are both in the high 500's, low 600's and mid 600's now.
 Also, we are renting a place until we can requalify so tell me the TRUTH about how long I am looking at to recover -- worse case scenario. Any advice you can give to us is sincerely appreciated.
 
Thanks.
 
Missy
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Posts: 9,252
Registered: ‎03-19-2007
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Re: Attention Teachers ~~~ Student Needs Advice!!

I would start with paying all of your active revolving balances down to 5%

Get all accounts current and work with anyone that does not have them marked current.

Write GW letters for late payments.

Do you have any derog accounts? charge off? Collections?
Pay these last - work for a PFD.

Bank as much as you can to use for your next down payment.
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