topic Re: HELP - High Utilization of debt to credit line (UTL)..options? in General Credit Topics

HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Sun, 05 Jun 2011 17:11:40 GMT

So, I have a question for whoever may have insight...!

I'm been searching for answer to this question:

How long will certain actions effect my credit score? Thus, how long will it take to rebuild...I've heard 2 yrs (after bankruptcy, the "walk away from it all," which DOES NOT make any sense), 3 yrs (after completing credit arbitration), & I've heard 7-10 yrs for all of these as well! OMG...I don't know who to believe!

I finally found this site...! It seems that maybe many of you have gone through what I may need to go thru.

I've NEVER been late on any account in my life (I have 10 accounts, I know a lot!) & I've thankfully, been able to pay them off 2 different times in my life as well! I credit score was 729 four yrs ago. Now my utilization of debt to credit line is very high, thus huring my score. Also, due to economy & others not able to pay their bills to me...my income is suffering EXTREMELY! I've been taking out of my IRA (I know, HORRIBLE! I don't have much left now), I'm down-sizing from a large beautiful home w/open space, mtn views to...a 1 bdrm cottage! I'm REALLY trying to do the right thing...but soon, I'm looking at not being able to make all my bills next month...& I'm TERRIFIED! I don't want to file bankruptcy!

I'm considering settling some accounts...but I can't get a concrete answer on how that will effect my credit & how long it will be bad..as I noted above?

I've gotten several answers from an array of folks regarding what I should do:

1) settle/abitrate w/creditors -whlie still paying these off as fast as I can (3 yrs or possibly less)

2) Do it on my own, late payments on come accounts (which will happen for a long time, much longer than 5 yrs), while paying off certains accounts SLOWLY! (Meanwhile, I expect these accounts will close & even go into collections!)

3) or bankruptcy

***** All are HORRIBLE....I'm totally freakin' out, but I'm looking at my credit suffering tremendously regardless, so I want to the best thing & pay what I can! *****

4) win the lotto!!! (never happening, right?)

So, could I get your comments/advice after those of you who have done this credit abitration (settling) credit card debt?

Really, ANY input on any option (even something I've not learned of or listed here)...I will greatly appreciate!

Thanks...

"Super scared & Nail-biting"

Re: HELP - High Utilization of debt to credit line (UTL)..options?

DI — Sun, 05 Jun 2011 17:23:20 GMT

@Anonymous wrote:
Hi there all...
So, I have a question for whoever may have insight...!
I'm been searching for answer to this question:
How long will certain actions effect my credit score? Thus, how long will it take to rebuild...I've heard 2 yrs (after bankruptcy, the "walk away from it all," which DOES NOT make any sense), 3 yrs (after completing credit arbitration), & I've heard 7-10 yrs for all of these as well!   OMG...I don't know who to believe!

I finally found this site...!   It seems that maybe many of you have gone through what I may need to go thru.

I've NEVER been late on any account in my life (I have 10 accounts, I know a lot!) & I've thankfully, been able to pay them off 2 different times in my life as well! I credit score was 729 four yrs ago. Now my utilization of debt to credit line is very high, thus huring my score. Also, due to economy & others not able to pay their bills to me...my income is suffering EXTREMELY! I've been taking out of my IRA (I know, HORRIBLE! I don't have much left now), I'm down-sizing from a large beautiful home w/open space, mtn views to...a 1 bdrm cottage! I'm REALLY trying to do the right thing...but soon, I'm looking at not being able to make all my bills next month...& I'm TERRIFIED!   I don't want to file bankruptcy!

I'm considering settling some accounts...but I can't get a concrete answer on how that will effect my credit & how long it will be bad..as I noted above?
I've gotten several answers from an array of folks regarding what I should do:
1) settle/abitrate w/creditors -whlie still paying these off as fast as I can (3 yrs or possibly less)
2) Do it on my own, late payments on come accounts (which will happen for a long time, much longer than 5 yrs), while paying off certains accounts SLOWLY! (Meanwhile, I expect these accounts will close & even go into collections!)
3) or bankruptcy
***** All are HORRIBLE....I'm totally freakin' out, but I'm looking at my credit suffering tremendously regardless, so I want to the best thing & pay what I can! *****
4) win the lotto!!! (never happening, right?)

So, could I get your comments/advice after those of you who have done this credit abitration (settling) credit card debt?
Really, ANY input on any option (even something I've not learned of or listed here)...I will greatly appreciate!
Thanks...
"Super scared & Nail-biting"

How much debt are you in ? Are you current on all of your accounts? If you're terrifed, super scared and biting your nails, BK may be your only way out if your debt is extremely high and little income.

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Sun, 05 Jun 2011 17:34:37 GMT

I suppose I'm super scared & all....because (thankfully )I've NEVER been int this situation before. I've always paid my bills & ON TIME. : ) But now...life has drastically changed. : (

I'm looking @ $60,000 in debt...yes, I'm current on all my accounts & still never been late, BUT...I know the cash flow will not be adequate this next month, thus the following months as well. I figure...I better get educated now on what looks like will happed to me. And start addressing this HUGE problem now as well. Right? Currently, my income is ~ $65-60, 000.

AND...THANK you for responding to me!

Re: HELP - High Utilization of debt to credit line (UTL)..options?

DI — Sun, 05 Jun 2011 17:39:22 GMT

I think you can make it without filing BK if you downgrade your lifestyle. You have a nice income. Have a garage sale and start selling things you no longer need.

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Sun, 05 Jun 2011 17:47:23 GMT

Yes...I am. I'm also downgrading from house to a 1 bdrm. I feel BK is not an option for me...but the numbers are still not working for me. I'd really like find an answer to my question. How long does your credit score suffer if you're late on payments, or go to collections? How long does it take to re-build, as I will have to do?

How about those who have done arbitrations? How long does that clear up?

thanks...

Re: HELP - High Utilization of debt to credit line (UTL)..options?

llecs — Sun, 05 Jun 2011 17:49:51 GMT

Ditto. I'm certain you can get through this without a BK. Many of us have been there.

I'd do whatever it takes to increase your income (change jobs, add a second job, do some side business somewhere, etc.).

And I'd do whatever it takes to decrease your expenses (e.g. cancel your landline or cell, eliminate a car payment if applicable, down grade your cell plan, your insurance(s), temporarily cancel cable, put off some hobbies, cancel any travel plans temporarily, cancel anything that results in dues or subscription fees, tighten the budget by changing your eating habits, stop eating out, etc.)

Finally, I would reposition money to pay off debt. I'd suspend contributions to any 401(k) or IRA plans temporarily. I'd cash in any non-retirement accounts. If you got a tax refund, then I'd adjust your W-4 to get more money on your check and do the same for state if applicable. I'd sell an extra car if you have two. I'd sell off any stuff around the house you don't use or need and make eBay or Craigslist your friend.

I'd also cut up all of your CCs. I necessarily wouldn't cancel, but I wouldn't use them until debt free and if my habits didn't change to where I'd use them again, then I'd cancel them for good.

Re: HELP - High Utilization of debt to credit line (UTL)..options?

DI — Sun, 05 Jun 2011 17:54:56 GMT

@Anonymous wrote:
Yes...I am. I'm also downgrading from house to a 1 bdrm. I feel BK is not an option for me...but the numbers are still not working for me. I'd really like find an answer to my question. How long does your credit score suffer if you're late on payments, or go to collections? How long does it take to re-build, as I will have to do?

How about those who have done arbitrations? How long does that clear up?
thanks...

I don't have the answers to all of your questions, but I do know that late payments and collections affect your score until the day they no longer appear on one's credit report. Regardless how old the late payments and collections become, they still have significant effect on one's credit. If you can stay current on your oldest revolving account, that will help you recover a lot quicker if some of your accounts end up in collections.

So the bottom line is, keep your oldest revolving account open and free of blemishes. Hopefully, the bank you have your oldest account with won't close your account if they see trouble with accounts you have with other banks.

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Sun, 05 Jun 2011 17:59:09 GMT

Thank you for these suggestions! I've been living this way already for last 2.5 yrs (no trips, eating smart cheap, cell, no landline, cable, etc) & now going to the 1 bdrm (this will be complete in ~2 mo's). I'm hoping this will help too...but, still concerned that the cash flow in will continue to decline as it has! Thus, I need to prepare for the worst.

Do you know where I can learn how long my score will suffer w/the results I listed before?

thx

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Sun, 05 Jun 2011 18:00:48 GMT

What about going to a crappy apartment for a few years? Sell everything you don't absolutely need. It's just stuff. Then try snowballing your cards. Pay the minimums on all but one (starting with the highest interest rate or balance first), then move on to the next after that's paid off.

You haven't been late yet. There's so much you can do. Don't just throw in the towel. Fight for your credit. Otherwise it'll be years before your BK stops haunting you.

Re: HELP - High Utilization of debt to credit line (UTL)..options?

DI — Sun, 05 Jun 2011 18:00:57 GMT

@Anonymous wrote:
Thank you for these suggestions! I've been living this way already for last 2.5 yrs (no trips, eating smart cheap, cell, no landline, cable, etc) & now going to the 1 bdrm (this will be complete in ~2 mo's). I'm hoping this will help too...but, still concerned that the cash flow in will continue to decline as it has! Thus, I need to prepare for the worst.
Do you know where I can learn how long my score will suffer w/the results I listed before?
thx

http://www.myfico.com/CreditEducation/

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Sun, 05 Jun 2011 18:13:51 GMT

THANK YOU all!

Yes...I'm fighting! I think...that yes, I will have to sell it all...(it is just stuff), still sad tho.

I think if I still can't make minimums on all, then I'll have to determine which I'll hold on to (the oldest, of course, thanks!)

If this happens, collections....can anyone out there tell me how long it took them to re-build to 700's?

3, 5, 7+ yrs?

And seriously....thank you so much for your responses!

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Mon, 06 Jun 2011 04:08:21 GMT

Hi there. I was in the same exact position you were in 2 years ago. I led a good life, with a good job. I got disabled and lost 2/3 of my income. I lied to myself that I could make it work. I burned through all my 401k and savings etc. I Filed for BK with good credit, and two years later I have no debt and a 720 Transunion. It takes work though. You need a secured card, so keep some cash stashed somewhere where you can have it for this purpose. I opened a capital one with a 1000 cash secure. I actively managed, and still do, my credit report. Challenge things that are wrong. I have 3 credit cards now. I also downsized at the same time as my BK. Even with a 2K monthly income, I now live with money to spare. But, you need to LIVE BELOW YOUR MEANS, and you will be heading in the right direction. Hope this helps. It sounds exactly like what you are asking. And long answer short, no it didn't hurt me long term, but you need to make the other efforts, or it may.

Matt

Re: HELP - High Utilization of debt to credit line (UTL)..options?

kjm79 — Tue, 07 Jun 2011 18:46:40 GMT

Ditto to everyone's suggestions above. I'd add that IF you are seriously considering BK, keep all of your accounts current right up until the day of filing BK. Don't let the accounts go late and then into collections and THEN file for BK. That will take you much longer to recover. And in cases of manual reviews, showing current accounts up until filing looks much better. How long it takes for scores to recover is different for everyone based upon their history and future financial picture.

Late payments and collections will have a major impact on your score. That impact lessens the older they get (usually starting around 2 years old) but until gone will drag your scores down. Have you tried calling the creditors and asking for APR reductions or to work out a payment plan? Some people have been able to work with the creditors after they informed them they were considering BK but really wanted to honor their obligations. Rates can be reduced and some creditors will work with you. They'll probably close the accounts but that's ok as long as they are in good standing. They'll still stay on your reports. And IF BK is the route you go, read the forums here. There is definitely life after BK. Some recover in a year, some longer.

ETA:

I guess to specifically answer some questions though:

Negative marks/accounts on your reports stay on for 7-7.5 years from the FIRST MAJOR delinquency.

Ch 13 BK's stay on for 7 years generally.

Ch 7 BK's stay on for 10 years.

Closed positive accounts stay on for 10 years.

For arbitrations/settlements I'd think they follow the negative account marks timeline of 7-7.5 years.

Re: HELP - High Utilization of debt to credit line (UTL)..options?

Anonymous — Wed, 08 Jun 2011 03:30:36 GMT

kjm79 ~

Wow! THANK YOU for your input, kjm79! Really great info! It is nice to have some numbers & start to get an idea.

REALLY great post...

I will keep this site on my favorites....AWESOME replies everyone - again THANK YOU!

I'm meeting w/an attorney tomorrow to get advice on what I need to do...I'm hoping for options! Wish me luck.

~ J