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Moving in a year - should I file?

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Anonymous
Not applicable

Moving in a year - should I file?

I'm strongly considering filing Ch. 7 bankruptcy after some prolonged medical issues. I've got several accounts in collections, accounts reporting late and closed by issuer, etc. My lowest credit score is in the low 500's. I'm a renter, pretty good rental history, mainly to private landlords - but I got in when my average score was in the low to mid 600's.

 

I'm looking at moving in about a year (I'm a freelancer, my job goes with me) - would it be better for me to go ahead and file Ch. 7 and get some distance between the move and the bankruptcy, or would it be better for me to try to settle some of my collections/closed accounts and try to boost my score that way over the next year? If it's a toss-up, I'll probably file for peace of mind, but I'd like to know if bankruptcy will be more of a problem than a very low credit score with negative history.

 

I've also read some conflicting things on here about filing when accounts are already charged off or reporting as late. Will they still report that way after I file as well as IIB, or will they only show as IIB?

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chasmith
Valued Contributor

Re: Moving in a year - should I file?

It seems to me that if BK is unavoidable you should do it sooner rather than later, after consulting an attorney.  The idea of paying down some debts that would be discharged and then filing BK doesn't seem very productive to me.  You would be better off filing now and starting to rehabilitate credit and live off the funds you would have spent paying on the to-be-discharged debt.

 

 If you can get your debts under control without BK, and use some of the strategies discussed in forums here and elsewhere to mitigate negatives then by all means don't file BK.

 

TLs that are showing lates, COs etc. before filing will possibly still show those delinquencies, but after BK they will show IIB and zero balance.  Since BK is a serious derogatory by itself, I'm not sure the prior delinquencies do that much moredamage to your scores, and you will have set an end date to the derogatory so it can start aging, which will help your score.

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
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