I need some ANSWERS! Someone please help me out!

[GoldenBoy1]

Okay, so here is my situation ( i'm sure it will sound like a broken record ).  I was in my mid 20's and got a little credit crazy and maxed out about 10,000 dollars in credit.  I paid on them for years until I was about 28 and then got divorced, so went from having 2 incomes to just 1.  I honestly couldn't afford to pay anymore $, so I defaulted on several accounts ( 5 in total ) for just over 10 grand.  

First question:  Is it possible to rebuild credit WITHOUT PAYING OFF THESE OLD CHARGED OFF ACCOUNTS.  I am 31 now, so they are about 3 years old.  I settled with a few of the lower balances but there are some I just cannot pay.  If I could, I certainly would.  

Second question:  I have opened up 4 secured credit cards, and a car loan within the last month.  With this new positive activity on my report, will this make my credit score jump as long as a stay current?  ( EVEN IF I DON'T PAY THE OLD CHARGED OFF ACCOUNTS )

Third question: What are some other things I could do to help my credit score (500 FICO) without paying off the old charged off accounts?

Thanks so much for any help you guys and gals can offer

C.B.

[starry1]

Those charge-offs are going to hold your score down as long as they are reporting.  And depending on the SOL in your state, they can still sue you and a judgment will hurt you far worse than a CO will.  And with amounts that high, they almost will certainly sue you.  Have you considered trying to work out a settlement with them?

[Anonymous]

To add, if the COs are reporting a balance and a CL your getting a double whammy on your score.  One for high utilization and the bigger for the COs. 

Paying off the COs will forever remove them from utilization but the impact of the COs will continue for almost the entire 7.5 years.  They are considered major derogatories.

Even with new established credit, paid on time every month. your scores will more than likely remain on the lower side until the COs have aged to near 7 years.

[GoldenBoy1]

SUE ME?  That seems like some strong words.  I do know that since these are unsecured lines of credit that the most they can do is get a judgement against me and I would certainly think if that is what they intended to do, they most certainly would have done it by now.  It has been 42 months ( almost 4 years ) since default.   I also know that unsecured credit card companies cannot garnish wages.   As I said before, If I had the means to pay these I would. 

So, with all that being said........You are saying it is near impossible to do any fixing to my credit while these charge offs are reporting?

[Shogun]

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@GoldenBoy1 wrote:

SUE ME?  That seems like some strong words.  I do know that since these are unsecured lines of credit that the most they can do is get a judgement against me and I would certainly think if that is what they intended to do, they most certainly would have done it by now.  It has been 42 months ( almost 4 years ) since default.   I also know that unsecured credit card companies cannot garnish wages.   As I said before, If I had the means to pay these I would. 

So, with all that being said........You are saying it is near impossible to do any fixing to my credit while these charge offs are reporting?

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Where did you hear that?   Of course they can garnish wages.  If you get sued and get a judgement against you, anyone can garnish your wages.  If the debt is still within SOL you could expect a lawsuit at any time.  Some places will file just before the SOL is up.  I've seen that happen many times.

As far as fixing your credit.  You have unpaid debt.  If it's your debt, then yes it is very difficult to clear up.

[starry1]

Yes they have to sue you in order to get a judgment. They often wait until the last minute to file suit so the prejudgment interest accumulates as high as possible. And once there is a judgment they can garnish you.

[Anonymous]

Wage garnishment depends on whether your state laws allow it.  But, yes, in order to get a judgment you have to first be sued.

And it makes no difference whether the debt is credit card debt or installment debt.

If you were to get a PR on your CR it would make things far, far worse than what they are now.

[RobertEG]

There are ways to attempt to remove prior derogs reported on an account that remains delinquent by offering some incentive to the creditor to grant a good-will deletion, but they almost always require satisfaction of the debt in order to obtain any good will from the furnisher of the information. 

Their reporting agreements with the CRAs inform them that they are not to delete based on payment of the debt, so even payment is dicey as to getting deletion.

I dont see much incentive for a creditor to delete accurate reporting when they are holding an unpaid debt.  The fact that they did a charge-off does not relieve the consumer of continued obligation on the entire debt, or prevent the creditor from continuing attempts to collect the full amount.

[p-]

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@GoldenBoy1 wrote:

...I would certainly think if that is what they intended to do, they most certainly would have done it by now...I also know that unsecured credit card companies cannot garnish wages... it is near impossible to do any fixing to my credit while these charge offs are reporting?

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 You definitely need to find out the SOL laws for your state.  Typically collectors are fine just letting things sit until it gets close to SOL.  The interest and fees just keep adding up.  But once the SOL is about to run out, they will sue.  There's no way they are going to let their rights to that money expire.  If they get a judgement against you, at that time they will be able to garnish your pay.  The money will be gone regardless of whether you can afford it or not.  And the Judgment will be a new public record item on your report that could decimate your score for up to ten years.  Rough, I know...  Lots of us have been there.

Not all charge-offs become Judgements.  And not all Judgements become Garnishments.  But the safest course to take is make a radical change in your budget so as to free up money to negotiate full payment in exchange for deletion.  But make sure you have money to negotiate with before you contact any of them...  Don't poke the bear.  Another option; you could go halfway. Ratchet down expenses to almost nothing, live with roommates, etc., pretend to be a monk, and save every penny.  If you're served, contact the lawyer and negotiate a settlement to avoid court.  If they never come after you, then you have a nice nest egg.

If you really have something that scary hanging over your head, it may be worth a major life change.  A year or two of pain now will be a distant memory when it's all behind you...

As far as fixing your credit, there are definitely things you can do.  First and foremost is to begin paying on time all of the time, and work on recent history.  There is a very slight chance that the SOL will pass before they sue, but it would be foolish to bank on that.  On the other hand, if it did pass SOL, and aged off, within a few years they will be gone from your report.  So it would make sense to do what can be done to improve recent history for the future.

[p-]

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GoldenBoy1 wrote: ...they most certainly would have done it by now. 

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I think I understand why collectors wait until the last minute to sue.  Let's say it's a six year SOL state with ten year judgements, and the debt occurred in 2009.  If they sue right away, and have ten years to collect, they have to collect by 2019.  Assuming you had no money or assets in 2009 they have to hope you accrue some by 2019.  If you don't, they lose out.

But if they wait until the last minute in 2015 to sue, then they will have until 2025 to collect.  So they have a longer period, and thus a higher likelihood of catching you with income or assets.  Plus they get the added benefit of growing the balance due over that time.

Many people in credit distress follow the same path after defaults.  Within a few years we get our spit together, and start looking for ways to improve our credit for major purchases like homes or cars.  A big charge-off will hamper that, so just having that on the report is enough to make us come looking for a deal when we have money again.

One more thing they can do is watch your report for new trade lines.  Once they see you are back to earning, they can ratchet up collection activity.

So their motivation in waiting to sue is simple.  They're waiting for you to be worth suing.