Help!! I don't know where to start....

[Anonymous]

I am 34... I never took my credit seriously in my 20's and early 30's. I at one time had wonderful credit (I never really checked my credit scores but never had any issues with getting approved for credit). Well a few years ago 2014 after a failed relationship and I took over care of my mother, she had run into several medical problems and needed assistance and had lost her job because of it. When that happened I was then responsible for paying for 100% of the living expenses for my household (3 children, my mother and myself). Needless to say and to make a long story short my credit when KAPPUT!! It was either put food on the table and keep the lights on or pay the credit card.

So after several years of "making it work" I am in a position now that I can finally start working on things. Bad news for my credit it dropped way down with 10 collections showing. My score today was 480 on TU and 528 EX (EEK!!). With less then $6000 total debt. I have already submitted a dispute for one of the collections that I do not recognize and I hope that it will come back in my favor and then be removed.

I am at a loss of where to start. I have been reading through the forums and have been learning a lot. So a question for some of the more credit savy people out there do you think that it would be beneficial for my to write a "pay and delete letter" or just work on paying them one by one, writing a Goodwill letter, or just painfully waiting another 4 years for everything to drop off?  I would like to eventually purchase a home (I know it will be a little while) and not be ashamed of my credit.

I do have a car loan that I just got in March and plan of making payments on time if not ahead every month (Already have it set up on auto pay). And I have another car loan that I co-signed for my mother on, that I have also made sure says current.

Help Please

[JustinA]

If you could list the collection agencies it may be helpful. Also if you have any open cards. Some collection agencies are tough...others not so much.

So let's start there

[Anonymous]

Ok so I have 8 accounts listed with Portfolio and 2 with Midland.

One of the 8 and am disputing because I don't know what it is.

[Anonymous]

It's going to be very tough for a GW deletion from either one.

Zero chance for PFD with Portfolio.

[Anonymous]

I had zero luck with PFDs for both also. However, both were easy to settle with. I had 2 with PRA and 3 with MM. I just checked my spreadsheet and my settlement average for the sum of those 5 was 38% of what I showed owed. PRA and MM both updated quickly and accurately for me. Actually, PRA and the OC fell of TU for me. I paid lump, not payment. My average would have been lower, but MM sued me for 1 and I had to settle with the attorney they hired for close to 60%. Please note though, if the delta of your settlement is > than $600 (I think that's the #) you will receive a 1099-c, thus owing taxes on the delta. Make sure you understand all of this. If you settle now, you may want to have additional with holdings held to cover this shortfall. It can add up and there is no way around it. If you are unfamiliar with 1099-c, you can Google it. Don't ignore the documents. The agencies will submit them to the IRS, and if you don't file them a few years later Uncle will send you a collection notice. 

[JustinA]

Man that's a bad draw. On the brightside though credit scoring has many angles that can be worked. So if it were me...I wouldn't settle. PRA even though they are bloodsuckers they are actually easy to work with. Set up an auto pay with them...something easily affordable. And forget about it. (Or lump sum on smaller ones). And while that is doing its thing make your goal 530s and get a decent secured card.

By the time you have good payment history (1 year or so)...most collections could be paid off and possibly go away on their own.

Even still after a year paid in full with a good payment history those collections will be aging and slowly becoming less effective.

Make your plan for 1 year. Set up autopay or lump sum. Goal 530s or better. Secured card. This time next year go for a creditone unsecured and you will be on your way!

(Solely my opinion and plan of attack)

[Anonymous]

I don't know if I would recommend paying the full amount. Everyone's financial situation is different. If you can afford to settle for an amount that doesn't put you in an awkward tax situation, I would. Especially with a collection company. If PRA and MM are the collectors, they have purchase the debt from the OC for about $0.4 to $0.12 on the dollar. Settling for less (IMHO) with a CA doesn't mean diddly, unless your settlement requires a 1099-c, you may want to pay a little more to avoid the 1099-c.  Each account is different. Also, MAKE SURE if you DO enter into a payment plan, that it doesn't impact your delete date. Fully understand what you are doing before you do it. In other words, don't do it blindly. Just because you can do payments with a CA, doesn't mean you would ever want to do payments on a CO with an OC. That can potentially bring you current and reset the clock, not saying it will. Just ask questions and research before you execute each of your moves.

[Anonymous]

Ok Thank you everyone for your advice. I think I am just going to start chipping away at them and hopefully that will help, I was hoping that a pay and delete letter would work for them since they are so old. I am going to see if I can start with the smallest ones first with Portfolio and work my way up.

Hopefully I can see my score rising soon