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How long to rebuild credit in this scenario

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wackajala
Established Member

How long to rebuild credit in this scenario

Greetings -

I have about 120k in credit card debt that I am slowly paying off via a debt payoff program. The debt is spread across about 12 cards with the majority (90k or so) in 5 cards.

 

I recently have started reevaluating the situation as the monthly payment is quite high, and am considering doing a debt settlement with the top 5 cards which I'm hoping I could get somewhere between 2-3 cents on the dollar for the 90k that represents those cards, and then be left with about 30k in debt across the remaining 7 cards which I can pay off fairly quickly.

 

Here's my question. I'm aware that debt settlement affects your credit. In this situation described, how quickly do you feel I can rebound in terms of getting back to decent credit.

 

I have about 20 years credit history. Credit was 740-ish before the debt. The credit today is hovering around 600. I have an active mortgage which is in good standing, and the idea would be the remaining 8 cards also are in good standing. So the negative marks would be for the 5 cards that presumably get marked as settled.

 

Thoughts? Thanks in advance for the help.

Message 1 of 8
7 REPLIES 7
gdale6
Moderator Emeritus

Re: How long to rebuild credit in this scenario

Have all these been Charged off??

Message 2 of 8
wackajala
Established Member

Re: How long to rebuild credit in this scenario

2 have been charged off with payment going to a legal firm, but the record does not show as such in my credit report. The rest are payments directly to credit card companies under their own "payoff program". There is no negative record on my credit report today other than high utilization.

Message 3 of 8
gdale6
Moderator Emeritus

Re: How long to rebuild credit in this scenario


@wackajala wrote:

2 have been charged off with payment going to a legal firm, but the record does not show as such in my credit report. The rest are payments directly to credit card companies under their own "payoff program". There is no negative record on my credit report today other than high utilization.


The faster you can pay off anything that is reporting the faster you will recover from this. It is not realistic to think you will be able to gete a deal with them or the amount on the dollar that you are talking about. The fast that most are not reporting derog and are not COed makes it near impossible for the creditor to even entertain a settlement of less than full. If you are looking to settle then you would need to stop making payments and let the cards go to 90+ days and even to CO status. This may be your only option if you are continuing to have trouble making the payments.

Message 4 of 8
wackajala
Established Member

Re: How long to rebuild credit in this scenario

Understand and thank you. I hear you on the response, as what you just said is how I would normally view it but I do actually have a 30% settlement offer on the table for 3 chase cards totaling 39k with up to a 4 month installment plan, and a 70% offer on 12k of debt with Zwicker & Associates. Nothing negative on a recent credit report other than a high revolving balance. The credit score right now is 600 across all 3.

 

What impact do you feel I should expect from a 600 current credit score and 4 settled cards and otherwise successful repayment of all the others? Seems worth taking the offer, correct?

 

Thank you for taking the time to respond. I appreciate it.

Message 5 of 8
TheKid2
Frequent Contributor

Re: How long to rebuild credit in this scenario

It's hard for me to understand how you can get down to a 600 score without a single derog on your credit report. Are you sure you don't have any derogatory indicators? Are your cards actually over their limits? It's also shocking that a OC will take a settlement on an account that is not late. Especially as low as 30%! I couldn't get down to 30% on a couple of my CO accounts.

 

If you settle an account for less than what you owe I do not see how a creditors can report your account paid as agreed.

 

 

 

JOINED 4/2020


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Message 6 of 8
wackajala
Established Member

Re: How long to rebuild credit in this scenario

Understood. It's as I say.

 

15 cards all at their limit (high utilization). There are a handful of 90 and 120 day lates from just under 2 years ago when this all started which is what got me into the debt management program. The debt management program is American Financial. They basically call all the cards for you and get you onto a payment plan for the full amount with them. The cards are all closed, but marked as paying as agreed in the credit report. Even though 3 cards went to legal firms, they have not marked anything negative in the report other than the obvious high utilization. I can only assume this is due to the program I'm in where the goal is to pay the amount in full. Who knows.

 

I decided to take the 30% offer from Chase.

 

Thanks.

Message 7 of 8
Creditrecipe
New Contributor

Re: How long to rebuild credit in this scenario

You may consider a call to a ch13 bankruptcy attorney, ch7 will most likely be off the table due to your mortgage. Just a thought..

Message 8 of 8
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