OK I have to start by saying (a) I have done some dumb stuff and (b) I really wish I had found these forums a long time ago.
So I left a job and decided to change careers - going into Insurance. Hated it, made almost no money doing it. At this point I ran out of savings and start dipping into IRA to keep bills paid. CC account gradually piling up all the while.
So then I discover real estate investing and decided to go flip a house - and of course I lost money doing that. Worse, I had to income while doing it, and you guessed it, more draining the IRA to survive. Really really stupid, gambling like that. I did get the house sold, and actually I'd do that again - but only if I had some cash flow to keep me afloat, and not a ton of debt dragging me under.
Alright I think you can guess the outcome - I finally just ran out of funds and had to admit defeat and go back to that same job. But it pays OK. Been back about 11 months now.
When I went back, I had two Bank of A credit lines one for $30K and another cc for $18K. My wife and I had another 10 cards for probably another $55K.
Right about this time I started defaulting on these cards, missing payments and getting all kinds of collections.
Briefly we discussed BK but we decided we could probably avoid that. Instead we looked into debt settlement companies and we signed up with one, about 10 months ago. We put 8 CC acounts into that (2 we are keeping up with, they are small). At the time I didn't really know what to do with those Big Bank of A lines because we simply didn't have the income to service them. So we set them aside for a bit.
Then we found a nonprofit that really helped us out (not sure we are allowed to share the name here). They recommended signing up and they will act as intermediate to negotiate reduced payment terms with the bank on these two accounts. It turns out that you can sometimes qualify for reduced interest rates (hardship or something), if you know how to ask. So we did that, and now we are paying like 2% interest on these two accounts and paying them off, slowly, but paying them in full. Our understanding was that the banks will close those accounts and it will still show some kind of impaired status, since it isn't really paid as agreed (reduced interest rates). We started this in March, and my Experian had fallen to about 530 or so. It was bad - I had been a 745 a couple years prior.
Now we have gotten to the point where the bank has re-aged both accounts, and so now they are showing them as current. So by dollar amount a huge chunk of our debt load is showing 'paid as agreed' instead of everything being 30/60/90 or worse.
I believe this has helped my score a lot - my experian is up to 604 as of last week.
In fact, now I wish we had not done the debt settlement thing at all. So far only 3 of the 8 cards have been settled, and I am considering dropping some of the remaining cards out of that program and doing something different - such as enrolling them to this non-profit program. I , and not have so many settlements on my record. In fact AMEX is writing letters to my wife offering various solutions, and so we might look at tackling that one next.
Still have massive debts but chipping away at them, and keeping up with these payment plans. I have probably another 36 months of this, at least. One car payment drops off in about 12 months so that will allow us to hammer the rest of it that much harder.
Now the goal is to get the credit score back up while reducing that 'financial footprint' down to a minimum. Also going to start working on building business credit in my LLC so that I can eventually do some house flips again on the side.
On the upside, I do have some equity in our personal residence and we've never missed a payment on cars or mortgage.
