Pay Credit Cards, declare bankruptcy, or what?

[Anonymous]

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@John35 wrote:

For years I had good credit then a perfect storm hit where I had student loans come due, an ARM adjust, and a 15% pay cut. For about a year it was bad. My score went from the mid 700's to 600. I am not back to a point were I could pay down balances on cards ( about $15,000) currently outstanding. These accounts are all closed and in collections. My question is, they show as poor marks on the credit report for 7 years from what I understand. I can undo that. So if thats the case what if any benefit to my score is paying it down? Most the the debt has been sold to a collector. I would rather give the money to a homeless person on the street than some collector trying to make a buck off acquiring my debt. So with the ability to pay, my credit already toast, what should I do? Thanks.

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I'm lost on your train of thinking.

They're your acquired debt.  You should make every attempt to pay  them.

I don't understand why you are critical of collectors "trying to make a buck", but you have no problem with the concept of not paying your own debts.

I also don't understand the title of your message:  Pay Credit Cards, Declare Bankruptcy, or What?  If you have the ability to pay credit cards, declaring bankruptcy shouldn't be an option.

Work with the student loan folks, they have some pretty neat options.  Really - that might make all the difference in the world.

Consider managing the 15% pay cut with a second job.

Cut your budget down.  You may have to be on a killer budget until your ducks are back in a row.  Stop eating out, stop buying "things", slice your food and entertainment budgets, make managing your budget your most interesting hobby.  Fight back - but make every effort to pay the debt you have acquired.  Consider a snowball approach - there's different flavors - find the one that works best for you.

Bite the bullet for a year, get your score up, and get a better mortgage.  We had to do that and we're still alive.  Now have a beautiful mortgage - but I will never ever go for an ARM again.  I let my husband talk me into it against my better judgement, and we paid dearly.  But it was our choice, and we had to dig our way out of it.  It is/was dang hard work, but we are now in a good place.

You'll get some great advice on these boards.  Just be willing to work hard.  And don't worry about your score as much as doing the right thing.  Good scores will follow.

[Anonymous]

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@Anonymous wrote:

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@John35 wrote:

For years I had good credit then a perfect storm hit where I had student loans come due, an ARM adjust, and a 15% pay cut. For about a year it was bad. My score went from the mid 700's to 600. I am not back to a point were I could pay down balances on cards ( about $15,000) currently outstanding. These accounts are all closed and in collections. My question is, they show as poor marks on the credit report for 7 years from what I understand. I can undo that. So if thats the case what if any benefit to my score is paying it down? Most the the debt has been sold to a collector. I would rather give the money to a homeless person on the street than some collector trying to make a buck off acquiring my debt. So with the ability to pay, my credit already toast, what should I do? Thanks.

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I'm lost on your train of thinking.

They're your acquired debt.  You should make every attempt to pay  them.

I don't understand why you are critical of collectors "trying to make a buck", but you have no problem with the concept of not paying your own debts.

I also don't understand the title of your message:  Pay Credit Cards, Declare Bankruptcy, or What?  If you have the ability to pay credit cards, declaring bankruptcy shouldn't be an option.

Work with the student loan folks, they have some pretty neat options.  Really - that might make all the difference in the world.

Consider managing the 15% pay cut with a second job.

Cut your budget down.  You may have to be on a killer budget until your ducks are back in a row.  Stop eating out, stop buying "things", slice your food and entertainment budgets, make managing your budget your most interesting hobby.  Fight back - but make every effort to pay the debt you have acquired.  Consider a snowball approach - there's different flavors - find the one that works best for you.

Bite the bullet for a year, get your score up, and get a better mortgage.  We had to do that and we're still alive.  Now have a beautiful mortgage - but I will never ever go for an ARM again.  I let my husband talk me into it against my better judgement, and we paid dearly.  But it was our choice, and we had to dig our way out of it.  It is/was dang hard work, but we are now in a good place.

You'll get some great advice on these boards.  Just be willing to work hard.  And don't worry about your score as much as doing the right thing.  Good scores will follow.

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I'm glad you mentioned that because there's something I missed.

Student loans are virtually impossible to discharge in bankruptcy.  And they can report much longer than the 7 years that other baddies can report.

[John35]

Wow, thanks for all the great info. Is there a link someone can post to cover the acronyms? I read the reference post by the 1st response and can infer some of the others but not all. Thanks,

[John35]

@beamMeup  The issue I have with the debt collectors is this.

1) I feel my debt is to the bank, I would much rather pay the balance in full now to the bank as opposed to pay a reduced balance to the collector. A collector is nothing more than someone who assumes a risk betting that they can harass someone to pay. They are profiting off someone else's hardship and a banks need to recoup some costs, I find nothing compelling about that.

2) THIS IS THE MAIN REASON - I have no IDEA how much if any paying the debt down will affect my score now that I can afford to pay the balances. If I pay a settlement amount does my score go up by 10, if I pay in full does it go up by 50? I have no idea. The homeless person statement was an inference that paying money to a homeless person makes you feel better but doesn't help your situation, does paying a debt collector help my situation (meaning bring my credit up) or does it just make me feel better? 

[llecs]

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@John35 wrote:

Wow, thanks for all the great info. Is there a link someone can post to cover the acronyms? I read the reference post by the 1st response and can infer some of the others but not all. Thanks,

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Welcome to the forums!

I'd suggest reading the following:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

What Steps Do I Take - great for learning the repair process.

and Example letters - PFDs, GWs, DVs, etc.

[Anonymous]

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@John35 wrote:

@Anonymous  The issue I have with the debt collectors is this.

1) I feel my debt is to the bank, I would much rather pay the balance in full now to the bank as opposed to pay a reduced balance to the collector. A collector is nothing more than someone who assumes a risk betting that they can harass someone to pay. They are profiting off someone else's hardship and a banks need to recoup some costs, I find nothing compelling about that.

I understand your lack of affection for collection agencies.  They can be stinky and rotten.  I've dealt with them and have vowed to never put myself in that situation again.

In the real world, you don't get to pick who your debt is to.  You agreed to pay the debt.  Your creditor had the right to sell the debt when you defaulted.  You still are obligated to pay the debt you incurrred.  You don't get to pick what the OC does when you've failed to keep your end of the bargain.  Whether you like collection agencies or not is a mute point.  They now own your debt.

2) THIS IS THE MAIN REASON - I have no IDEA how much if any paying the debt down will affect my score now that I can afford to pay the balances. If I pay a settlement amount does my score go up by 10, if I pay in full does it go up by 50? I have no idea. The homeless person statement was an inference that paying money to a homeless person makes you feel better but doesn't help your situation, does paying a debt collector help my situation (meaning bring my credit up) or does it just make me feel better? 

Whether or not you pay your obligations should not be determined by how you will personally benefit - FICOwise or any other way.

It is your obligation, you incurred it, and it's in your best interest to pay your debts.

Again, do what is right, and the FICO scores will follow.  Right now, you've got some work to do and need to understand that you are not the center of the universe.  It's just simply not all about you, what you like, or what your FICO score is.  It's about having integrity and making every possible effort to repay the debts you've agreed to repay.

If you don't like collection agencies, don't default.  If you default, pull yourself up by your bootstraps and make the appropriate efforts to pay whoever owns your debt.  Again, they own your debt because you didn't pay the creditor you promised to pay.  You created the situation, and you can respond appropriately. 

Best wishes to you!

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[Anonymous]

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@Anonymous wrote:

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@John35 wrote:

@Anonymous  The issue I have with the debt collectors is this.

1) I feel my debt is to the bank, I would much rather pay the balance in full now to the bank as opposed to pay a reduced balance to the collector. A collector is nothing more than someone who assumes a risk betting that they can harass someone to pay. They are profiting off someone else's hardship and a banks need to recoup some costs, I find nothing compelling about that.

I understand your lack of affection for collection agencies.  They can be stinky and rotten.  I've dealt with them and have vowed to never put myself in that situation again.

In the real world, you don't get to pick who your debt is to.  You agreed to pay the debt.  Your creditor had the right to sell the debt when you defaulted.  You still are obligated to pay the debt you incurrred.  You don't get to pick what the OC does when you've failed to keep your end of the bargain.  Whether you like collection agencies or not is a mute point.  They now own your debt.

2) THIS IS THE MAIN REASON - I have no IDEA how much if any paying the debt down will affect my score now that I can afford to pay the balances. If I pay a settlement amount does my score go up by 10, if I pay in full does it go up by 50? I have no idea. The homeless person statement was an inference that paying money to a homeless person makes you feel better but doesn't help your situation, does paying a debt collector help my situation (meaning bring my credit up) or does it just make me feel better? 

Whether or not you pay your obligations should not be determined by how you will personally benefit - FICOwise or any other way.

It is your obligation, you incurred it, and it's in your best interest to pay your debts.

Again, do what is right, and the FICO scores will follow.  Right now, you've got some work to do and need to understand that you are not the center of the universe.  It's just simply not all about you, what you like, or what your FICO score is.  It's about having integrity and making every possible effort to repay the debts you've agreed to repay.

If you don't like collection agencies, don't default.  If you default, pull yourself up by your bootstraps and make the appropriate efforts to pay whoever owns your debt.  Again, they own your debt because you didn't pay the creditor you promised to pay.  You created the situation, and you can respond appropriately. 

Best wishes to you!

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+1

Just the facts, ma'am.