Single father trying to fix and repair my credit. Need guidance please!

[Anonymous]

Long story short about 2 years ago my ex wife and I split I ended up with debt and hardships. I had a truck leased through southeast Toyota financing and had to let it go because I could no longer afford it. I took out a personal loan just before to try to hang on to the truck in hopes that my money situation would bounce back. I defaulted on both unfortunately and they are both showing on my credit as "charge off" bad debt. I recently received a re-enlistment bonus from the army of $7k after taxes. I'm trying to do the right thing and fix all of this to get my credit back. The owed debt for the tundra is $9k and the mariner loan debt is $4k what would be my best option to fix. Thank you guys for any help!!

[FireMedic1]

Well best thing is call the creditors and ask what they'll take to settle the account. Settled or paid it has to show a $0 balance. The hit from being a CO will stay for the 7yr period. Need more info on what else you have to work on. Thanks for your service.

[Anonymous]

Thank you for the timely reply, i am going to call both of them on Monday and hope for the best outcome! Thank you for the support my friend. 

[FireMedic1]

Cool. The CO hit stays the same. But once they report $0 balance. They no longer affect your overall util %'s. So a small gain in points. But some $ saved. May be able to settle both off with the bonus. Good Luck!!!!!!!!

[Anonymous]

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@Anonymous wrote:

Long story short about 2 years ago my ex wife and I split I ended up with debt and hardships. I had a truck leased through southeast Toyota financing and had to let it go because I could no longer afford it. I took out a personal loan just before to try to hang on to the truck in hopes that my money situation would bounce back. I defaulted on both unfortunately and they are both showing on my credit as "charge off" bad debt. I recently received a re-enlistment bonus from the army of $7k after taxes. I'm trying to do the right thing and fix all of this to get my credit back. The owed debt for the tundra is $9k and the mariner loan debt is $4k what would be my best option to fix. Thank you guys for any help!!

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If I was in your position this is what I would do;

I would not look to pay off the CO's at all at this time. I would let them age off and even be removed once they are 7 years old. Since you are in the military they can not sue you while in there so I would see if they can just go away in time. you can always deal with it if you have to at a later time.

I would take $1,000 of your $7,000 and open two secured credit cards for $500 each. this will report monthly to all 3 agencies. As these new accounts report as a good payer (even if you never use them) the old CO's become less important over time and your scores will increase from both aspects. Open Sky Visa and 1St progress would both be good choices as they are easy to get.

I would take the $6,000 balance and place that in a savings account as an emergency fund. Once you are out of the military you will need money to start your civilian life. to pay the CO's now and have nothing is NOT the way to go.

Thanks

Mark

[FireMedic1]

@AnonymousNot paying the CO's and let them age will open up collection accounts. @Anonymous didnt mention any collections associated with the accounts. Hopefully none. Then here comes more damage to scores from new collection accounts. I understand what your saying. Its always best to fix whats broken first. Dont add more fuel to the fire with more derogs that didnt need to happen if the balances are settled and let them age off. Paid/Settled is always better than owed.

[Anonymous]

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@FireMedic1 wrote:

@AnonymousNot paying the CO's and let them age will open up collection accounts. @Anonymous didnt mention any collections associated with the accounts. Hopefully none. Then here comes more damage to scores from new collection accounts. I understand what your saying. Its always best to fix whats broken first. Dont add more fuel to the fire with more derogs that didnt need to happen if the balances are settled and let them age off. Paid/Settled is always better than owed.

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Oh I agree but only if it can be settled for like 20 cents on each dollar. For the OP to go and pay it off in full is not something any of us would tell him to do. He is doing the country a service and is entitled to a break. (my opinion). He needs to hold onto as much of that $7,000 as possible , its his future riding on this.

Thanks

Mark

[Anonymous]

Thank you both for the info, they are both about 2 year old debt. I haven't seen them pass it off to a collections agency yet. I'm in the Army reserves currently, not on active duty at the moment. So the dilemma I'm dealing with is soon I'd like to buy a house but with those 2 accounts on there I can't get approved for anything at the moment. 

[FireMedic1]

Ah ok. Then it falls into past debts. Everything has to be paid to make the lenders happy. No outstanding debt. Now it makes sense. You'll be fine man. Good Luck on the home!!!!!!!!!!!

[Anonymous]

Thank you my friend, so I should just get some kind of deal going with both of the creditors to pay them off asap? Weather settling or payment arrangements? 

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@FireMedic1 wrote:

Ah ok. Then it falls into past debts. Everything has to be paid to make the lenders happy. No outstanding debt. Now it makes sense. You'll be fine man. Good Luck on the home!!!!!!!!!!!

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