TIME TO BE RESPONSIBLE.....Paying CHARGED OFF PREDATORY Loans

[Anonymous]

Hello All,

I am rebuilding my credit after a year and a half of being in survival mode. Its hurt the whole way but finally able to take care of my mess.

Question.

I have 3 charge offs from loans with very high daily interest. They are no longer charging interest but since they are charged off I am looking for the best way to move forward. I want/plan to pay them off ($1100, $450, $275) but wondering what would be the best method for my rebuilding journey.

$275: Line of Credit with credit union (got it to help credit and build realtionship    )

$450: Short term Line of Credit with shady Finance place (needed the cash)

$1300: Line of credit with Local finance company with huge daily incurred interest.

I have have the option to get on a payment plan with the larger of the 3 for $50 biweekly that will have to be drafted from my account (on top of making additional payments hopefully).

The smaller 2 I can pay in full within the month.

Would a PFD be a good strategy in this circumstance?

How would you go about this?

Thanks and look out for my full Journey thread!

[gdale6]

Yes you would want to try and get the PFD, if these are with the OC its going to be tough as PFD is geared towards CAs. You do want them to stop updating monthly so your Fico can begin to recover. If someone is willing to give you a loan with biweekly payments I would take it as long as the interest is not ridiculous just make sure you can actually commit to such terms without default again. Welcome to the board

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/PFD-Q-amp-A-Examples-and-PFD-Success-Stories/...

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/PFD-Example-Letter/td-p/4519

[Anonymous]

Thank you for your reply!!

I have the option to a bi weekly pay off through the OC. The way understand this is I am no longer being charged interest, since it defaulted. I just have to pay the amount of $1300, but im assuming they will still report "lates" until fully paid.

Thanks,

[OmarGB9]

If they're offering you a biweekly $50 payment option, they're no longer charging interest, and you can comfortably pay those $50 biweekly, then I'd say go for it! And of course still pay in full the other two charge offs as well like you said.

[Anonymous]

Thank you!

That's my plan. Would it still be reporting negatively every month until the total balance (1300) is paid?

[MyDataMyChoice]

Since you already took the hit to your credit...

Do NOT take out ANY additonal loans/line of credit

SAVE MONEY - at least $2000

You DO NOT Need to pay these in full I would NOT recomend it.  

You can settle these for 50% of the balace.  (except the credit union - if you ever want any credit products there in the future - pay that)

Also to avoid being in this rut again - do not let your savings go below $1000 (even after paying these account off)

If you can save $50 biweekly - thats 1300 in one year -   they will settle by then.  ESPECIALLY with all the COVID related layoffs/defaults coming their way. 

If you have 225@100% PIF/Delete, 1300@50% PFD/Settlement Lump Sum, and 450 @Anonymous% PFD/Settlement Lump Sum 

That is 1150 needed to settle them all.

+1000 emergency savings

=86/bi weekly  OR 41/Saved a week

[OmarGB9]

---

@MyDataMyChoice wrote:

Since you already took the hit to your credit...

Do NOT take out ANY additonal loans/line of credit

SAVE MONEY - at least $2000

You DO NOT Need to pay these in full I would NOT recomend it.  

You can settle these for 50% of the balace.  (except the credit union - if you ever want any credit products there in the future - pay that)

Also to avoid being in this rut again - do not let your savings go below $1000 (even after paying these account off)

If you can save $50 biweekly - thats 1300 in one year -   they will settle by then.  ESPECIALLY with all the COVID related layoffs/defaults coming their way. 

If you have 225@100% PIF/Delete, 1300@50% PFD/Settlement Lump Sum, and 450 @Anonymous% PFD/Settlement Lump Sum 

That is 1150 needed to settle them all.

+1000 emergency savings

=86/bi weekly  OR 41/Saved a week

---

Yes, but that's assuming creditors don't sue you while you make them wait until you save up that money to settle in a lump sum.

Also, when you settle, if the forgiven debt is $600 or more, by law creditors are required to file a 1099-C, which means the forgiven debt counts as income and OP would be responsible for paying taxes on that debt, unless they can prove they were insolvent at the time, which is kind of difficult to do.

Finally, there's absolutely no guarantee the creditors would accept a 50% settlement, or *any* settlement for that matter.

[Anonymous]

When you say I already took a hit, can you elaborate?

Im assuming they still are hitting my account every month for unpaid. And I should have been more clear. They are NOT charged off.. Rather they have been Defaulted.

In this stateI believe they still report monthly as late.

I want to catch them before they sell  to a CA of course but I do like the allure of paying a smaller amount monthly.

What im confusesd on is if they will still negatively report me weekly until paid completely off?

Thanks for you reply

[Anonymous]

I should have been more clear in the title these debts are actually defaulted but not yet charged off.

Would this change you suggestion?