Hello Everyone, I am a college senior who will be graduating in May. I came to college with no insurance, no money and no financial knowledge. I willingly signed up with the cool kids outside of the footballs games for credit cards to get free frisbees, water bottles and t-shirts. At this point, my credit is totally shot and my scores are ridiculously low. ( By the way, I also don't even have the cheap frisbees anymore either lol). This is probably going to be long because I am want to give you guys all the pertinent information. Thank you in advance for any help, suggestions, advice, etc. that you're willing to share with a 23 year old who seriously needs your help. I have about 14 negative items reporting and $14,000 of unsecured debt. The newest negative item is almost a year old (3/09). Two items make up $10,219 of that (a repossessed car and an eviction). The other 12 make up $3781. They are small amounts that I couldn't afford to pay at the time (mostly emergency room visits, one old electric bill, a cable bill my brother ran up in my name, progressive auto insurance, credit cards). About half are shown as charged off the others are collection accounts that are extremely past due. Last year I started paying some of the collection agencies on payment plans and to my dismay all 3 scores dropped drastically, insanely, shamefully, shatteringly low. Who wants to try to do the right thing and be punished by getting an even lower score?!?! Plus, since I started paying again I re-started the statue of limitations. I could have done nothing for three more years and watched it fall off but I was told by the CA that my seven years restarted since I made payments. At that point, I resolved to file bankruptcy. Until I found this site today I felt like that was my only option. Now I'm wondering if I may have other choices. If I could get pay to delete agreements rather than negative hits for paying that would be WAY better than bankruptcy. My parents are going to give me 4,000 for a graduation gift in May and I was planning to use half of that to file for bankruptcy. Now I am thinking that I can use the whole thing to pay almost everything in full, with the exception of the repo and eviction. I don't want to do debt consolidation, I want to pay it and be done with it as soon as possible. Even if I can't do anything about all 14 accounts, 12 down sounds like heaven to me. I can suffer through the remaining 2 CA's calling me until I can afford to pay them I think. But all 14 are killing me. The 12 items that I would be paying off are all with collection agencies. Realistically, how likely is it to get pay for deletes? Is this something I would need a lawyer or financial counselor to do to ensure it's done successfully? Or are CA's usually willing to do it to get the money? If I pay in full even if they don't agree to delete do CA's usually verify disputes after they recieve their full payment? I'm thinking that if they don't agree to the pay to delete letter that I could pay it anyway then after I receive notice that it's been paid file a dispute with the 3 agencies, in hopes that CA won't verify after they have their full amount. Then the items would be removed as well right? Does this sound reasonable at all? In terms of the repo and eviction: The repo is $5848 from spring 2007 the eviction is $4371 from spring 2009. I don't have any extra money right now so I can't do anything about these until the fall when I begin teaching. I'd be willing to offer them settlements for a pay for delete at that point. Do CA's ever agree with pay for delete for settlements? If not, what is the best possible outcome for a settlement? The eviction is with a CA that is reporting. Toyota is still on my report but the account has been sold to several CA's over the years. None of the CA's for the repo have ever reported. That is my whole financial mess of a life. If anyone can tell me how to dig myself out of this pit of hell I would be very very grateful. How can I get my life back? Should I just file bankruptcy? Sorry this is so long. Please offer any suggestions, insights, advice, etc that you can. It would be GREATLY appreciated.
There is your first hard lesson. Never pay a debt collector a crying dime because if you do your scores will drop like a rock. You should sue them for telling you that. They gave you false and misleading information. That is an illegal act and you are telling us that you are willing to let them get away with that and keep on wrecking your score month after month? You didn't reset anything when you paid them money. You didn't reset the 7 year reporting period and if they try to do that they can be sued and make them pay you to go away and leave them alone. Make them take their reports off your credit reports at the same time and then sit back and watch your scores climb. You bet your boots you have other options. Learn how to use informal bankruptcy to keep from having to mess with the formal kind. Quite so, but the question should be one of who pays who? You pay them to delete or they pay you and delete on top of that. I'll take the latter over the former every time. Do you want to waste the whole thing or would you rather use it for better purposes such as getting some decent wheels or maybe getting excellent credit at very little cost? Like maybe $100 or so? The choice is yours, not somebody elses. Good! Debt consolidation companies can't do a thing for you that you can't do for yourself and for far less money. On top of that, if some of your creditors don't want to wait and decide to sue you that debt consolidation will melt away like snowballs in july. They can't help you at all and will run at the first hit of litigation. Pay it and be done with it are oxymorons. Pay it and you will live with it for a very long time. They are bugging you to death on the phone? Learn how to put a stop to those phone calls quickly and easily. On the other hand why do you want them to stop so soon? I love it when they call me but they never do after the first couple or so. After that they know better and don't want any more of that treatment. Not very. That's an idea. Now how many more great ideas can you come up to use to waste your money? They might promise to do it but don't hold your breath waiting for it to happen. Dream on. The repo is from spring of 2007 and they haven't sued you yet? That's pretty amazing but just wait until you get that great teaching job and it probably won't be long until you get your personalized invitation to the next session of civil court where they will attempt to present you with one of their infamous deadbeat awards. Lots of luck. You would be lucky to get them to settle for maybe 80 percent but good luck getting either the judgment or anything else from your credit reports. Isn't going to happen. The best possible outcome is they pay your court costs, your attorney fees even though you didn't hire one, take it off your credit reports and pay you a nice lump sum to go away and leave them alone. Of course you will also want to demand a nice stiff non-disclosure agreement in the process. Same remedy for them. How many years? What state do you live in? Might be out of stat. Informal bankruptcy yes. Formal bankruptcy no.
Hmmm...I think Bill's post may come across as being a little harsh, so don't take it personally. Anyway, let me just say welcome to the forum and I do hope you can find some advice here that will help you make good decisions regarding how to approach your personal credit situation. Now, the good thing you have going for you is that you're young. Yea, your credit might be wrecked now, but credit improves with time and that's one thing you should have a lot of in the future. It also sounds like you have a job lined up for the fall, so I'm assuming you'll have income to help you dig out of this hole. It wouldn't hurt to still get a free consultation at this juncture from a good bankruptcy attorney who can take a holistic look at your entire financial picture and provide you with options. But Bankruptcy is always a last resort in my book, and I'm not an attorney, so I tend to be an optimist and think there's always a way to dig out of the hole. I also personally believe it's better to pay your debts than run from them. That doesn't mean you should give up on your rights as a consumer and get walked all over, but it does mean that if you have the means to pay debts you truly owe, then why not do everything you possibly can to take care of them? Of course, you still have to watch our for #1 along the way. You've asked a lot of questions, but let's focus on the 12 debts that account for about $4K right now. Negotiating PFDs is possible, but not easy. If you can't get the CAs to agree to PFDs for payment in full, then compromise on something that's at least better than an unpaid or even paid collection. Both are very damaging to your credit scores, so research some other options and plan how you will negotiate in the event PFDs are absolutely unattainable. I've got to run, but I'll be back later to try and offer some more thoughts that might help. Hopefully others will chime in as well.
Thank you BillBauer and JoshuaHeckathorn for your responses. BillBauer- LOL, I appreciate your candid responses. After reading your post, the one thing that is glaringly clear is that all of my ideas are bad ideas. One lesson down, a lot to go it seems. I wish I found this board sooner. Now that I'm here, would you mind telling me where to start? What is an informal bankruptcy? Where can I learn how to get through this successfully? JoshuaHeckathorn- Thanks for the welcome! I understand what you mean about paying back debts if I can afford to do so. That's how I felt last year when I started paying. I'm not so sure I still agree with that though. My concern is this- unpaid collections and charge offs look shitty. Paid collections and paid charge offs also look shitty. In fact, paying hurt my score more than not paying. I will be teaching in the fall but my salary offer isn't great. I don't want to sacrifice to pay when it has no benefit. That seems oxymoronic to me. I'm interested in learning how I can improve my score. It seemed logical that paying back would do that but it had the opposite effect. At this point, I want to do whatever will allow me to have a better score. Do you have any ideas as to how I can do that?
You can start by clicking on the link in my signature line below. That will lead you to my links page which has many links to other resources and articles. Following those links will keep you occupied for quite a while but you will learn a great deal. Another great resource is to be found here. That web site has all of the FDCPA annotated which means that the links you find there take you to court decisions which explain how the courts have ruled on various portions of FDCPA or to the various FTC opinion letters which deal with that particular section of FDCPA. That web site is a rare find indeed since it is pretty well annotated. When studying law one needs to stay with the annotated statutes rather than just the plain statutes. That is because a statute isn't really valid law until a court of law has ruled on what the statute says, what it means and who it applies to. Another source one should always refer to when studying a statute is the definitions section. All statutes have a definitions section which also explains most of the words in the statute, what they mean and who the law applies to and more. If you fail to read and understand the definitions section you can easily come up with all manner of incorrect assumptions and bad ideas. It is also necessary to understand that the law is a living thing and changes constantly trying to keep up with life in our modern society. Old laws are superseded with newer decisions and changes in the law and it's interpretations.
Paying back collection accounts can improve your credit score if you make your credit score part of the negotiation. But as you've learned, if you fail to negotiate your credit score as well, a paid collection is just as damaging as an unpaid collection. To the credit scoring model, it's still a collection, which is a negative mark. Anyway, as far as improving your credit score, there's plenty you can do right now. You need to start building positive payment history again, but you have to first decide that you will use credit responsibly from this point forward, always live within your means, and always pay your balance in full. Take some time to do a little research here and find out what kind of new card, perhaps a student or secured credit card, you can qualify for and get it. Then, start building positive payment history again and keep your utilization low - preferably below 10% Also, do you have a close friend or relative that would be willing to add you as an AU on one of their old credit cards in good standing? That may give your scores a little boost as well.
