What's the difference in having bad credit history versus having a bankruptcy on your credit, and you trying to rebuild? I have about 3 credit cards with awful payment history, but I am current now, but I still can't get good interest rates on credit cards, and I still owe out the bazooka!
A BK will stick around for ten years. If you do everything right, most bad history will be less important after two years.
I was told BK stays for 7 years. So you are saying after about 2 yrs with BK things will start turning around for the good? What about 2 yrs, paying my bills on time with the bad credit history????
Another question??? What about a credit counselor with the bad credit history??? I am thinking about using one to make payments and get a lower rate, what about this instead of the BK??? As you can see I am grasping at of the straws possible...
I am not advocating BK at all. I think BK is something for extreme situations. Mine was extreme - owed over $500k in taxes. IRS is the CA from hell. I would avoid credit counselors, etc. They make money off these deals and don't represent YOUR best interests. If you're able to make the payments and keep on top today and have no recent bad history, then keep going. If you're still having problems, time to do some serious research. Look at how much how owe, the SOL in your state, what your assets are, etc. and come up w/a strategy. My story can be found on this board. http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&threadid=54102 http://consumers.creditnet.com/straighttalk/board/showthread.php?threadid=52490
Thanks for the reply... I did some quick research... Is it true that the SOL only works if you don't make any payments for whatever amt of yrs in your state? What do you do if you have been making payments for a 3 or 4 year old debt, that just won't go away???
Honestly, here's what I've found: Bankruptcy can haunt you, and unfortunately some people view this as a complete "escape" from having to pay those bills. Fine. It is a serious negative, and many lenders (prime) will not touch you at all until it's gone (7-10 years after DISCHARGE, depending on the bankruptcy type). Now, with that said, I was a fool and actually paid off $60K of my bills (there's only one that I won't pay, and unfortunately it's a judgment on my CR). That judgment is what is keeping my scores down, so MOST people 2+ years post BK have significantly higher scores than I do. I have more positive accounts than negative accounts, by far, and am hopeful that after getting my credit card balances down below 20%, and after this judgment falls off my report in 3/05, that my scores will finally be "prime". I've barely scraped over the 600's on my EQ and EX, and my TU sucks no matter what I try (cannot get above 550 with them, and most cases I'm near 490... the [expletive deleted]). So, point is, bad credit can be bad, bankruptcy can be bad, it all depends on what you do afterwards. In large part, it depends on your situation. As I also stated, with other public records, my scores are impacted for the entire 7 years, and there is little that can be done about it, whereas BK's will have their scores increase (and offers for credit) greatly after 2+ years. On a laughable note, I did just get three pre-approved offers for the Aspire Visa (LOL!) By next year I hope I get better offers than THAT!
Thanks for the reply... Why do you say that you were a fool to pay off the 60k in debt? I think that's the situation I am facing, I have 25k in credit card debt, that I have been paying, and I am currently on all but 1 acct. Do I continue to pay for years on end or say screw and wait 3 or 4 years, and have them deleted under the SOL???? I can't get reasonably rates right now, am I just stuck paying bills for the next 5 years????
I am living through this situation right now and would vote no on the BK, except as a last resort. I am 8 years out and the BK is still haunting me and preventing approval of prime credit. If I had worked on keeping my accounts current 8 years ago that would all be a distant memory now. This assumes you have the income or cash to work out the current problems.
That's just it, I have just enough, and sometimes not enough to cover the monthly payments to just stay current, can't even think about getting ahead, or trying to save something. I look at all the postings that say their credit rating has improved, and I want to know how???? I could get ahead, if I could get some lower interest rates, with lower payments.
Try to get a second job, flipping burgers, 7-11, whatever. Put EVERY PENNY that you earn there on your debt. Make a spreadsheet of your debts with interest rates and balances. Assuming that you are not over limit on any of them, sort by interest rate. Pay minimums on everything except the highest interest rate. On the highest interest rate account, pay every penny possible. When that is paid off, add whatever you were paying on that account to the minimum on the next highest interest rate (this is now your highest). Keep going until you get it manageable. Make sure you don't have any payments missed or late. Don't close the accounts as you get them paid. This will start to help your ratios. If you want, use one for daily expenses, but make sure you pay it in full every month. If you search the board, you'll see where I've posted my story several times. I have paid off most of $77K of unsecured debt. Soon, I will be in a position that my mortgage will be the highest rate account I have! I won't pay the mortgage off, however. I have other theories about that. The point is that I may start only paying minimums on most of mine and build up some cash reserves for emergencies. I would say definitely don't do the BK unless it is really a last resort. There are some times (certain jobs, etc) where you are asked if you EVER filed BK. And it does follow you for 10 years. My husband filed when he divorced his first wife, and the only way he started getting credit was with me on the account with him.
Thanks for the reply...it's very encouraging. By the way how long did it take you to pay down the 77k?? If you don't mind
Also, I was thinking just the opposite about the budget.. I was thinking to pay off the smaller balances first, then concentrate on the larger balances? What's your take on that idea? My balances look like this: $500 - 22.8% $700 - 17% $1800 - 14.99% $6900 - 19.99% $5200 - ???% $4200 - 10.10% $3800 - 16% $3200 - 0% $1100 - 14% Any thouhgts would be greatly appreciated
I'm living proof that even a Chapter 7 BK'er can get prime credit 7 years post BK (CH7 remains 10 years). Before the 7th year out of a CH7BK, the best I could get was CCB, FP, Cap1, and Providian. All with annual fees, low lines, excessive fees, etc. But I stayed the course and kept them open and while I was able to get some fees waived, it was never a guarantee. Overall, pretty bad. After 7.5 years since filing: BofA -- Denied initially, approved via PFB After 8 years since filing: Citi -- Approved after receiving 7-10 day message MBNA -- Approved after talking to credit analyst. AMEX -- Approved after calling for reconsideration. So yes it can be done. Keep your chin up and never take no for an answer. Won't work every time, but if you've rebuilt your credit and demonstrated a long history, that plays a huge part in getting approved. I still cannot get signature cards, but don't really need them yet. I've tried other banks and was not approved, but once the BK falls off, I can choose who I give my business too, that is a great feeling I am looking forward too. Keep your eyes on the prize and know there is light at the end of the tunnel.
It has taken me 7 years to pay off the $60K, and even with that, I have had difficulty getting credit. In fact, I still have scores in the low 6's (low 5's on TU), and cannot get financed on a car at this point under 17.9% interest. By May, all cc balances will be $0, and all collection accounts should be off. The one judgment is the thing that I think is killing me, so I'll know if it was worth it after 3/05. If my scores don't improve dramatically, I will be living proof that there is something drastically wrong with this system. I personally know of at least five people who had larger debts than I did, and who filed BK, and who have higher scores (and get better rates) than I do at only 2+ years after discharge.
It took about 5 years to pay it off. But I did get a lawsuit settlement and some inheritance, all of which went on debt. What a difference a little extra makes! Even a little extra. That's why I suggested a second job with all of the money from it going to debts. After a few months it will get addicting and you'll try to scrounge every penny you can to pay on bills.
The fastest way to pay it off is ALWAYS put the extra on the highest interest rate. Balances mean nothing. Some people suggest paying the lowest balance first. The idea is that it makes you feel good. The problem is that you are then paying the higher rate for a longer period of time. If you want to track your progress, do it at the total level. Don't even think about individual balances. Work your interest rates. If you get BT offers (you may not now, but you will when you start to pay off debt), move your money to as low a rate as you can get. I'm almost at the point that all of my remaining debt will be at 3.9% except my car and mortgage. I don't care if one of my cards is maxed--I'll deal with that as the balance goes down. And maybe I'll get limit increases. Make your spreadsheet, as I suggested. Card, balance, rate at a minimum. I put the minimum payments and my current payment in as well. I try to keep the bottom line current constant or increasing. So as minimum payment decreases on one card, add that amount to your current payment on the highest rate. Every month, you update the sheet with new balances. Also, make sure you check the rates every month. Some of them will change. If they do, where the extra money goes changes as well to the highest rate. When the highest rate is paid off, take that "current payment" and add it to the minimum of the next highest rate. That's your new current payment for that card. You will see your total balance decrease every month. Worry about that, not individual balances. It only makes sense. If I pay off a 10% card, that amount of money is still on the 20% card compounding interest. Look at Butch's rule of 72. Get that total interest down as fast as possible by paying the highest interest rate at all times.
