Cccs?

Whether you go thru CCCS, or do it yourself, you need to know what your financial position is, and you need to ensure that you are on track to where you want to be. Your scores are only one measure of that, and if your level of debt is the problem, that number is a better measure.

What is your total debt?
Monthly income?
Monthly living expenses?
Monthly debt payment cost?
Monthly interest cost?
Monthly debt paydown?

At this rate, how many months will it take to pay off that debt?

 

If you have $600/month available to pay down debt, then in a year you could have the debt paid off, not including interest. With interest at 18% APR, more like 1.3 years. That is not a bad period to get things turned around and tipping in your favor, and you would still need to be disciplined to accomplish it even if you shift your debt by using HELOC to stop accumulation of interest at penalty rates.

You would not, for example, want to pay exorbitant fees and interest on a HELOC that would undermine any benefit to doing so for debt you intend to pay off in a year or two. In particular, you might not want to do that just because it appears to be an easy path, if by doing so you now spend several years or longer actually reducing your total debt back to managable levels. You have also put your house at additional risk.

Since some part of how fast you get out of this may depend on existing high interest rates, the faster you pay that portion off, and shift your lendability and terms on the rest, the better. In addition, some debts may represent a higher risk, such as a judgement which you might be forced to pay anyway as a condition to a HELOC.

In addition, if some debts are past SOL, and due to fall off in 1 to 2 years, you might focus on paying off more recent debt first, to produce the fastest improvement in scores, and the fastest reduction in legally colectable debt obligations. Similarly, if one of your apparent credit score positions is better than the other, you might focus on improving that first, with the goal being to shift debt to better terms as opportunities arise, to reduce your carrying costs.

What expenses can you cut? Existing cable? Extra or extravagant cell phone plans vs. pay as you go? Magazine subscriptions? Eating out? Planned travel/vacation expenses?

The sooner you shift expenditures to debt payoff, the faster you get the marginal return from that decision.

 

You are trying to ratched up your position any way you can. Some payoffs may not produce an immediate credit score improvement, since even paid collection accounts count negative for a while, but you will produce an improvement over time and as they drop off eventually, but if you are not trying to to a major purchase on credit, that doesn't matter. Make progress where you can, and as your scores shift, use that to shift remaining debt to better terms to accelerate your ability to pay off the remainder.

What settlement offers do you have? What type of debt, how old, is it past SOL, and can you accept the settlement, pay it off now, and move on?

 

Unpaid charge-off has got to be worse than settled for less than full, and at least you might chop maybe $500 off your outstanding debt. If, so be sure to keep your documentation of the settlement (offer letter) and make sure your payment check and accompanying letter indicates that it is being settled in full in response to their offer, and what original creditor and account number is being settled. Keep copies of everything.

There are cases where consumers settle with a CA, and years later some other CA shows up and wants the difference.

 

Some people prefer to reduce their debts maximum payoff (highest interest rate) first, which all things being equal, should reduce your debt the fastest.

Others prefer to proceed on what you might call maximum psychic benefit first, getting some of the small debts out of the way to get early success, or getting the most harassing creditors out of your life first to improve the stability of your life.

Another approach looks at recovering your credit lendability fastest, perhaps trying to preserve some existing credit relationships if you can, pay down those debts that have the longest time to damage you if not dealt with, and removing risk of suit first.

Choose what works for you, since the details are secondary to the discipline and follow thru.

 

If it is not yours, dispute it. If it is paid, and not accurate and is damaging, dispute it. There is no down side here.

Just realize that if it is yours, and you owe it, and it is within SOL, if the error is minor, disputing it may get as a response additional collection activity or a lawsuit if it is worth it.

So do what makes sense.

 

Another opportunity to improve your cash flow is to check your withholding.

If you are having too much withheld, and always get back a substantial tax refund, you are loaning the government free money, and paying steep, and non-deductible, interest for nothing. And too many treat their refunds as a windfall, unexpected money much of which can be spent outside of their budget controls.

Better to adjust your fed and state WH to match your actual liabilities, recheck and readjust a couple of times a year, and use the difference to pay off debt earlier, so that your return on that payoff is at your highest marginal rate.

 

I have no specific experience with CCCS, so I can't comment on that path in general, or any particular company in particular.

It is my understanding that paying your debts thru CCCS can result in that being noted on those accounts on your credit reports, which can have a negative effect.

I think that in making your choices, you have to look past the period during which you will be paying down your debts, to where that will leave you when you are done. In addition, for the amount of debt you have, you would have to consider any fees, and the effect of any delay in paying thru them, both on reducing your debt quickly, and on affecting your credit thru payment history. It looks like you could pay this off in a little over a year anyway.

 

I am neither for, nor against, CCCS.

It just appears to me that either way, in a year you are about in the same place, except you might try to minimize credit report damage to the extent you can.

I would probably get the judgement out of the way early. For debts where I was not sure the amount in collection was correct, I would request validation. I might also try to pay first recent debts, where it could be paid before charge-off, to try to limit longer term credit damage, or try to pay and keep open existing revolving accounts as a base to rebuild new credit.

 

I just finished a 3 1/2 year stint with CCCS. They were very helpful in my situation. I was not behind or delinquent when I went to them, but I could see it coming. They were able to reduce payment and interest rates. You can always speak to someone, see what they can do for you, and then make your decision.

 

Michelle,

I can tell you are trying here and are very confused and frustrated. This is only natural and I applaud your effort to learn and address your situtation. That is more than most do and shows that you are indeed a responsible person. With that said, please do not take my comments as derogatory insofar as I am only trying to assist you as are others here.

Here is what I've ascertained from your posts:

1) You want a home, and

2) You've got some old collection accounts.

There are brokers who will find you funding with a minimum score of 520. The rates will be bad but if you are paying $1000 per month in rent, you could easily get into a 100k home for that. True, it wouldn't be the greatest but it would be yours. Moreover, after the first two years of a 2/28, you could refi if you work on your scores.

I would seriously consider disputing all these derogatory accounts. You do not have to use a "not mine" dispute and do not do so if they are your accounts. With collections and debt purchasers, there are all types of latent and patent inaccuracies within the tradelines. Furthermore, if you request validation, there a few more standards they have to abide by. There is nothing unethical or dishonest about disputing accounts that belong to you so long as you have a solid basis for doing so. It is their job to comply with the FCRA and FDCPA. You should not feel bad about doing so.

This is business. We all make mistakes, however, you should not punish yourself by forking over money to those people who can't prove up you owe. In any event, paying off old collections will not likely help you get a home. It may help in terms of a non-conventional load such as FHA or the like, but not in terms of a conventional loan. In fact, it may actually hurt you in terms of FICO scores (I know it will with Experian) because it will make the account look more recent. It's hard to tell 100% but I wouldn't make payment until it was a last resort.

A short rundown of the mortgage industry may assist you here. Typically, a 520 will get you in the door with most "subprime" lenders and rates. Often, the don't care what you owe. The rates can swing from 8% on the front to 15% on the back. This is with 100% financing. A 580-620 will get you a better deal but not much. 620 will get you into a marginally affordable rate. 680 and your pretty much prime. 700-720 and your in no-doc land.

What this means is that with a little tweaking of your reports here and there (utilization, auth user accounts, inquiries, etc.) and you can get in a home soon. Dispute some things off and it's a no brainer. You may consider asking your friends or relatives to add you to some of their old, positive accounts. As a last resort, you may even consider paying for one or two. Anything to raise at least two of your scores to as high as possible (mortgage and rate is based upon the middle of the three credit reports).

Just give it some consideration before opening your purse.

 

Yes, you first request validation from the CA's and only CA's. Wait for the RR to come back and then dispute any of their tradelines through the CRA's. The basis for your disputes is contingent upon how they are reporting. You will need to look at your reports to see how they are reporting inaccurately. After they receive the request for validation, the CA's must also mark the tradeline as in dispute. That is something to keep an eye on.

With scores in the mid 500's, you can get a mortgage now. You just have to find the right broker.