Wow. I've got to step in and disagree! Most large creditors use an automated dispute verification system and they do verify once paid. A lot of collection agencies will verify out of spite, a sense of righteous indignation... whatever. A lot of disputes aren't even really verified because the cras are lazy and break the law: and they will leave the bad and delete the good. why? predisposition against consumers and for their creditors who pay their salaries. Pay a percentage of double and/or triple the original debt to a collection agency? ugh. and without deletion and then hope a cra dispute will clear it? ugh again. a bk gets rid of the underlying debt and not just the reporting of the debt. when you're buying a house, the reporting of the debt can keep you from a loan... but even if she can hide/dispute some of that down and get a mortgage with 20 percent down... being sued for the underlying debt while still under the sol will get your house attached with a judgment (with the added 1-2k atty fees and then mandatory state interest pre and/or post judgment) the point isn't just clean reports... the point is also making sure the individual is protected from losing a large asset that will be purchased by some nice parents... trade lines don't "come off easily"... I mean come on, the old way of just disputing with the cras is the least effective way of getting something off... it's a "hope and pray" method. and what's the point of paying without a full delete in the settlement letter anyway? So you're advocating paying the full bill for what? nothing? UGH again. a bk isn't easy to dispute off. that is correct. but after 2 years it really doesn't affect your ability to get credit. I've now got over 40k in revolving credit available, 23k of it completely prime and even an Amex with an open credit line... 3 years post bk7. I could right now get a mortgage at A rates... so who cares about that bk entry. It doesn't stop me from getting what I want and that's the real point of the credit report... the score looks at the last 24 mos of activity most and she likely doesn't have good active trade lines on her reports either... meaning her score will be in the toilet until she reestablishes some credit to balance either the bad or lack of credit once she works on cleaning her credit... does the credit report help you get what you want or not? is it useful? that's its only point. the way hers is now, I'm sure she can't finance a stick of gum with all the original creditor and then collection agency entries right now... I just don't get this post and it seems like an institutional party line... pay in full then dispute with cras... that's just dangerous advice and least effective method so I had to say something... Regarding the bk: if I knew then what I know now, I'd do it Lizardking's way and wait on the house purchase... but I am also aware that a lot of people can't or won't do what we know how to do... and a bk can be a swift discharge of all her debt in one move... then she could use the parents money to do a 20 percent no doc loan and have no debt, get the mortgage, and not have to look over her shoulder again... then she could get 1 secured credit card, clean the reports at her pace... and the reports really wouldn't matter: she'd have a house and 1 credit card. what more do you really need???
With filing a BK do you really think she can purchase a house any time soon? I'm sorry, but I don't believe so...at least at a prime rate. They will end up socking it to her if anyone will approve her at all. Plus, if she was even to consider such a thing..which I thing would be a dreadful mistake she needs to speak with a BK lawyer and then she has to hide the additional assets she has coming her way. If she were to declare BK and then show up to buy a home with 35K down you don't think anyone will suspect anything? As I have stated before, I believe BK should only be used in the dire of circumstances - family members death, your own ill health (or spouse's), sudden unemployment, and in some cases divorce. If she was to show up a couple months later with 35K in hand (anywhere) she could get herself prosecuted with fraud. And it won't be any of us on this board doing jail time. Dani
One thought I had with Lizzardkings post. As I recall, he only had 5 or possibly 6 cards he defaulted on. This person with 20 or so, the odds that one or two or three will be able to validate are probably fairly decent. The more I think about it, the more I think BK is a better solution. Owing less than a $1000 on average per card is not enough to really make any of these cards deal on a deletion.
Also, no where in my paragraph did I advocate paying the full bill without deletion. If she wants to settle with the original creditor, collection agency, Superman, whoever then she should settle for deletion (I have nothing against this and I believe it would be the smartest way to go). Dani
Dani, This person can qualify for FHA financing at conventional rates with 24 months of clean credit post bk. 6 months after a bk discharge, you can win the powerball and there is nothing anyone can do about overturning the bk. I assume the person won't blurt out to the trustee "let's hurry this along, I've got $35K coming from the Bank of Mom and Dad". You are correct though, they ought to see a lawyer .
several different issues here. So now you want a prime rate directly after a bk? You're completely joking right!!! Nope. but she won't get prime now anyway. the point was a mortgage... not a prime mortgage. we have to work in the confines of reality. II know sometime in the first year she can get a reasonable rate that's backed by fha... and I do know conventional rates are within reach by 24 mos... she might have access to someone's va loan... again, we don't know her circumstances so we don't know what she might be able to do or not... in 2 years with perfect mortgage payments she can refinance at a better rate. If you're doubting my veracity about my credit scores.. they're now all over 700 and the public record bk is the only derog I have so I can get prime paper.. but that's my business not hers. I did some aggressive tactics to not only rebuild but clean my reports. most people won't work on their credit as a hobby... As for the bk, the assets aren't hers so it's not a bk issue: but, if she had an impending lawsuit success, inheritance etc then the assets could be considered by the trustee. they're not her assets, they're her parents... there's no fraud with the filing of the bk. I've already stated I don't think her parents have any business giving her the money now... that puts her in the worst position possible. You're jumping the gun even with the bk assumptions. If she's in Florida a house isn't even considered in a bk 7 (the equity) even if you currently own it... You can bk and keep the equity in your house. One guy did it with 1 million in equity and he bk'd his unsecured debt away. While I don't agree with that... it's legal. again, we don't know enough about this person to really evaluate the situation anyway... get an atty??? well, of course. duh. really what you're doing is making an ethical choice here based on what you would do and when you think someone SHOULD file a bk... well, that is your standard and that's fine but objectively the person we're discussing needs to consider all options. a bk can be a good option depending on the circumstances and their tolerance for risk, their intelligence and their ability to understand some of our tactics and just the sheer tenacity to do them... they're time consuming and if her life is in upheaval then perhaps none of this is really a course she can do.... we don't know her so we can't judge... Now, as to my real feelings here: with her financial life up in the air like this I wonder if she can even handle the long term payments of a house, but that's a different concern. If this WERE my friend, I'd have the parents buy a house and let her live in it with a lease to own agreement.. putting aside part of the payment for her as a future down payment on the house... then I'd objectively deal with the debts she has now, look at her budget, income stability, etc and make a decision on a course of action. we don't really have all the facts here so we're throwing out ideas and seeing what sticks... we don't even know if this person even wants to work on her credit...
Keepmine, I agree with your agrument, but the key word is qualify. I have a sister-in-law who filed BK four years ago. To this day, she and her husband cannot qualify for a decent home mortgage rate. Dani
that could be for several different reasons. They could be over their heads in debt again (cars etc). They could have too low of incomes for the mortgage requested...they could have missed or been late on their current mortgage payments or on car or new credit card payments... perhaps they didn't rebuild much current credit so the formula doesn't have much to work with, they could have new errors on their reports or applied for a ton of credit and got turned down and the inquiries are hurting the scores... or maybe they can qualify but don't know it and have lenders who are lying to them... their current bank will want to keep them at a higher rate for the obvious reason...if they don't know their scores and the corresponding rates that will go with them... maybe they do qualify but aren't getting the right rate... it happens a lot... again, too big of a jump from here to there without details...
They can't qualify for several different reasons, as you mentioned. Nothing is guaranteed (except death and taxes). Dani
Dani, We agree 100 percent On a personal note, I actually hated filing bk, I cried when I signed the papers... but laughed after the 341 meeting. With one effort, all the looking over my shoulder and worrying was finally over... I had serious ethical issues with it but had fought filing for several years and just couldn't do it anymore... I wish I had made the objective decision to file earlier. I would have been better off. I actuallly had the tenacity (and lack of knowledge) to really try and settle my accounts. I had original creditors tell me to file bk because they're better off if I filed. I didn't understand that but I now see how they can profit more writing off a debt completely, it's so overinflated it's a joke... I've realized you just have to step back, be objective, and make your decisions as though you're a business... it's the only way to do it.
Marie, I like your point about how chargeoffs are overinflated. Do you remember Cable666 who used to post here? He hangs at the motley Fool now and he mentioned once that he owed about $30K when he defaulted. He spent 4 years trying to settle with no luck. He stopped trying when the SOL ran out and with default interest rates and fees, it was well over $60K.
If you look at it from a business standpoint, chargeoffs are not only necessary but useful. They offset a lot of real income and taxes... I wish I could overinflate the bad debts that are owed to me so I could shelter some income. Let me write off my brothers' debts to me. All the tows I paid for late at night, the bailing out of friends, the impound fees I paid for them with the full knowledge "I'll pay you back Sis" means I just gave them an early Christmas present... let me take a loss times 3 because of my fees and interest.... I didn't actually loan that amount... but who cares...financial institutions don't pay tax on interest they don't collect (but the IRS will make us pay tax on 5% interest if we loan money free to friends or relatives)... even though we don't actually get the money... I would never again feel bad about a chargeoff per so, because I'd just be helping the financial institution shelter income in a big way. Doing them a favor so to speak. and while they'd try to collect it, I'd (free of charge) give their collection agencies a free lesson on the fdcpa, fcra, etc via a little lawsuit... it's really a big service we perform and perhaps we should now view it in that light We're chargeoff consultants... and we're getting more expensive as the days pass so hire us now, while you can still afford us
Nodding, lizardking's plan as numbered is working for me. I've all bad tradelines, all old, all under 1k, and all inaccurately reported. Just starting but am now getting first results back. No responses to validations sent and first dispute with TU = all but 1 deleted. Sassy
Marie, great and sincere advice as always! from the intimidation of the CA's, the time involved in actually facing responsibility, and the grief of BK. I don't regret my C13, but had I the knowledge, time, and stamina to do it again, I'd first challenge the inaccuracies of my credit reports prior to filing. Sassy
