When I was 17 I received a pre-approved notice in the mail for a chase freedom credit card. I will never know why they sent me this offer at an age where I wasn't even old enough to have credit, but I applied, and they approved me. I began applying for other cards but was never approved due to my age. Less than a month later I turned 18 and applied for a capital one card just to try, and was approved. All in all, I applied for a total of 43 various credit accounts including retail stores and catalogs, and was approved for 19. I know this because of the credit report I ordered that following year when I had realized what I had done. I've asked myself how I let things get this bad, and have narrowed it down to either my bipolar disorder, the fact that I was a teenager and didn't think of the consequences this would have on my life and my future, or the combination of the two. Regardless, here I am 5 years later, with a really bad credit score and a feeling of helplessness. I am so overwhelmingly in debt but have been told many times that bankruptcy should not be an option. At the same time, I have been told by many people that settling these debts would not help my credit enough for it to be worth it in the end. I purchase a credit report every year and my score is going up. I also have one SECURED credit card that should improve my score some, but I have a couple questions. 1) Is my best bet to keep trying to improve my credit score as-is? Or should I file bankruptcy? 2) How long does it take and how much will a secured card really help my credit score? Thank you everyone!
How much debt do you have and what income/assets do you have? There are a lot of factors to take into consideration before deciding to go the BK route, but if you have income/assets to settle debts and pay down others over time then I would choose to take that route instead. Even if it does feel more painful. Filing BK is a major life changing event and should only be used as a last resort in my opinion. In response to your 2nd question, credit scores improve with time. As the old negatives gets older and eventually fall off your reports, your credit scores will improve as long as you're making the right moves now. So, at the same time, you need to be doing everything possible to add positive payment history to your credit history via the secured credit card and other products as you begin to qualify for them. What's your current FICO score? Oh, and don't waste money purchasing your credit reports every year. You get 1 free report from each of the CRAs each year via annualcreditreport.com by law. Check it out.
I have approximately $20,000 in debt. The only asset I have is my mitsubishi eclipse which is worth around $2,500. I agree that BK should only be a last resort, and being so young, my best bet would be to do like you said and let the old records fall off of my report. How long does that typically take? My credit score is 548.
Hmmm...that's a sizable amount of credit card debt, but I've certainly seen worse. What about your income? Do you have enough of a stable income to pay down this $20K over time if you cut expenses bigtime? If not, you may want to get a free consultation with a local bankruptcy attorney and learn more about your options. Most old negative marks should fall off your reports in 7 years. However, as time passes, they also have less of an effect on your credit scores as newer information is more heavily weighted.
Remember, bankruptcy may and probably should be a last resort, but your credit score will actually improve with a discharged bankruptcy more quickly than if you try and wait out all of those debts. And sometimes those debts don't just disappear. You may get sued on one of those 19 credit card debts. Yes, you may have a statute of limitations defense, but it is still going to cost you time and money if you defend the lawsuit, and if the debt collector gets a judgment against you, you risk the debt collector enforcing that judgment. I don't know where you live, but they may be able to garnish your bank accounts, lien your real property (if you have any), or go after non exempt assets. I'm not trying to scare you, but that is the potential reality with the wait and see approach.
was there any way, that you can clear it one at a time. just try to clear those whom you think are easy to clear.
As Joshua mentioned, what is your income? Depending on how much you make, you might want to explore credit counseling programs before taking a leap into BK. These programs will typically lower your interest rates substantially and stop all late fees and penalties. If you don't want to enroll in any type of debt relief plan, just pay off the highest interest rate card first while paying minimum payment on the other accounts. This method is called the debt stacking method. You can do a little more research on google if you want to learn more about it. Don't feel too terrible, many of us have all been there at some point in our lives. The important thing is to learn from your mistake and avoid going down the same road. Good luck!
Yes I would definitely exhaust efforts in all other options before filing for bankruptcy. It would be something on your credit report for many years and although 20k in CC debt is very bad, I believe it's manageable.
I agree with everyone else that has responded to your thread. Use bankruptcy as a last resort, with some planning you could manage to pay down the $20K of debt if you have a descent income. If you do decide to file bankruptcy your credit score could jump 100 points after it is discharged. Thanks! Heather with BoostMyScore.NET
