Bankruptcy Or Credit Repair??
I am currently in a bad position with a rapidly declining credit score, 2 liens totalling 24k and many unpaid debts.
I was wondering if it is easier to just file bankruptcy or if I should try to get one of these companies to try and fix my credit.
I understand that if I just have my credit repaired I will still have all of these debts waiting in the wings.
I want to start using credit to buy properties instead of cash but of course Im screwed with my score the way it is.
If there is anyone out here that has filed bankruptcy before I would be interested in knowing how long it took you to regain your credit. I know it used to take years to get the bankruptcy off of your report but Ive also heard that its not the same nowadays. Please anyone with info or advice post here, I am very desperate to get started on one or the other. Thank You 
The time for bankruptcy is usually when things have gotten as bad as they're ever going to get and are on the way up, but some creditor has come out of the woodwork to press an asset seizure or garnishment.
Bankruptcy stays on your credit reports up to ten years, although most potential creditors basically ignore it after seven years.
If you're considering bankruptcy, you should keep abreast of the bankruptcy "reform" legislation currently wending its way through congress and ultimately toward the president's desk. It's "mean" to debtors, and the ugly fact is that even before it gets passed, it has already motivated bankruptcy judges to take a closer look at whether people qualify for Chapter 7 ... if not, they're being pushed into onerous Chapter 13 plans.
As bad as things are for you, you should probably consider buying a personal bankruptcy for dummies book, and also looking at www.budhibbs.com for the "debt avoider" side of the coin.
If there is nothing for creitors to go after, or its not worth them going after( a bunch of other creditors), you will be better than to just wait the 7 years rather than to file. It seens like a long time, but you can pay CA$H for everything and you will gain disipline that cannot be learned any other way__Trust me on that one__ That way you credit should be cleaned up by 7 1/2 years--I am still trying to get stuff from jan 97 off my transunion, but I think bankruptcy might have been easier and quicker- but is will haunt you for a longer time-but I am a much wiser and thrifty person (family) now.
A lot of people think bankruptcy is SO BAD. People everywhere talk about it being THE END OF THE WORLD. Let me tell you something from experience: I filed bankruptcy to discharge about $30,000 in bad debts...and I mean bad. As derrogatory as it gets. Within 3 months of filing, my credit score went from a 330 to 590. NO JOKE. I have used Equifax's credit score analyzer to estimate what my credit score will be by paying current debts on time for the next six months, and it reports that my score will be in the 617 to 637 range. Why lose sleep over debts that you might never be able to pay when you can pay a lawyer $900 and erase everything and start over?
Bankruptcy does stay on your record for up to 10 years, but see what a lot of people don't know or don't tell you is that the second you file your bankruptcy petition, you will get offers from banks to extend you new credit because they know you can't file again for 6 years (on a Chapter 7).
Another thing that you hear a lot is that the debts will only stay on your record for 7 years. This is true, BUT, what people don't tell you or don't know is that those companies can sell your account to different collection agencies over and over again FOREVER and those agencies will continue to report NEW COLLECTION ACCOUNTS to your credit report. This can go on for the rest of your life. This is a trick that many creditors are using and were using on me. That's why I filed my Chapter 7 bankruptcy. Hope this helps!
The DOLA (date of last activity) is the DOLA, and re-aging by subsequent "owners" of the debt is illegal.
I'm not saying you won't have to fight outfits like Sherman Acquisitions, Asset Acceptance, and Risk Management Alternatives that buy past-statute of limitations debts for a penny on the dollar, but you have a right to have those items deleted.
Check out this article:
http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P74812.asp
I and my family ran into severe credit problems in Nov 96 and went to CCC in jan 97 and was told our best bet would be to file bankruptcy, we had 150k in secured debt(our house and land) and over 120k in unsecured debt-credit cards, lines of credit, some were 12 years old, Home Depot, etc.... At that point our phone was ringing off the hook from creditors. We always had good credit and just in a few months the floor fell in. Income went from 80k+ to 30k including unemployment. No one wanted to know anything, they just wanted thier money. Wife was ready for the rubber room.
I went to a lawyer and paid him $1200 to complete the paperwork--the only hitch was we had accumutaled 150k in IRA and 401K accounts and he was not sure how much, or if that much would stay procected from the court and trustees. We decided we would file as soon as the 1st lawsuit came. we waited and waited we got all kind of calls and just said we were not home and loads of mail from the 24 or so creditors and I mean loads--sometimes 20 pieces a day, but no one sued us. Now just this week I got my credit report straightened out -Not a single derogatory mark on it. Wife went back to college (we paid CASH as she went)l a few years ago and is now and RN and working and I am going to nursing school now-done in Nov. For those long 7 years and still now, we pay CA$H for everything. Heating oil, cars, insurance, all repairs etc...we always paid our home mortgage but never paid any other creditor.
Did I plan it that way ??NO, but I did what I had to do for myself and my family. Now just last fall I took money from those retirement account (after the market correction, naturally) and bought a duplex CASH and put 20% down on a 4 unit and another duplex, (had no problem financing them)and am looking got another triplex or quad now, and we still have 100k in that retirement account. AND we are starting to to finally see the light at the end of the tunnel.
Would I have been better off if the creditors each got a piece of that 150k in retirement money and the state would have had to pay for health insurance and wefare for my family (5 kids) or was I better off doing what I did. And now I do have a little nest egg and learned a big lesson. but if I did file bankruptcy it would still be on my record for 3 more years. Both I and my atty could not believe that no one even attempted to sue us, but our CRs looked bad and they probably figured it would have been a waste of time.
I did not mean to give my life story, but I just wanted to lend my experience to your question----and do note---what you owe is not a lot of money and perhaps you can pay it back in time--that would be the best I think, but I just owed so much if would have been impossible. BTW I worked for a Co. 18 years that was just sold and closed up in a few weeks with NO notice and I am still waiting for my holiday, vacation and sick time pay.......over 30 grand that i will never see and my wife worked for Service Mercahdise for almost 20 years before they closed her store and filed for bankruptcy and she lost all of her pension and most of her 401K on that deal.
Sorry for being long winded about this, but it is not a situation that you want to discuss w/your neighbors, if you know what I mean.. Think about what is best for you in your current situation
[ Edited by jenkie01 on Date 03/20/2004 ]
[ Edited by jenkie01 on Date 03/20/2004 ]
[ Edited by jenkie01 on Date 03/20/2004 ][ Edited by jenkie01 on Date 03/20/2004 ]
You're right Jenkie...think about your situation. That's why I did a Chapter 7...I didn't have any saved assets for anybody to take. If you have loads of assets like you did, then you have to really think hard about it. I just related my experience because the Chapter 7 BK was the best thing for me to fix my credit because I had no assets to take.
All of the above, plus:
If you file a chapter 13, you can try applying for a real estate loan after it's been discharged for a year. It's two years with a chapter 7. The interest rates will definitely be higher, but if you're flipping or the cash flow numbers work, it might be manageable. THen you can refi when your credit improves.
usaully a real estate loan would be the best to start with--- especialy if you have 20% down, it is often had for a lender to say no.
And then we can look at the bigger picture...What bankruptcy does for our economy and everyone's finances.
It's very unfortunate that so many prople are selfish in the fact that they feel they can spend money without responsibility and then forget about paying the creditors. This, in turn, affects the interest rates, loan requirements, etc. as banks incur many outstanding debts.
Karma does exist. If you shaft someone and then get a rental property...Beware!
Quote:
On 2004-03-21 09:13, AcquisitionCorp wrote:
And then we can look at the bigger picture...What bankruptcy does for our economy and everyone's finances.You mean, of course, rehabilitating debtors so that they can return to their productive lives and not be a deadweight drain on the economy?
I think that Bankruptcy is the last resort and should not be used to make a bad day go away.
[ Edited by Stockpro99 on Date 03/21/2004 ]
Every successful person has had hard times (usually brought on by ourselves) the responsible thing is to "deal" with it.
30K is minimal and can be paid off. I was in a similar situation, moved into a small basement apt. ($100 per month and help the elderly owner) and it took 7 years but I paid it all off. I have almost an 800 now.
I think that as a rule bankruptcy is for the unmotivated "loser mentality" though there are legitimate exceptions. Too often it is the "first remedy sought for poor decisions" and should be the last.
In your case it seems like a case of the "wants", you want to invest now, having debt is slowing you down, and bankruptcy is an easy fix.
You incurred the debt, do the grown up thing and pay it off....
Selfish? Did I forget to mention that I ended up with the $30K after working to pay off about $70K, but that the collection accounts were going to stay on my credit for 5 more years? I filed bankruptcy, becasue the sad truth is that the bankruptcy actually HELPED my credit. Now, when creditors look at my credit, instead of seeing collection accounts and telling me no, they see collection accounts and then they see a bankruptcy and now a majority of the time tell me yes, simply because the bankruptcy off-sets the collection accounts.
Yes, I wish I didn't have file bankruptcy. Yes, it should be a last resort...but its a viable resort, and our country's laws permit us to do it. If its not against the law, I don't see why so many people bitch and moan when others do it. If it becomes illegal, then you can complain about it. Until then, as far as I know, its still a free country, and there is still nothing in the law that says its wrong to file bankruptcy.
Ethics and the law don't always go hand in hand. Just because something is legal doesn't mean it is moral.
I watched a friend prepare to file bankruptcy, then charge the max on his credit cards, new computer, furniture, games etc.
Was what he did legal? I have no doubt as to the ethics....
I would never do business with him or anyone like him, ever..
You're right on about that StockPro99. What your friend did is something that is definitely questionable. As for people who just get themselves in too deep and need relief sooner than 7 years, BK is definitely a viable option.
Wondering how many points my credit score will drop from Chapter 7 filing?
Thanks :-?
Well, Chomsky, mine actually went from a 330 to now a 590, and I just filed in December 03.[ Edited by kjxs on Date 03/24/2004 ]