have bad credit and want to start building it up, what is the best course of actioin, should i pay off old credit cards, i think they are so far gone that it would not help anymore, theyve been passed from collection agency to collection agency. or should i get me a secured card and just maintain it? what about bankrupcy? didnt really want to do that but dont know much about it
2006-10-30 03:39:41 · 8 answers · asked by PITT59 1 in Business & Finance ➔ Credit
As far as doing a BK, talk to a lawyer for details but if you were my friend I’d say if you can pay off all your debts within 3 years, do it and don’t do a BK. If you think that is impossible to pay off all your debt inside of 3 years, do the BK7.
Be very skeptical of credit counceling services. Although non-profit, many are puppet agencies of the banks and credit card companies. Like collection agencies, they are often paid by the credit card companies to collect from you. Using a credit counseling service will not help your credit record.
You should at least consider a bankruptcy. Most BK lawyers will give you a free consult. The total cost of the lawyers services should be about $600 to $1200 for a simple case where you do not own real estate.
If you don't own a house, you might consider a chapter 7 bankruptcy. A chapter 7 BK will wipe out all your old unsecured debts (except student loans & some taxes) and give you a fresh start. Once notified of your BK, no company or collection agency can legally try to collect the debt anymore. No more calls or letters. If you own a house, they can in some cases, make you borrow money on it or sell it to pay your debts in a chapter 7.
There is a different type of BK called a chapter 13 which involves paying back a small portion of your debts over 3 to 5 years. This may be a better choice if you own a house since it can usually allow you to keep your house. The amount you pay every month is based on your income and not how much you owe.
A BK will be on your Credit Report for 10 years, but you should be able to buy a car and get an unsecured credit card on your own in about 2 -3 years if you maintain good credit after the BK.
I know people who have bought a house 2 years after a BK7.
The interest rate you pay on any loan will be higher than other people with good credit, but that is true with or without the BK.
Without the BK your debts can dog you and drag your credit score down indefinitely. Every time the debt goes to another agency they can ding your credit.
My personal recommendation is, above all else, handle your credit responsibly from now on!
2006-10-30 04:20:29 · answer #1 · answered by John L 5 · 0⤊ 0⤋
Going back to pay old debts will not help you at all. The debt may be too old for the creditor to go after you. Example, the bank has only 4 years to sue a resident of California for the credit card debt. They can leave it on your credit report for 7 years. Check with your state. Check out www.itsadebtorslife.com...great site
2006-11-02 09:43:39 · answer #2 · answered by itsadebtorslife 1 · 0⤊ 0⤋
The answer depends on the age of the items in question. For home loans usually items older than 2 years are disregarded. They cab still come back to haunt you and demand a settlement but after over 2 years they usually charge it off and sell the item to a collection agency. However, anything that reports under PUBLIC RECORDS (judgements, tax liens, child support) would have to be paid...and 7 years doesn't cover many of these items.
2006-10-30 12:04:17 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Pay off your debt. Stop the bleeding.
Right now you have negative credit. If you can pay off your debt, then you won't have outstanding payments anymore. It's not positive credit, but it's not negative.
Once you're even, then you can start over with a low limit credit card. Pay responsibly, and your credit score will begin to rise.
2006-10-30 11:43:23 · answer #4 · answered by trigam41 4 · 0⤊ 0⤋
Pull up a copy of your credit report. Anything that shows up, you should try to pay it off so it will be dropped faster than usual. If you haven't already, you can get a free copy of your credit report at www.annualcreditreport.com. It's totally free and you can get a copy once a year.
2006-10-30 11:43:24 · answer #5 · answered by DJ 5 · 0⤊ 0⤋
Bankruptcy is the way to go but after that start rebuilding your credit.
2006-10-30 12:05:03 · answer #6 · answered by asexystudd 3 · 0⤊ 0⤋
If you owe someone and you have money to pay it, do the respectable thing and pay.
2006-10-30 14:00:03 · answer #7 · answered by Blackjack 2 · 0⤊ 0⤋