How do I start paying off $16,000 in bad debt?

Question

I have had a few ppl in my life that took advantage of my credit and my money, when I was just out of High School. Now I have a child and a boyfriend. We are trying to get married in the next few years and buy a house, that we can call home. I checked my credit yesterday and I have about $16,000 in bad debt to pay for. I am not sure what are scams and where I should begin. I can only afford about $200 a month, maybe a little more at times, maybe a little less. Is bankrupcty that bad of an idea for me? And does it hurt you as bad as some ppl say? Is there any loan company that will give me a loan to pay it off and pay them monthly? This is so stressful, I am lost, I dont know where to go or where to begin. Most of my credit is medical bills....does that matter?

Answer 1

you won't be able to file for bankruptcy it's much harder to do now than it was before. you can thank people like you who didn't have to file but did anyway. it doesn't matter if it's medical or mechanical they want their money and it looks bad on you. First off realize that you won't be able to get a house in the next few years, be realistic. Call all of those agencies that you owe and ask to settle they usually settle for less than what is owed to them. Then on your other accounts start paying off the ones with the lowest balance first then the high balance ones. Well good luck and I wish you the best. Don't' try those credit counseling agencies, they are funded by credit card companies to get their money back so they are worthless to people like you who are in debt.

Answer 2

Pay what you can to as many creditors as you can at one time. They will want it all at one time, but you should simply work to bail yourself out of the mess.

Bankruptcy will be a credit killer for years, at least doing it this way you can have pride in yourself for being honorable and your credit won't be hurt as badly. Why would a loan company give you a loan? Do you have collateral? The interest rate would be pretty high.

I had a $5000 bill for a hospital and took 5 years to pay off, $75 a month and then settled for like 75% of the balance. You might even want to contact some of these places you owe; they might prefer getting $70 from you now for a $100 debt than waiting years for you to pay off the whole debt. Worst they can say is no.

Answer 3

Look at the dates on the credit reports. The credit bureaus usually list a date on the debt that it will come off of your credit report. I would start paying on the newest ones first because if you start paying on the oldest ones (closer to being dropped from your credit file) it's not going to do that much good for your credit score. Be very careful if you choose to go with a credit consultant. Some are legitimate but lots of them are not. Try the Federal Trade Commission. They offer lots of free info about repairing bad credit. The website is www.ftc.gov

Answer 4

You might try a credit counseling service. Try paying off the smallest bills first, paying only the minimum on the largest bills. When the smallest is paid off, start applying the amount you were paying toward the next larger bill, and move up the scale. Cheer up! The good news is that you actually have $200 per month to put toward your bills!

Answer 5

If you are considering bankruptcy then file a chapter 7 today. The bk will remain on your credit file for 10 years. There is life after bk. In just 2 years you can qualify for a conforming mortgage with some re-established credit.

Answer 6

depending upon the debt amounts and who the creditors are i think that most consumers are satisfied with the outcome of a debt settlement program. they can help to reduce the debt about 50% so that way its a smaller number to pay back and less stressful
you can see an example at http://www.fdnsolutions.com

or read this interesting information

Debt Settlement Vs. Debt Consolidation

Debt settlement and debt consolidation both offer ways of reducing your debt. Debt settlement eliminates part of your loans, while debt consolidation reduces interest rates. Even though debt consolidation has the least impact on your credit score, there are cases when debt settlement is a better option.

Lower Debt

The goal of both debt settlement and debt consolidation is to lower your debt. Debt settlement companies negotiate with your creditors to sometimes reduce the amount of your unsecured debt. There will be a fee associated with the program that equates to roughly 1% of the interest that you will pay if you continue to pay the creditors directly.

Debt settlement can reduce your debt 40% to 60%. A debt settlement program can also cut our payments by 40% in most cases making it easier to cope with your monthly budget. In most cases for a consumer in a debt settlement program they are typically debt free within 2-3 years that can be about half the time it would take in a Consumer Credit Counseling Program or a conventional debt consolidation loan.

Debt consolidation pays off your high interest debts with a low interest loan. Home equity loans provide the lowest rates, but after stretching out the loan over 20 years the 6% interest refinance winds up costing the same amount as a 21% interest credit card. A conventional bank loan will not pay off the debts but rather transfer the debt from one institution to another. This action appears to banks and mortgage companies as a last ditch effort on a consumers part to try and rectify a sinking situation. Many mortgage companies see debt consolidation loans as a sign of stress in your financial situation making it difficult for them to extend you credit in the future.

Credit Score Implication

Reducing your debts through debt settlement is a method to get out of debt in a short period of time relative to your credit history. You credit score will drop, making you ineligible for prime lending situations. You can apply for sub-prime credit after a year however the goal of a debt settlement program is to get out of debt not to create new ones.

Taking out a loan to consolidate your debt will have a major impact on your credit. Since your debt isn’t actually decreasing, you will be negatively hit on your credit for opening another account making your overall situation more overextended. Most debt consolidation loans are issued with the assumption that the problem debt will be paid off and then the accounts closed. However 98% of consumers that get a debt consolidation loan do not close the problem accounts but rather make things worse by incurring new debt on the paid off accounts. Now the consumer is faced with the debt consolidation loan in addition to the new debt on the other accounts that were previously paid off.

Financial Choices

No one financial choice will fit everyone’s needs. While debt settlement will have an affect on your credit report, additional loans may be too expensive. In extreme cases, debt settlement can help to avoid bankruptcy and costly debt consolidation loans. Many debts settlement companies report that about 50% of the debt that their clients put into the program is debt from a prior debt consolidation loan.

Answer 7

If you can avoid bankruptcy, please do. Try places such as "Debt Relief". They will give a a free consultation to see if they can help. Or you can try to work out some type of payment arrangements with the individual companies. If you file hardship with them, they will usually work something out.

Answer 8

Credit counselor.