Re-Building Credit? Debt Consolidation?

Question

Here’s the situation:
Last June (2006) my Husband and I went to our Lawyer and said we wanted to file bankruptcy. We started the process then (June 2006), and the lawyer told us to stop paying ALL of the things we were filing on…so we did. It has been a year now, and we had run into a few problems along the way and our case is STILL NOT filed with the courts. It is to be filed this month.

My Husband has gotten a better job and now we want to do a debt consolidation INSTEAD of filing for the bankruptcy.

My Questions:
1. Can we still do a debt consolidation after not making any payments to the creditors for a year?
2. How long after the consolidation will it take for our credit scores to go up?
3. How long after the consolidation should it take to get approved for a mortgage?

Thanks!!

Answer 1

Im no expert, but it seems if your bankrupsy has not went through the courts yet then you should still be able to pull something to get out of it. I certainly would try. You should explain this over with your lawyer. A debt consolidation would be much better for you than bankrupsy. I think that bankrupsy kills your credit rating for like 7 years or so.
Also, your creditors would probably rather see you go with debt consolidation than bankrupsy as well, so i really would push for that route.
Talk to your laywer, and good luck.

Answer 2

I was on the same situation and this site helped me MYLOANSRATES.NET-

RE Re-Building Credit? Debt Consolidation?

Here’s the situation:
Last June (2006) my Husband and I went to our Lawyer and said we wanted to file bankruptcy. We started the process then (June 2006), and the lawyer told us to stop paying ALL of the things we were filing on…so we did. It has been a year now, and we had run into a few problems along the way and our case is STILL NOT filed with the courts. It is to be filed this month.

My Husband has gotten a better job and now we want to do a debt consolidation INSTEAD of filing for the bankruptcy.

My Questions:
1. Can we still do a debt consolidation after not making any payments to the creditors for a year?
2. How long after the consolidation will it take for our credit scores to go up?
3. How long after the consolidation should it take to get approved for a mortgage?

Thanks!!

Answer 3

You should really be asking your trustee. But if you have not yet filed the papers I don't see why you can't change your mind, however once it has been filed there is no turning back and you will not be able to apply for a mortgage for 7 years after going bankrupt. I have never heard of this whole situation taking a year before. That's crazy. Every time you make a payment on time it will help rebuild your credit. Seeing as you were filing for bankruptcy I am assuming you are very far into debt and if you have made no payments for a year I don't think you will get a mortgage anytime soon. However if you can come up with a large down payment they will probably accept you.

btw debt consolidation is not a bad idea. It is not borrowing, it consolidates all your debt into one monthly payment and also in some cases has your interest reduced or cleared completely.

Answer 4

Yikes! That's a sticky situation that you are in.
Since your bankruptcy papers have not been filed, you are able to change your mind. Talk to you lawyer and see what he says about that.
If you want to go the consolidation route, make sure you are with a reputable agency - someone like CCCS. They will want a good explanation as to why you had not been paying your bills for an entire year. Be prepared for that. They want to work w/ people who are making an effort and showing good faith.
Be advised that the consolidators usually tell their customers to stop paying their bills in order to negotiate interest rates, get them on the same payment schedule, etc. Since you have already stopped, this will further hurt your credit. It will take a few years to get your scores back up. You also want to make sure that you are not late w/ your consolidation payments. Once you are in a program, they will report to the credit bureaus and the accounts you choose to have consolidated will show up as "in consolidation" or "in payment arrangement" on your report. If you default on that, it looks terrible to potential creditors.
Normally, it takes people at least 2 years to be approved for a mortgage loan if they filed bankruptcy (only if they reestablished their credit during those two years, mind you). Even though you're not filing, you should still give yourself at least two years to get everything paid and try to reestablish some credit. If you have some accounts that you are not going to include in the consolidation, make sure your payments are on time for all of those no matter what. When trying to obtain the mortgage, the lenders will probably want to see that you are 'graduated' from the consolidation program and that you can handle your finances on you own. So, whenever you are all paid off and reestablished, that's when you could seek financing.
I hope that helps and I wish you the best of luck!

Answer 5

Debt consolidation is a bad idea. You cannot borrow your way out of debt. It doesn't make sense. The fact that you haven't paid any of your debts in a year make you an ideal candidate for debt settlement.

How it works is that you would pay into a fund each month until sufficient funds are built up to make a legitimate settlement offer with your creditor. Here's what happens with your account with the creditor. After about 4 months of uncollected payments, the creditor will charge off the debt and sell the account to a collection agency, which pays between 8 and 12 cents on the dollar. This gives the negotiation process a starting point. The program normally is between 12 and 36 months determined by the speed of funding into your settlement account At the conclusion of the program, you can do damage control and work on rebuilding your credit.

Under any circumstances, your credit rating will take time to rebuild. But there are things that you can do while you're in the program to expedite thing a bit.

Answer 6

Hi, I have never filed bankruptcy, butmy mother-inlaw did 18 months ago and they just got approved for a mortgage. when they filked, they recieved abunch of those cc with high interest rate offers and they accepted 4of them. 2 in hers, 2 in his. They kept those for 9 months just charging little things that they had the cash for like toilet paper,laundry soap, and gas.They sent most of the payment except like $5 or $10, to keep a revolving balance, they were givebn acredit limit increase after four months, and six, and seven, at the ninth month they closed 1 card each and recieved an American Express, after a year with the other one, they closed it and got a chase card and still did small amounts. Also, after they filed bankruptcy, they put their tax refund in a cd at the bank and the 9 month mark they got a car loan with the cd as collateral and a $2k down payment paid the car off 2 months ago, which was 10 months early, and filed last week for the mortgage and they got approved! They filed ch. 7 if that helps. They had tried debt consolidation 3 years ago but got really screwed by the company. So they decided for bankruptcy in the end. It's your choice what vto do as u know what's best for your family. If you do decide to go bankruptcy and want to try to build credit like they did here are some websites:
www.mysalutecard.com
www.mytributecard.com

also search for Orchard Gold card
Premier Bank credit card- this is a really good credit builder card, high interest and high feesfor first year, but when you prove yourself they drop it down like a normal card. If it wasn't for them my credit would still be bad and I'd be walking.
Good luck and God Bless!

Answer 7

Opt for a debt consolidation loan:The easiest method of getting a debt consolidation loan is to utilize the equity of your home. Equity of your home is calculated and determined by the difference in the amount you have paid and the amount you owe. If the amount you have paid is more than the amount due, you can use it as collateral. This allows you to borrow money on lower interest rates. Besides, you also get tax benefit on this type of loan. Consult your tax advisor before opting for this loan.

Answer 8

DO NOT do debt consolidation. Most debt consolidation agencies are either complete scams, charge exorbitant fees for stuff that you can negotiate on your own, or do nothing to help you but a lot to aggravate you. Most debt consolidation agencies charge upfront fees/deposits, and they will try any way possible to avoid giving you back your deposit. For example, they will say that they don't give you your deposit unless you pay off an account through them...but then they will do little annoying things such as "lose" your payments that you sent to them or send in your payments late, to the point that you get so fed up with them and want to get "out" of debt consolidation and do it better on your own...and then they try to tell you that now you won't get your deposit back! The customer service with debt consolidation tends to be as bad(or worse!) than that of sleazy subprime lenders.

A lot of the "legitimate" debt consolidation agencies will promise to negotiate with your creditors for smaller minimum payments and lower interest rates...but most times they do not follow through on this. You end up spending so much time following up to make sure that the debt consolidation agency is doing their job, that you end up feeling like you're doing all the "dirty work" for them...yet THEY'RE the ones getting paid, in the form of extra fees that you pay to them to service your bills??

Debt consolidation in and of itself won't hurt your credit score, but if they screw up(which is very very common), it can. They will tell you to stop paying your creditors, and to simply pay one bulk payment to them. But what they don't tell you, is that if they mail the payment late to creditors(which happens quite often), you will STILL suffer the delinquencies/lateness notes on your credit report!

F--k debt consolidation. You're way better off calling up creditors and negotiating on your own. If the account is in collections already, then leave it be and only pay it when you are financially stable enough to. For example, it is a mistake to pay off a collections account in place of paying for food or rent that month. It is also a mistake to pay off a collections account with the only money that you have to pay the minimum on your other credit cards. Don't let debt consolidators hustle you, or bill collectors bully you. So call your creditors asap to work out a more doable payment plan for you. Pay off collections when you are financially stable enought to. But if the collections are older than 3yrs old, I would NOT recommend paying them. Why? As they age, the bad effect of a collections account on your credit diminishes. Plus, paying an old collections will bring the account up to "current," which will actually DROP your credit score for the 1st 6mo. after you pay the collections.

Answer 9

for the credit details u can try this