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     | Tuesday, February 27, 2001 - 01:25 pm  About 2 years ago I went through a messy divorce that left me with large debts and expenses higher than my income. I eventually stopped paying on my credit cards. Now that I have reached a point where my expenses are less than my income, I was going to attempt to resolve the debt. I don't think I can pay it off, though, and was considering bankruptcy. Reviewing my credit report, all the companies seem to have charged off my debt. At this point, I'm wondering if I would just be in better shape to ride out the next 5 years until it goes off my record, or actually file bankruptcy. Also: one company, I'm not sure it's the original debtor, has been applying "payments" to my account of $150 on a fairly regular basis. I'm not sending this money, they're just posting payments. I think they're doing this to keep extending the 7 year time-frame, since it's 7 years from the last activity on the account. Is this legal? Thanks for any info you can give me.
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| | Tuesday, February 27, 2001 - 04:31 pm Are those payments just for interest, or are they reducing principal? It's not legal if done to extend the SOL or the time to report to the CRAs. You need to find out what your SOL is (See the "Links" section) and of course, how much do you owe?
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| | Tuesday, February 27, 2001 - 04:54 pm File bankruptcy. Your credit score will go dramatically up within 6 months after discharge.
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| | Wednesday, February 28, 2001 - 06:01 am It shows up on the statement as a payment, with a little "Thank you for your payment" note attached to it. The debt on that card is about $11k. My total debt is about $40k. Nobody except for that one company is even contacting me about it anymore. They're not sending me statements or calling me. I lived in Georgia when I obtained most of these cards, I lived in California when I obtained one of them, so I guess I'm looking at the SOL for both of them. My main concern is the length of time it'll take me to get back to the point where I could apply for a mortgage loan. It seems to me if I just wait 5 years, my report should be clean. If I file bankruptcy, I'm looking at 10. Thanks for your help, Iceman
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| | Wednesday, February 28, 2001 - 11:50 am 40K is a lot! Since you want to get a mortgage, I'd look into bankruptcy. Your situation is very different from Dave's friend as you have BAD credit already and you owe twice the dollars. Of course I also haven't seen YOUR budget and know nothing about your employment. I think you should definitely look into bankruptcy, there are many discussion here on the advantage of bankruptcy over charge-offs when it comes to getting a mortgage approval. With strong re-established credit you're looking at 2 years from discharge for mortgage approval with the best rates under CURRENT guidelines. A potential problem is of course that now you make more money and you may not qualify for a Ch. 7 discharge. You also need to keep in mind that any of these creditors could start COLLECTING any time. Sometimes as late as 7 years later! You have no way of knowing what they'll do. You could be in escrow to close on a home when the SURPRISE collection account shows up on your credit and you'll have to PAY that before you can close. Contact a couple of bankruptcy attorneys offering free consultations and see if it's even an option.
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| | Wednesday, February 28, 2001 - 11:53 am Forgot about that mystery payments. I've never seen anything like that. Keep those statements. Which bank is it?
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| | Wednesday, February 28, 2001 - 02:05 pm Could your ex wife possibly be making those payments? If it was a joint account it's probably on her report as well so maybe she wants to clear up her credit? Even if you officially got stuck with the bill in your divorce papers, that really has no legal bearing on who the creditors can and will go after on those joint accounts. That's why I'm assuming they could be trying to collect from your ex.
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| | Wednesday, February 28, 2001 - 02:22 pm My experience started as a college student, I gave up paying on my credit cards. They showed up as charge-offs on all my credit reports. Then 2 days before the SOL was set to expire (according the the documentation a collection agency produced), and well after the SOL expired, according to the dates on my reports, a sleezy collection agency filed suit against me, and ended up with a judgement. Apparently, unless you have a witness from the credit bureau, a regular credit report is not considered as admissable evidence. It's hear-say. I really got burned on this one. To do it again, I'd request verification of the date of last activity from the credit bureaus, that way, I'd have some documentation on the date of last activity. I should have gone with a BK when I left school. Then I wouldn't have had this come up 4 years later.
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| | Wednesday, February 28, 2001 - 02:44 pm Mel, you might be right. And Gary, I don't understand this at all. Isn't the start of the SOL related to the last payment you made? What kind of documentation did the collection agency provide?
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| | Thursday, March 01, 2001 - 05:36 am No, it wasn't my ex. All our joint cards were cancelled and I assumed the debt on my own cards at the beginning of the divorce. The creditor in this case is First National Bank. I guess it's moot, since the overwhelming consensus seems to be that I should file bankruptcy. Thanks for all the information and advice.
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| | Thursday, March 01, 2001 - 11:18 am Well that's really interesting. All I know about First National Bank is that there are a tremendous amount of web searches for them, and there are probably 20 banks with similar names. Anyway, check with SEVERAL bankruptcy attorneys soon since we can expect the "bankruptcy reform."
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| | Thursday, March 01, 2001 - 06:46 pm I moved the legal discussion to Proving and DISproving payments, discovery?
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| | Friday, March 02, 2001 - 04:17 am As an addon to what Shylock and Christine said, I filed 8 months ago. I got my discharge two months ago. Since then, I've sucessfully gotten an unsecured credit card with a $750 limit (crappy rate, but hey, it's just to re-establish credit), an auto loan at 16% (not great, but not the worst I've heard of). I saw my credit score the other day - 595 -- not bad for 2 months after discharge. I owed about 65k. Most of it CC debt, most of the accounts charged off. My score BEFORE ch7 with all the chargeoffs was a whopping 525. -Dave
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| | Friday, March 02, 2001 - 10:27 am Reality check: Maybe the new Next Gen scores rate bankruptcy much harsher. Maybe FNMA will change guidelines and require 4 years to qualify after discharge. Maybe you'll apply for a super job one day and they'll turn you down because of the bankruptcy. I'd say 65K is worth the risk. But 19K? How does that compare to the cost of your new car?
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| | Friday, March 02, 2001 - 06:10 pm Who ever said anything about 19k other than the post that I had mentioned for my friend? And the only reason why I even mentioned ch7 in his case is because his debt is 100% of his yearly take-home pay. I'm not saying bankruptcy is the best option. Far from it. But if your scores are horrid, and there's any chance of someone trying to collect that large of a debt from you, why deal with it? FYI: The only place I've ever had pull my credit report was Equifax, when I considered moving to Atlanta to work for them. Guess what? They still offered me the job. In talking with other people, jobs pulling your credit report is the exception rather than the rule. I work for what's effectively a bank, and they didn't pull it. For now, it was the best solution for the time. It sounds like it may be the best solution for this person too, maybe not. That's why we're all here to discuss.
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| | Friday, March 02, 2001 - 07:26 pm I didn't mean that personal, was just in a hurry to point out that we are seeing changes. I certainly want to read how things work out for you. You've been lucky too. I guess I'm missing senator's postings. He had a rough time and often posted about the problems he encountered. I also find it hard to believe that a recent bankruptcy won't affect the ability to get a rental. I don't want people come back to this discussion 2 years from now updating that FNMA changed their underwriting guidelines and now they lost $20K in rent credits for their lease option. As I posted previously, I definitely want Iceman to see several bankruptcy attorneys. But based on the changes I have seen over the last 10 years, I detect a trend. Anything is possible. The bankruptcy reform is not only part of this trend, but also reason to file while you can. Unfortunately I have no idea what the new bankruptcy changes exactly are, my day has only 24 hours.
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| | Friday, March 02, 2001 - 07:58 pm What I'm actually hoping to see, if bankruptcy reform actually does get passed (which I don't want to see), that perhaps part of the stigma will be removed from it. Who knows, maybe bankruptcy won't be such a horrid credit mark anymore because it'll be reserved for the people who Bush and the banking industry feel really need it... Or, maybe it'll be worse... Who knows.
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| | Saturday, March 03, 2001 - 01:49 am If you file ch7, you can expect a mortgage around 11% one year after discharge. I chose to wait one more year (2 following discharge), continue to work on the cra reports which were an unmitigated disaster. I got a new cc shortly after filing to reestablish. Bought a new car but am paying 17%--but didn't have to pay any down. All in all, a really bad bad time. I personally would file right now because the new law looks to be a mechanism to hurt the middle class. This economic downturn we're entering is going to be a whopper. Many will be hurt financially. Even tho i survived the reorg many did not and are having to work for less pay. The bill is designed to keep you in ch 13 and pay off the cc bills. the fico and credit will still be ruined for a time. I think, however, it takes years to get back some cash reserve (try to build it up to 3 years, not 6 mo), be prepared to pay higher interest rates. If i were a woman dependent on child support, i'd be rallying the troops to stop this bill. I haven't read it in its entirety because legalese is just bs I can't take anymore. The whole system is so corrupted by lobbyist money and the middle class just keeps getting screwed. I normally would say reserve the ch7 for huge debts--well in excess of your 60k--but the times they are changing and now is the time to get the debt monkey off your back and start fresh. good luck.
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| | Tuesday, April 03, 2001 - 08:21 am Im having a similar dilema. I have $30k of credit card debt that I have not paid on in over 1 year. I am now getting notices from attorneys of judgments for these accounts. In the long run,(3-5 years) would it be better for me to file BK, or try and arrange pmts with the creditors. cannot afford the pmts they have proposed, so the judgements will more than likely be enforced. The way I see it, I can declare BK, and put $6k a year in the bank, or I can make pmts and be out of debt in 5 years, but with 5 judgments. By making pmts, with my present income, I would be $800 in the hole each month. I would have to sell my truck to make ends meet. With BK I would surrender my truck, as I have a second car. How will future creditors see the difference between these 2 situations. I think I will be much better off going with BK, but would like a more educated opinion. My goal is to be able to rent a place of my own within 12 - 18 months, and to buy a house in 3-5 years.
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| | Tuesday, April 03, 2001 - 11:17 am Discharge your debts ASAP. See a few lawyers offering free consultations, if you qualify, go for it. The sooner you file, the sooner you'll be on your way to having acceptable credit scores and getting a mortgage. OLD judgments and collection can destroy your credit much longer than the Ch. 7. Anyone who thinks that people have a "moral" obligation to pay their debts should read Small Claims complaint against VoiceStream Wireless for failure to refund the deposit. Corporate can legally defraud us and they do it millions of times every day. Because they can. It's our legal right to discharge our debts. Just do it!
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| | Tuesday, April 03, 2001 - 11:37 am Christine...tell me a bit more about qualifying...I am ignorant as far as this goes. Also I have found a website that for $129 will allow you to fill out all the forms online, and supposedly give "secrets" and eliminate the use of a lawyer, Any insight to sites like this one?
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| | Tuesday, April 03, 2001 - 12:10 pm Go see a lawyer. Bankruptcy laws and the exemptions vary by STATE. Basically, you have to show that you can't afford to pay your bills. You need to prepare a budget, a list of debtors, judgments, etc. and a lawyer can tell you right away whether you qualify. We had one person here who had $300 in "disposable" income and he was very lucky he didn't get converted to a Ch. 13. I can't speak for "a" website and seriously recommend you get a lawyer. There's an awful lot of crap on the web. It's only a few hundred dollars for a lawyer, why risk screwing up?
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| | Monday, April 09, 2001 - 04:57 pm Hey DT, what CC bank are you with? What's the interest rate? Also, Senator, how long and where did you qualify for a new car with zero down? Inquiring minds really want to know as I am almost 1 year out of ch7.
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| | Tuesday, April 10, 2001 - 10:11 am arcadia financial out of Minneapolis for the car. 17% but it beats the 24% I was paying. As of 9/1/01 I am two years out of ch 7. It will be crunch time for buying a home. I believe I can get the car rate down after two years with a credit union i recently joined. With regard to arcadia, call around to dealers to find out who they work with. I was soundly rejected by wells fargo and a couple others. I got an Isuzu and they put the deal together. When I applied I was about 8 months out of ch 7. Car dealers are desperate to move inventory. I suggest waiting on the deal until the end of the month when the crunch is on to meet sales goals and deal only with the credit manager--the average sales guy won't be able to handle the deal. I also suggest that you know your scores ahead of time and ask what cra is used. the dealer used the best score with me which was somewhere a little over 600. he of course ran the stupid report about five times dinging me with every run. good luck--I think it eventually gets better.
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| | Monday, April 16, 2001 - 05:42 am Anonymous: I currently hold 3 cards. Capital One, MBNA, and First Consumers National Bank. I figured I'd try to stick with the bigger names (though everyone's had their problems with all three) to get reputable reporting. I'm just holding onto the FCNB card until it's aged at least a year (for history purposes) and then I'll get rid of it.
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| | Monday, April 16, 2001 - 09:39 am Bad move.
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| | Monday, April 16, 2001 - 05:11 pm I didn't want to start a new topic but wanted to post this item in this pertinent topic. Today when I got the mail I received an invoice from Ford Motor Credit for a car that I had retained after I declared chapter 7. When I filed I was informed by Ford that I would never receive an invoice and so for the last almost 24 months I have paid the monthly lease payment and nothing was reported on my credit file. On the invoice today I not only have a late payment but over $200 in late penalty fees. I plan on calling tomorrow and demanding a copy of the account history but am wondering if anyone knows if Ford has unilaterally changed its policies regarding former bankrupts or is this another method they have discovered to shake down more money like their infamous Associates Mortgage scam, preying on subprime individuals
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| | Thursday, April 19, 2001 - 11:39 am Christine, Why do you see it as a bad move? -Dave
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| | Thursday, April 19, 2001 - 01:20 pm Dave, it will lower your scores.
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| | Thursday, April 19, 2001 - 04:15 pm Senator, Ford has not changed its policies and still routinely sends out its form letter that all payments shall be voluntary and that there is no need to reaffirm. In fact, last week I had to telephone to request a reaff form because they did not send it unsolicited in that case (I received it within 2 days). But were you actually late in the car payment? You see, the bankruptcy discharged your personal (in personam) liability for the car, but not the property's (in rem) liability. So the terms of the auto installment contract are still in effect, but only as to the car, and not against you. That means that they still have the right to repossess if you are late in payments, because that would not be an attempt to collect on a discharged debt, but would only be an effort to enforce their rights against the secured property.
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| | Thursday, April 19, 2001 - 05:56 pm no, i wasn't late. they failed to credit a payment that I had made. luckily, i had the cancelled checks. but this is the second time that they credited to the wrong account. it seems their national bankruptcy center is staffed with airheads. what is infuriating is that they never called and said we're missing your september payment
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| | Friday, April 20, 2001 - 06:04 am Which will lower my scores, Christine? Closing the account or keeping them all? I would imagine at most it would be a neutral account...
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| | Friday, April 20, 2001 - 07:52 am Closing the account. You should have at least 3 credit cards and a few charge cards and NEVER close them. And one of your cards is Cap One and not reporting the limit. So every time you get a line increase you have to charge it to the limit to get it reported right.
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