Monday Mailbag: Credit Repair vs Bankruptcy and Debt Settlement

Monday Mailbag 9/24/2018

Question:

Should I use credit repair services or file a Chapter 7 Bankruptcy?

Answer:

Whether a Bankruptcy is right for you really depends on your goals.

A Chapter 7 Bankruptcy will wipe out all of your debt and the creditors reporting charge-offs/collections will then have to report $0 balances and a status of included in bankruptcy.

Those accounts would report for a period of 7 years on your credit reports from the date that the Bankruptcy was filed and the Bankruptcy itself, would report for up to 10 years in the Public Records section.

Typically, lenders make you wait at least 1 year to finance a vehicle and 2 years to get a mortgage after a Bankruptcy.

Credit repair services typically take 6-8 months to complete and focus on helping consumers improve credit scores so that they can qualify for a mortgage or auto loan as quickly as possible.

There’s a lot more to Bankruptcy, some people don’t qualify for a Chapter 7 and have to file Chapter 13 which is a repayment plan which can sometimes take upwards of 5 years to complete.

If you’re interested in learning more about bankruptcies I would encourage you to contact a local bankruptcy attorney who can help answer your questions.

If you’re interested in learning more about credit repair, feel free to reach out to us via email at info@creditfirm.net or by calling us at 800-750-1416.

Question:

Can you delete a Bankruptcy from my credit?

Answer:

Whether Discharged, Dismissed or Withdrawn, a Chapter 13 bankruptcy can report on your credit file for a period of up to 7 years from the date that the bankruptcy was filed and up to 10 years for a Chapter 7 bankruptcy.

Having said all of that, we have had great success in removing public record information, such as bankruptcies, from our client’s credit reports significantly faster than the original date that they were scheduled to fall off.

Whether you use our services or not, there is a very important point that I want to make, make sure that all of the accounts discharged in the bankruptcy are reporting a $0 balance, a status of “included in bankruptcy”, and have deleted their payment history (not reporting any late payments).

In most cases, some creditors may not update this information and continue to report their accounts as past due, charged off, in collection, with balances, late payments, etc…

The difference between all accounts reporting included in the bankruptcy and just one account reporting something like a charge-off can be the difference between a 650 score and a 550 score. It’s also the difference between being able to get approved for a credit card right after the bankruptcy and not being able to qualify for anything.

Make sure that everything is reporting correctly so that you can start to reestablish your credit.

Question:

Do you guys pay off my creditors or settle my debt?

Answer:

We don’t do any debt settlement but, settling your accounts isn’t rather difficult. You can simply call up the collection agency and tell them that you would like to settle the debt.

They will make you an offer, you then counter their offer with a lower amount – and you usually meet somewhere in the middle. Most collection agencies have a bottom where they can’t settle lower than a specific amount per their original creditor’s instructions.

For Example: If they offer $500, counter their offer with $100. They will say that they can’t go that low but, they can set up a payment plan. Ask them if they will take $200 to settle the whole thing, they will reply back with another offer. Go back and forth until they can’t move below a number and offer you their best deal, 1-time payment or payment plan.

Once you agree on an amount, request that they fax, email, or mail you the terms to which you have agreed that state the amount that you are going to pay them to settle the account in full. Once you have that document in writing you can make payment arrangements with them.

Are you ready to get started with your journey to a better credit score?