should I file BK or should I wait it out?

[broketsi]

Hello all, I hope someone can be of assistance. I am currently in a rough situation credit wise. I went from a 780 score to a 434 according to Truans Union due to a "hiccup" in my life. I have been contimpalting filing bankruptcy for a while, but now it is to the point where I have about 3 years and they'll all be at the 7 yr mark. Should I wait it out and hope no one goes for a judgement against me or should I just file and be done and take the 7 more years of "marked" credit. This really upsets me to even have to discuss, but it was a "riches to rags" situation and I am finally turning things around. At this point, paying them is kind of not worth it because then they will remain there for 7 years past the last payment date from what I have been told. Any help would be greatly appreciated. Thanks in advance.

Joe

PS- This is in NY if that matters.

[creditdodger]

Hold On!!!!!!

Before you do anything know that there is a difference between the time negative items can appear on your credit report and the time creditors can sue you. Just because the creditor can report negative items does not mean they can still collect the debt. Do a search on NY SOL or Statute of Limitations. Some of them might just be time barred already. I'll search too.

[Champion80]

I have never filed so I cant really give you subjective advice, but if you do have the money and you will need the credit soon, I do not know what the SOL is in NY, but you might want to try and use the bankruptcy as a tool, give each creditor a sob story, try to settle with deletes, if that doesnt work, I cant really give you any advice, you know though the weird thing is though, I have seen people with BK's with scores over mine, and they said they filed 2 or 3 years ago, that amazes me, because I only have a couple negs on my account, and perfect payment history for the last 3 years, whats up with that!!

[broketsi]

Hold On!!!!!!

Before you do anything know that there is a difference between the time negative items can appear on your credit report and the time creditors can sue you. Just because the creditor can report negative items does not mean they can still collect the debt. Do a search on NY SOL or Statute of Limitations. Some of them might just be time barred already. I'll search too.

Wow- thanks for the fast reply! I read one place it is 10 years, somewhere else said 6 years that they can sue you. I am worried that if I try to wait it out, someone may sue at the last minute and I will be stuck with a judgement on my record. A friend who works collections said judgements can last 20 years in NY?? I don't know, I hear so much conflicting info.

[creditdodger]

OK. The SOL is 6 years in NY. However if they take you to court and get a judgement against you, they have 10 yr SOL to collect the judgement.

[creditdodger]

But your friend is kind of right. Judgements can be renewed until the debt is paid. So really there is no SOL for judgements unless the creditor is sloppy.

[broketsi]

Hmm, so they have six years to sue me, that's what I thought. If I get a judgement, it is not as easy to "clean up". I am wondering *if* I get one and pay it if I can dispute then and get it removed. IT is just a gamble- $1000 now for BK and clean it all up and be good in a couple years, or gamble on waiting it out and it either works perfectly and I have nice credit or it backfires and I have 10 judgements and a lifetime of screwed credit..

Another question- if an account is listed as "charged off", can they still sue me, or is it a done deal?

Joe

[creditdodger]

Yes they can still go after you or more likely they will sell to a collection agency to go after you.

[broketsi]

Ok, so that leaves me back where I started- is it worth filing, or do I just play the waiting game an *hope* no one goes for a judgement . Thanks.

Joe

[broketsi]

oh one more thing- if it has been sold to a collection agency, won't it say so on my report? Some of these just say charged off. Thanks again.

[creditdodger]

Good Luck

[broketsi]

Good Luck

haha- Thanks. I am going to speak with a bankruptcy attorney on Monday to see what he advises. I have a feeling he may be biased though . Thanks again for your help.

Joe

[score booster]

DO NOT SEE A BK ATTORNEY FOR ADVICE!!!!!!!!!!! They make their money on this. Do you think he'll try to talk you out of filing? I filed ch 7 in 1998 and I am just starting to get regular banks to not run when they see me coming. You won't be "all set" in a couple years. (although a bk attorney will tell you otherwise). Most regular banks will shun you for the first 5 or 6 years. A chapter 7 stays on the report for 10. Some puritan lending institutions won't touch you for the entire 10 years. Yes the sol in ny is 6 years: I live in ny also. My best advice is to ride it out. If nobody is suing you and you have no unpaid judgments against you it is foolish to file. Could you be more specific as to your debts: number, amounts owed, dola etc.? Oh, and the reason people witha bk on their file can have higher scores is because FICO groups them all together. Many people find when the bk drops off, their scores drop quite a bit as they are now being compared to everyone else with perfect credit.

[DocDon]

score booster, that's a good "heads up", but everyone's situation is different. A BK does not automatically make you untouchable for 10 years.

I've seen firsthand, people getting into homes, cars, and new credit shortly after BK - mostly due do a relatively strong pre-BK history.

[broketsi]

DO NOT SEE A BK ATTORNEY FOR ADVICE!!!!!!!!!!! They make their money on this. Do you think he'll try to talk you out of filing? I filed ch 7 in 1998 and I am just starting to get regular banks to not run when they see me coming. You won't be "all set" in a couple years. (although a bk attorney will tell you otherwise). Most regular banks will shun you for the first 5 or 6 years. A chapter 7 stays on the report for 10. Some puritan lending institutions won't touch you for the entire 10 years. Yes the sol in ny is 6 years: I live in ny also. My best advice is to ride it out. If nobody is suing you and you have no unpaid judgments against you it is foolish to file. Could you be more specific as to your debts: number, amounts owed, dola etc.? Oh, and the reason people witha bk on their file can have higher scores is because FICO groups them all together. Many people find when the bk drops off, their scores drop quite a bit as they are now being compared to everyone else with perfect credit.

Hmm. Interesting point. I have heard both sides though- what you said and what DocDon said, so I don't know. I know people that have gotten decent credit within a couple of years after a BK. I agree with not talking to an attorney for advice- that's why I said he may be biased, but I don't know who else to talk to around here. If you want, I will go over the specefics of what I owe and such. It is about $30k max I think- have to add it all up. Mostly CC's and revolving credit in the $4k range and one auto repo where they wanted a $10k difference after selling it. The $10k has been charged off and to the best of my knowledge, no one is trying to sue me (yet). I am just concerned that they may at the last minute and then I'll be screwed. Another concern is that I have moved a couple of times, so I may not get a summons if they send one. Tough call.

Joe

[broketsi]

score booster, that's a good "heads up", but everyone's situation is different. A BK does not automatically make you untouchable for 10 years.

I've seen firsthand, people getting into homes, cars, and new credit shortly after BK - mostly due do a relatively strong pre-BK history.

That's my thing, I don't have a "strong" pre BK history, there are ~11 accounts in good standing from prior to the "**** hitting the fan"- some auto loans, som credit cards- all short term though. Any advice? Thanks.

Joe

[DocDon]

Don't expect to go with prime lenders and get upset when they say "no". Even with a strong pre-BK history, most lenders have a blacklist. Once you default with them, they'll never issue you credit again.

You'll have to start with lower expectations. Just stay away from predatory lenders - your credit isn't worth selling your soul. With the prior history, and current positive credit growth, you'll start seeing approvals, but it takes some time.

As far as not BK'ing and "letting them go".... chargeoffs can turn to judgments, and judgments can often times get renewed, and some judgments lasts for 20 years. So.... 10 years doesn't seem so bad now considering you could have companies coming after you forever, and plopping new collections all over your credit while you're trying to rebuild it....

Did you try secured cards like National City, or obtaining financing through small hometown credit unions who exist solely upon individual membership (ie: no corporate accounts)?

[broketsi]

Don't expect to go with prime lenders and get upset when they say "no". Even with a strong pre-BK history, most lenders have a blacklist. Once you default with them, they'll never issue you credit again.

You'll have to start with lower expectations. Just stay away from predatory lenders - your credit isn't worth selling your soul. With the prior history, and current positive credit growth, you'll start seeing approvals, but it takes some time.

As far as not BK'ing and "letting them go".... chargeoffs can turn to judgments, and judgments can often times get renewed, and some judgments lasts for 20 years. So.... 10 years doesn't seem so bad now considering you could have companies coming after you forever, and plopping new collections all over your credit while you're trying to rebuild it....

Did you try secured cards like National City, or obtaining financing through small hometown credit unions who exist solely upon individual membership (ie: no corporate accounts)?

I haven't tried any type of new credit, that wasn't my interest at this point. My main goal is to clear my credit up so I can start rebuilding it. It will do me no good to get another card right now with the rest of my credit still shot. I want to clean the rest first and am just trying to figure out what the best way to go about it is. Some people say to wait it out and some say to file. I am wondering *if* someone does try to sue and get a judgement if I can just deal with that one person and let the rest just go away with time would be better for my credit in the long run than filing? I have heard about 50/50 about it.

Joe

[DocDon]

I beg to differ, Joe. Getting into a secured card that reports is just what you need right now. For every day you spend working on cleaning up your credit, that card is adding what you really need - a good positive credit picture. And because you have such a "limited" history, may be just what you need to give the whole process a boost.

Going your route, what you may end up with is cleared up credit with a large gap in the history - in other words, you'll not really be any better off - clean credit is only a part of the whole FICO picture.

Your score takes about a 20 point hit for each collection (maybe closer to 30), and you're left fighting every CA that gets assigned your account, and every JDB with two coins to rub together that tries to collect from you too. Then, if they do get a judgment against you, you're battling possible garnishments, tax return seizures, and if your state allows - renewal of that judgment (remember the 20-year rule in some states).

Simply not paying does not make the debts go away, a BK does, which is why in some cases BK is the practical alternative.

[Guest jeeptravel]

Joe, I've enjoyed reading the posts you started. Let me offer my 2 cents: Debts never go away magically. There are 2 ways you can come close though:

1) BK7

or

2) Cut a deal with the creditors on your own.

I liked the advice of someone earlier who said you should use the BK as a tool. I would only say his attitude is a little unnecessary. You arent bluffing, you really can file BK and that is the reality the creditor is faced with. Most BK attorneys are not hurting for business, so they usually will tell you if it's not a good option for you. STILL, it is true that they can serve you better AFTER you have made the sure decision to go forward with it.

So, if you don't want to cut a deal to pay part of what you owe w/creditors (option2) you have only the choice to file BK,

Waiting for a bunch of SOL's to come around will hurt your score as much if not more than BK (some would argue). For me the recovery from BK was rather speedy in the # months it has taken and is taking.

so my personal "water cooler" advice is to lose the drama and wishy-washy fears about being 'untouchable' for 10 years etc. (thank you DOC DON for sharng your experience and knowledge as to how that is not always true). I filed BK7 in 1/04 and my ability to buy a home the day I filed was still present and now is higher than ever. I am just waiting another year so I can get into a HUD FHA loan (2 yr after bk limitation).

My inclination is that you should file and don't worry about your credit score until the dust settles, then you can start rebuilding it. Even if you don't try, it will rise on it's own. Good luck in deciding what the best choice for YOU and your family is. It's serious business!

jt

[broketsi]

Joe, I've enjoyed reading the posts you started. Let me offer my 2 cents: Debts never go away magically. There are 2 ways you can come close though:

1) BK7

or

2) Cut a deal with the creditors on your own.

I liked the advice of someone earlier who said you should use the BK as a tool. I would only say his attitude is a little unnecessary. You arent bluffing, you really can file BK and that is the reality the creditor is faced with. Most BK attorneys are not hurting for business, so they usually will tell you if it's not a good option for you. STILL, it is true that they can serve you better AFTER you have made the sure decision to go forward with it.

So, if you don't want to cut a deal to pay part of what you owe w/creditors (option2) you have only the choice to file BK,

Waiting for a bunch of SOL's to come around will hurt your score as much if not more than BK (some would argue). For me the recovery from BK was rather speedy in the # months it has taken and is taking.

so my personal "water cooler" advice is to lose the drama and wishy-washy fears about being 'untouchable' for 10 years etc. (thank you DOC DON for sharng your experience and knowledge as to how that is not always true). I filed BK7 in 1/04 and my ability to buy a home the day I filed was still present and now is higher than ever. I am just waiting another year so I can get into a HUD FHA loan (2 yr after bk limitation).

My inclination is that you should file and don't worry about your credit score until the dust settles, then you can start rebuilding it. Even if you don't try, it will rise on it's own. Good luck in deciding what the best choice for YOU and your family is. It's serious business!

jt

Thank you very much for your post. As for what is best for my family, it is hard to tell right now- most of the stuff is in my wifes name (all my debt is from before we met), so we don't need to rely on my credit, but I do want to get on the road to recovery . As for it not magically disappearing, I am aware of that, I was just under the impression that after the 7 years, I can clean my report up and get rid of all the bad and they could not get a judgement after the 6 years- they can still "try" to collect, but cannot get a judgement, attach anything or put a negative mark on my report- so I was thinking that may be best coupled with the dispute everything game. I just hear so many different stories from "you only have 3 years, best bet is to wait it out" to "BK would suit you best". I think BK is the safest with less gamble- especially now that you mention a gap in my credit history too. I didn't consider that. It is a tough decision.

Joe

[jq26]

One thing to add, just from experience. Don't beat yourself up about it. When life tries to shove you around, shove back and keep your head up. No matter whether you settle with creditors or file BK7, you are playing within the rules of a system that you did not create. It appears you're taking care of this head on and trying to move on. That's the important part.

Good luck