Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The collection will stay on your report whether you pay it or not so the answer is no, that will really not help you. Have you considered doing a bankruptcy? It will not really ding your score anymore than it is now and it may raise it because you won't be showing debt anymore. Then you can go out and get a secured credit card and pay it ON TIME every month. In about 6 months you should qualify for some other unsecured store credit cards like Sears and such. Get no more than 2 of them and pay the ON TIME every month. In about a year, you should have a score of about 630 which will qualify you for an unsecured Visa or Matercard. Get only ONE and pay off the balances on your other cards and use the Visa but only to about 30% of your credit limit (so if your limit is $1000, use $300 in credit) and pay it ON TIME every month. In about 18 to 21 months, you should have a score around 680 which will qualify you for a mortgage. People often think that bankruptcy kills their credit but in reality bankruptcy can actually help your credit in some situations. I think yours might be one.
I don't agree with this.....bankruptcy should NEVER be used except as a last no-choice resort. The financial damage of a bankruptcy can stay on your report for 10 years, and even after you have it discharged, you cannot even apply for any type of mortgage for 2 years, because lenders won't even touch you. And, with the change in the bankruptcy laws it will be harder to even file a Chapter 7 because alot of the creditors are crying foul that most consumers are doing that to prevent paying back their obligations.
His situation is not that bad to where something like that would be needed. I would understand if he was $50,000+ plus in debt with numerous credit cards and loans, but this case doesn't even qualify for such action. Totally unnecessary.
So no, I don't think bankruptcy is the answer here. I think the best way is to work with what you have and try to improve it from there. If the collections are really old accounts I wouldn't worry about them too much (based on date of last activity) but if they are very recent, say a few months old, it would be in the best interest to get that worked out.
I am trying really hard to improve my credit. I have 3 item I am paying promptly every month: car payment, student loan, and 1 credit card. I never use the credit card, but make the min payment to show I can pay bills on time.
The major problem with my credit report is past due hospital bills. I could not afford health insurance while in college and I got sick one day and now I owe about $7500 to collectors.
1. Will my credit improve if I continue to make payments with the past due hospital bills?
2. Should I start paying those hospital bills?
I want to be in a house in about 12 months.
Thanks for the help
How long ago with the "college" bills? If they were near 7 years ago.. Completely ignore them as they will fall off the credit reports.
What type of downpayment are you planning to put down?
darrell
You have been given some good advise
except for a few things.
I agree with AVTechMan bankruptcy is not the answer in this case.
Also credit cards can not be "reaffirmed in a BK. You must list all credit cards that you have and once the credit cards receive the BK notice the accounts will be closed.
It use to be that Sears would try to get folks to reaffirm" there cards but the courts have cracked down on that.
Also the BK will remain on your credit for 10 years. Sure after a couple years you can get credit cards or loans but it will beat a higher rate.
I would sink every bit of extra funds toward the medical, you can try to get a settlement for this will show as settled on your credit report.
Also what AVtech said about how lenders view medical past dues is true, it use to be that they would look past past due medical and also student loans but now days it is as he said a lender by lender thing.
Now keep in mind if the collection agency reviews your credit report and sees that your paying everyone but them and they also see inquires from a mortgage company they may decide to review the account for possible litigation. The reason I say this is because that is what I use to do for a major credit card, I would review accounts to see if we wanted to litigate. Those were the flags I would look for.
This is something you really want to avoid.
This is how creditors view negative trade lines.
30 day past dues- there probably was a problem -these are the easiest to explain
Charge off- you walked away and made no attempt to pay
Settlement - you at least made an attempt pay a portion
Bankruptcy- you got "permission" not to pay
Judgment - the creditor realized you either had assets or were paying others so they want their money, and to be honest judgments are "messy" and most lenders don't want to deal with them.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,782,332 times
Reputation: 3587
Quote:
Originally Posted by Karla with a K
darrell
You have been given some good advise
except for a few things.
I agree with AVTechMan bankruptcy is not the answer in this case.
Also credit cards can not be "reaffirmed in a BK. You must list all credit cards that you have and once the credit cards receive the BK notice the accounts will be closed.
It use to be that Sears would try to get folks to reaffirm" there cards but the courts have cracked down on that.
Also the BK will remain on your credit for 10 years. Sure after a couple years you can get credit cards or loans but it will beat a higher rate.
I would sink every bit of extra funds toward the medical, you can try to get a settlement for this will show as settled on your credit report.
Also what AVtech said about how lenders view medical past dues is true, it use to be that they would look past past due medical and also student loans but now days it is as he said a lender by lender thing.
Now keep in mind if the collection agency reviews your credit report and sees that your paying everyone but them and they also see inquires from a mortgage company they may decide to review the account for possible litigation. The reason I say this is because that is what I use to do for a major credit card, I would review accounts to see if we wanted to litigate. Those were the flags I would look for.
This is something you really want to avoid.
This is how creditors view negative trade lines.
30 day past dues- there probably was a problem -these are the easiest to explain
Charge off- you walked away and made no attempt to pay
Settlement - you at least made an attempt pay a portion
Bankruptcy- you got "permission" not to pay
Judgment - the creditor realized you either had assets or were paying others so they want their money, and to be honest judgments are "messy" and most lenders don't want to deal with them.
I disagree. BK is not going to ding his credit that much. If he is at 530, he cannot go much lower. The only thing I do agree with is that he should try to first settle the medical but I would offer not more than half the debt (the real bill is probably 25% of that anyway which is what the insurance co would have paid if he had insurance). Using BK he can get that off his report. And, yes while the accounts will be closed, he can reaffirm them and can pay on them and, once discharged, can reopen them to show available credit not being used.
The thing that your missing Kev is he has a pretty decent income and is paying everything else.
The laws have cracked down, a trustee would take all this into consideration. So if the trustee decides he can repay the medical bills they would either suggest a 13 or say no to the bk. In this case the fact that he attempted BK may show up on his credit report.
In about 6 months you should qualify for some other unsecured store credit cards like Sears and such. Get no more than 2 of them and pay the ON TIME every month.
Bankruptcy is never a good idea. I filed in 2004, paid off the debt and got a secured credit card. paid on time for two years and was recently turned down for a department store credit with a credit score of 655.
In about 6 months you should qualify for some other unsecured store credit cards like Sears and such. Get no more than 2 of them and pay the ON TIME every month.
Bankruptcy is never a good idea. I filed in 2004, paid off the debt and got a secured credit card. paid on time for two years and was recently turned down for a department store credit with a credit score of 655.
That's a shame, man. Something like that proves how tough it is to recover from BK. And with secured cards, you also have to be sure they are reported to all three agencies each month and that it isnt being reported as a 'secured' card.
I remember several years back I had gotten a partially secured card, in which I put in part of a deposit. After about 2 years of on-time payments and never missing a payment, my card was converted to a normal unsecured card and the deposit I put in was applied to my remaining balance. Can work in your favor if done right.
I remember several years back I had gotten a partially secured card, in which I put in part of a deposit. After about 2 years of on-time payments and never missing a payment, my card was converted to a normal unsecured card and the deposit I put in was applied to my remaining balance. Can work in your favor if done right.
I had a subprime card once when I was trying to rebuild my credit (same time I was combatting the results of ID theft). I responded to one of those teaser mailers--you know--the "preapproved" or "prequalified" letters that don't tell you the credit limit. That bank charged a horrendous "annual fee," a "processing fee" and they wouldn't tell me how much my credit limit was until I committed to paying all that. Anyhow, the first bill turned out to be close to $100 for a $300 limit. The interest rate was 29.9%. In retrospect, I should have done more research. After making good payments for some time, I called them to ask them for a credit increase. "We don't do that as a matter of bank policy" was their reply. Apparently that bank specialize in giving people really low credit limits and charging a fortune in finance charges.
I am *so* glad that I canceled that card as soon as I was able to get another one from a more favorable bank.
I had a subprime card once when I was trying to rebuild my credit (same time I was combatting the results of ID theft). I responded to one of those teaser mailers--you know--the "preapproved" or "prequalified" letters that don't tell you the credit limit. That bank charged a horrendous "annual fee," a "processing fee" and they wouldn't tell me how much my credit limit was until I committed to paying all that. Anyhow, the first bill turned out to be close to $100 for a $300 limit. The interest rate was 29.9%. In retrospect, I should have done more research. After making good payments for some time, I called them to ask them for a credit increase. "We don't do that as a matter of bank policy" was their reply. Apparently that bank specialize in giving people really low credit limits and charging a fortune in finance charges.
I am *so* glad that I canceled that card as soon as I was able to get another one from a more favorable bank.
Good you got rid of them....with the card I had, I qualified for an increase every 6 months, and when I called to check on some things they told me that I qualified for an increase and asked if I wanted it. And I never even asked for the increase, they just offered it to me. My starting limit for that card was $350. I have that card to this day with a perfect record, so pretty much that is my oldest card with a perfect payment record.
That card you had was a total ripoff....lenders like those prey on those with challenged credit so they feel that they can try to profit off of them by offering such horrible trash. I used to get those kinds of letters in the mail too and when I open to look at it, here was how they broke down the fees:
One-Time Acceptance Fee: $92
Participation (Annual) Fee: $72 (broken down at $6 monthly)
Application Fee: $32
Extra Card Fee: $20
Total Fees: $216
By the time you get the card with a $300 limit you already got a bill in the mail. This is how they take advantage of people who are trying to get back on their feet. What worthless scumbags. And what's worse, they dont even guarantee that they will report properly to the credit agencies. If you have to get a secured card, best to get one from your local bank and what's better, you can choose your credit line based on the amount you deposit.
At least now if I see these in the mail, I feed them to Betsy without hesitation (my document shredder--she loves eating that type of mail).
Thank you all for the advise. How do I decide if a past due account is old? Do I look at the date the account was open.
I listed my credit report down below; so any advise on what to settle with the CA first is great. I will not file for BK; I just feel thats not the right thing to do.
Here is my credit report:
POSTIVE STANDING
1. I owe 45K in student loan. I just graduated and I am paying ($280 a month) this monthly with no problems. This is in postive status.
2. I owe 13k for a car loan. I only pay $395/month and I have paid this on time for the past 17 months. This is in positve status. I am considering paying this off in cash by Aug 2008.
3. I have one secure credit card with a credit limit of $500 and a balance of $220. I have $277 avaiable on this credit card. This is in positve status
4. I have another credit card that is in good standing and is paid off from like 4 years ago.
NEGATIVE STANDING
Now the negative stuff. Strickly Hospital bills from being poor in college. I want to use my income tax to settle with the CA for some of it. However, some of the accounts are old (2002, 2005, etc.) , so should I pay them?
1. Date Opened 10/2006: $5,083 past due as of Aug 2007
2. Date Opened 06/2002 : $202 past due as of Dec 2007.
3. Date Opened 12/2006 : $1,500 past due as of Feb 2007.
4. Date Opened 09/2002 : $50 past due as of Oct 2007.
5. Date Opened 04/2005 :$1,016 past due as of Nov 2006.
6. Date Opened 11/2005 : $1,005 past due as of May 2006.
I really appreciated all the help. It really is a learning experience, but atleast I am trying to fix this issue. Thank You
Thank you all
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
