I ran into credit card problems after being laid-off from my job about 8 years ago. I was paying the credit cards on time and monthly, but unfortunately, the credit cards companies ran credit report on me and decided that my debt was too high and increased my interest rates – some to 24%. After doing this, I could no longer afford the payments and my credit cards (there were four) ended up in charge-off status. The total debt was $55k.
The debt for 3 of cards was sold to debt collectors/law firms and I was subsequently brought to court and judgments were filed against me. The 4th card is with a debt collector but there hasn’t been a judgment filed.
Currently, I am gainfully employed and paying the judgments monthly. The 4th card has a total debt of 33k. I am saving up to approach this company with an offer of debt settlement.
Questions:
1. Do I approach this company with an offer of say, 15k? And if they accept, what happens to my credit report? What can I do ensure that they remove the negative mark on my cc report (if I can at all)
2. Is this the best approach? (Debt Settlement)
3. Down the road when this is all paid off, I would like to buy a home. What can I do now to ensure that my past problems don’t make it impossible for me to purchase a home?
4. Is it possible to remove the Judgments from my CC with these CA's?
Thank you!
Debt Settlement - best approach for the future?
Yes, you can make a settlement offer to this company. But, it depends on their discretion to accept or reject your offer. If they accept your offer, then you can make a written request to them to update your account status as “Paid as settled†and remove the negative items from your credit report purely out of goodwill after repaying the debt.
Debt settlement may help you to repay your debt easily. But, it hurts your credit score adversely. I think debt consolidation is the better option for you to repay your debt.
You need to payoff your all existing debts on time. This is because late payments may hurt your credit score by 35%. Once you start making payments on time, your credit score goes up gradually with time. This will help you in future to purchase a home.
Usually negative items will remain on your credit report for the next 7 years. You can contact with these CA’s and make a written request to them to update your account status as “Paid judgment†and remove the negative listings from your credit report after repaying the judgment in full.