What A Crash: Recover From Problems With Credit |
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There are many advertisements offering to fix your problem with credit and dissuading you from filing bankruptcy. You must have seen them and if you have been in financial trouble, you must have planned to call a counseling service to help you solve your problem with credit. The following is an article on how a home-based working mom handled her family's problem with credit ratings.
When we met, my husband had problem credit. His legal advisor had not explained that for his name to be removed from an automobile loan his ex-wife was awarded, she needed to refinance the car or to file a Release of Lien and obtain approval for it from their lender. The car was repossessed and he was held responsible for the loan since she could not be located and had failed to do either of the above stipulations. This led him into problem credit. Similarly she had failed to pay her portion of the income tax, which she was supposed to pay, and five years after the divorce they located him and not only delivered a bill to him but audited him (this was prior to the newer and nicer IRS). His income was very limited as he was in college doing his Ph.D. and apart from paying his truck loan and meeting his living expenses he had no left over for anything else. I had just graduated from college with B.S. in Consumer Economics and I had met a lady from the local non-profit credit counseling agency who had spoken about help with problem with credit and I had retained all the literature that she had shared with us. My husband wanted his problem with credit to be remedied rather than going for bankruptcy. He made an appointment with a credit counseling agency and they agreed to help him get back on the right track, far away from problem with credit. They made agreements with credit card agencies to stop the accruing interest as long as he paid the principal balance and we sent them a check every month to cover all loans and credit card payments. We were kept aware of how much was paid to whom and the remaining balance. When we had extra money, we sent it to them and asked them to forward it to whichever account we thought was best. We were able to pay off everything in four years instead of our earlier goal of seven years, which was quite an accomplishment! Imagine our surprise when we received a final copy of all payoffs along with a whole packet of information from the businesses in the town that we lived in showing us who would lend money to one of their ‘graduates'. We had just come out of debt and the prospect of having problem with credit in the future was indeed very daunting. The information from the credit counseling service was dutifully reported to the credit reporting agencies and reality hit. It was then that we realized that had my husband filed for bankruptcy, his problem with credit would have been wiped clean after seven years. It is also not difficult to get loans after bankruptcy as lenders know that they are devoid of any bills. In our case we had spent four years being socially conscious citizens and paying back debts and another seven years waiting for problem with credit to disappear from his credit report. I do not recommend filing for bankruptcy nor do I recommend having the insurance company finance your wrong decisions. My recommendation is that if you have problem with credit, you should get all available information which can help you make the right decisions. This includes not only how to stop the harassing bill collectors from calling you but also where you will stand when you have paid your debts and have to live with the results. |
