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Getting out of a credit hole....

Discussion in 'Off Topic [BG]' started by Rusty Chainsaw, Nov 15, 2006.

  1. The wife and I were talking the other day about the idea of moving back over to the US one day (she's American). I know she misses her friends and family out there. And I didn't mind it too much either. :)

    But the main thing that puts her off going back would be dealing with all the bad credit she ran up when she was at college. From personal experience out there, I know that, in many situations, you are your credit rating. She has her college loans, a bunch of old credit cards and a few other things to sort out. We'd definitely want to be in a situation where we could investigate a mortgage, car loan, etc, without having to wait 6 years for her credit record to clear itself, and without our wages being garnished to the point of non-existence.

    So, for those of you who've been in this kind of situation and pulled themselves out of it, or dealt with it in other ways, how did you go about it? Are there ways around your credit rating being the be-all and end-all of everything there? Got any good tips for writing it off?
  2. fourstringdrums

    fourstringdrums Decidedly Indecisive Supporting Member

    Oct 20, 2002
    I'm no expert, but a few tips I've heard about are to pay off any credit card balances you may have that you can afford to. Also, use your credit cards more often but to pay the balances off immediately rather than paying the minimum.
  3. MJ5150

    MJ5150 Moderator Staff Member Supporting Member

    Apr 12, 2001
    Olympia, WA
    Has your wife been paying her debts all this time, or did she stop paying them when she moved to the UK?

    As far as getting out of the hole......start saving money and putting it toward bills. Depriving yourself of those little luxuries in life for a while is going to have to be how you guys live until the debt is gone. You may have to use the same bass strings a little longer than you would like. Your wife may need to wear the same pair of shoes longer than she wants. You guys may need to eat at home more often, etc.

    That is exactly what I did, and it worked. I took the $5 and $10 I would spend foolishly and put it in a savings accout. I opened a savings account at a local credit union, and did not opt for the ATM card option.

    You could always flake out and file bankruptcy, but you just hose yourself for 10 years when you do that.

  4. Wesley R

    Wesley R Gold Supporting Member

    can (and will) cost you. Higher interest on loans, forcing you into a higher debt/income ratio, denied loans, assigned credit for vehicle loans, second and even third tier lenders. and sometimes (never admitted too) jobs.

    Start or keep on paying, call or make arrangements for difficult to pay loans, get a second job and pay off anything and everything you can. Keep spending down, do not get co signers unless you absolutly have too. Try not to feel insulted

    Contact the credit bureaus and make sure any reports they have are accurate and up to date. If the info is not dead on send a 'Prove or remove' letter for each item. Keep records of every payment, judgement, late notice, early payment etc. they could come in handy.

    You can email if you wish for more in depth ideas.

    Best of Luck,
    Wesley R.
  5. 43% burnt

    43% burnt an actor who wants to run the whole show

    May 4, 2004
    Bridgeport, CT
    I did the exact same thing, racked up a bunch of debt when I was 18-20 and never payed the bills. It's a common story, I know so many people that did the exact same thing. Anyway, I ended up with a real low credit score and couldn't get financing for a car when I needed one. With a little work, patience and perseverance I've been able to repair it and get the car loan, along with a few credit cards again.

    Credit Boards is an amazing resource for all types of information regarding fixing your credit. Have her get on there and spend some time reading, she will learn a lot.

    First thing i did is get credit report. You can get a free one once a year I believe. Try to get one that includes the 3 main Credit Bureaus (Equifax, Trans Union and Experian) because sometimes things appear on one report and not the other.

    Next, I Figured out what the negatives were, and how much I owed each. Then I came up with a reasonable amount I could afford to pay back.

    Once I had some #'s figured out , I called each creditor and negotiated settling and closing each account. I told them I made some mistakes in the past and want to clean up my credit report, here's what I can afford. low balled them, almost ridiculously low, they didn't go for it...but everyone was willing to settle for substantially less than I owed. I set up a payment plan with the creditors and payed them back each month until my debt was gone!!

    Edit: Warning!! Stay away from "Credit Solution" places and do it yourself. These company's claim they can cut you debt in half, etc...but you end up paying them way more than you should have to. My girl went through one of them and it was a nightmare...I forget the specifics but it was a major mistake.
  6. Ed Goode

    Ed Goode Jersey to Georgia Gold Supporting Member Supporting Member

    Nov 4, 2004
    Acworth, GA
    Endorsing Artist: FBB Bass Works
    It sounds as if your own credit rating is not an issue? If so, you can completely segregate your financial situation from your wife and obtain credit/mortgage/car loans etc under your name only (assuming you have the financial strength to do so). Of course, under this arrangement everything would be in your name only and your wife would have, in effect, nothing.

    She would still need to clear her credit, though. If you guys are serious about this you should consult with a financial professional to guide you through the process. This separation of assets is, as I understand it, a complex process.

    Also, bear in mind that I don't have any expertise in these matters at all, I just happen to know people that have been in a similar situation .....
  7. 43% burnt

    43% burnt an actor who wants to run the whole show

    May 4, 2004
    Bridgeport, CT
    I forgot a couple things, Whenver possable deal directly with the original creditor...not the collection agency.

    Research "Pay For Deletion" procedure on Credit Boards, it's an agreement you make that basically says you will pay XXX amount on the condition that the creditor delete the account from all 3 credit bureaus.

    Make sure she gets everything in writing from her creditors before agreeing to anything or making any form or payment. Don't make any oral agreements via the phone, have them put it in writing and mail or email it to her.

    Good luck!
  8. -Kramer-


    Dec 9, 2003
    Charlotte, NC
    I am by no means an expert, but an idea I had while reading this is as follows. Do what everyone else has suggested AND get a credit -card together, pay it off AS YOU USE IT to get your joint credit score up. I think this in combionation with the other suggestions will give you both good credit as individuals and as a couple.
  9. msquared


    Sep 19, 2004
    Kansas City
    There's a lot of good info in this thread. I'd like to reiterate the mentions of getting a credit report, because when I was digging out of my own post-college credit hole I didn't do this immediately.

    When I eventually did, I found that there were a number of cases of mistaken identity as well as some things that I'd previously paid off but hadn't been reported, so had fallen into being labeled delinquent. Very irritating.

    Regarding the money thing, the best thing I ever did for personal finance was to open up a second checking and savings account. 75% of my check goes into an account that's used to pay mortgage, utilities, insurance, and so on with the leftovers going into savings. That account has no debit card associated with it so it's impossible to just spend out of. The other 25% goes into the account with the debit card and is used for food or toys or what have you. I can spend as much as I want and never have trouble saving money or paying bills. It didn't seem like much at the time but now I wish I'd done it sooner.
  10. dwbentley


    May 5, 2001
    Amarillo, Tx
    This seems to be the best way to me. Give him a try before making a decision. He'll change the way you look at credit and debt, and just might show you how to become rich. It's working for me.

  11. WillPlay4Food

    WillPlay4Food Now With More Metal! Supporting Member

    Apr 9, 2002
    Orbiting HQ
    I'm not sure if anyone brought it up yet, but college loans never go away. The other stuff you may be able to make go away through bankruptcy, but it'll be harder now that new bankruptcy laws were passed in the last couple of years. Still, college loans never get written off, even in bankruptcy. Just thought you might want to know.

    I got into the credit hole in the early-late 90s. Paid 300 on my card, then went out and charged 400, etc. Decided to get out of debt in the late 90s and it took me about 3 years of strict budgeting in order to pull it off.
  12. Bob Clayton

    Bob Clayton My P doesn’t have flats or tort Staff Member Supporting Member

    Aug 14, 2001
    Philly Suburbs
    College debt aside, I am in about $4,500 worth of debt to about 5 different debtors (luckily non of it is growing with interest). I am using the ladder method.

    Say i pay $20/week to each debt. Once the smallest is paid off, I put that $20 towards the next smallest, so it has $40. Once that is paid off I add it to the next smallest so it has $60, and so on, until I am just paying one lump sum to one debt.
  13. SteveC

    SteveC Moderator Staff Member

    Nov 12, 2004
    Eastern North Dakota
    I am paying off my highest interest first. Ihad one really high card from college/single life. I used some lower interest home equity, and I transfered the rest over to a different card at 3.9%. Not a bad rate. When my car is paid off in a few months, I can throw all that at it as well. You need to just start picking away at it as best you can.
  14. mkrtu9


    Mar 2, 2006
    That is exactly what I am doing. Just got all my credit cards paid off. Now all that money I was paying to those is now going to student loans. I figured I could be completely debt free (house and all) with in 7 years using this method.

    The only bad thing I see with your situation Rusty is that the credit cards and student loans that your wife has had would have been collecting massive interest over the years. I would think she needs to call all of them and attempt to work out a deal for payment like 43% burnt was talking about.

    Good luck
  15. scott917


    Mar 13, 2005
    Houston, Tx.
    As for the college loans if they are govt. loans she is stuck with them till they are paid off, no way out of those not even bankrupsy will help.

    As for the other bad credit, there are two choices.

    Bankrupsy: not as complete as it used to be, now the debt is not completely wiped out and you have to make payments to pay off part of the debt.


    change her name: maybe this occured when she got married. the credit system over here "tri-angulates" three pieces of information when applying for credit. your date of birth, name, and social security number. if you change one of these then a new and fresh credit file is opened. here is why, it is completely possible that there is someone with the same name as you. there is also a possibility that someone else(not necessarily the same name) was born on the same day you were. (yeah like thousands of people) and the social security number which can't be changed. the "Big 3" credit reporting companies take into account that several people might have one or two of these things in common, so if all three don't match then it creates a new credit file. now if your wife was to voluntarily change one of these three pieces of personal info then it would also open a new credit file for her too... usually you have to change your name, because no one can change the day we were born, nor can anyone but the govt. change your social security number. but she has to use the new name at work so her pay rate can be factored in to the equation. the other down side is that she starts with no credit, so she has to start slow and build it back up. but maybe better than the alternative....

    i have a friend that works for one of the "Big 3" and he said that this will and does work, and as far as he knew nothing wrong with it. and as the way the system is now there is nothing they can do about it. i am not encouraging anyone to toy with their credit. running up your credit cards intentionally, only to change your name and do it again is credit card fraud.... don't do it!!

    i am not an attorney and am not offering leagal advice, mearly my experience of talking with a friend that works for one of the "big 3". i am not the first person to think of this either.

  16. This works. :eek:

    As a test, my wife tried signing up for a credit card using her married name (all her old credit is in her maiden name), and she got approved! A clean slate is definitely an improvement on years of bad credit, even if it does mean having to build it up again. I'll, of course, have a clean slate too, so, I guess, if we do ever move back, we should be OK. She can arrange with her creditors to repay the outstanding stuff a little at a time, and it shouldn't affect the new credit file, especially if she arranges to do it from her parents' address.

    Cheers Scott! :D
  17. LarryM317


    Jun 28, 2005
    Ohio Valley

    I have herd that upwards of 80% of the folks that use these credit solution are no better off before then after. Within a few years they are back in the same place, spending more then they make.
  18. scott917


    Mar 13, 2005
    Houston, Tx.
    No Problem, and i wish you the best....

    Here is another tip. Get a charge card somewhere and get the info on their return policy. Charge something keep it for more than 30 days and then return it. It will appear to the credit reporting agencies that you charged something and then paid it off. It does not matter that you only returned the item you got in the first place. To the credit agencies it only sees a balance, 30days passing, and then the balance being zeroed out again. This will help get the raiting up there quicker.....


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