Beyond bad credit-struck by lightening twice

[august_snow]

Ok-I really need to know how this not affects not only getting a job, but my being able to get a license! It is long!

I have ALWAYS been careful with my credit. Credit is too picky. Not having any is bad, too much is bad, maxed out cards are bad, paying minimums is bad...we all get it. So anytime that I have had a credit line, I have been careful, used it wisely and paid it off in a timely fashion.

So why have I been struck by lightening twice? Here goes-

STRIKE ONE

In 1999-I bought a computer. Was paying on it and the company I worked for closed. Literally, I walked into work one day and was told we are no more as of the night before. Wham! No job, no income.

So what to do with this computer? My father's wife needed one terribly. Took it and was making the payments. No big deal. Trusted her completely, no reason not too.

Fast forward to last week-call from collection agency. Bank has not received a payment since 2003, I had been in collections since 2004 & if I don't clear this up, they are taking legal action.

STRIKE TWO

In January of this year-I had a college bill due in February. I had the money, was getting ready to pay it and husband asks if he can use for some bills his check couldn't cover and he will pay with next weeks check.

Fast forward to tonight. I am going through the pile of bills and way in the back are not one, not two-but five letters from this college because it was never paid! The last one was never even opened! So I open it and it is dated for September and says that on November 9th they are turning it in to the State Attorney General for legal action! I AM FURIOUS!!!!!!

I cannot believe this happened twice and it hurts that people, within my own family, has let this happened without talking to me when they were in trouble!

Both companies want to sue me not only for the amounts, but for the court fees and their attorney fees plus interest! I am in school- I have no job, no money and no assests! My husband has been out of work due to re-aggrivating an injury from when he was in the NAVY. There is no money right now! And now, my credit is gone!!!!

So it goes beyond bad credit. Two different companies have turned me in for legal action. What in the world does this do for my chance at a license and/or a job? At this point, I am more worried about the legal action being taken showing on my record then I am the actual credit. Help!

Please help-I think I am going to be sick!

[nurse4theplanet, RN]

My best advice is to call the credit agencies and dispute the bills. There are three: TransUnion, Experian, and another that I can't think of at the moment. This will make the charges sort of "disappear" for approximately 60 days. The purpose is to give you time to work something out with the collection agency(s). Usually they will threaten legal action to get your attention but it is still under collection. You can work out a payment plan and advoid expensive court costs. It is best to avoid filing bankruptcy at any cost, especially with the new bankruptcy laws.

Second, I would talk to my husband and suggest if he cannot pay the bills appropriately, to allow me to take over some of the responsibility. My DH is awful, so I took on full responsibility and have pulled us completely out of debt and improved his credit rating. He fought with me about it at first, but it has turned out for the best.

And last, have you talked to your father and his wife about the bill they did not pay. Let them know what a financial strain it has become for you and ask them to help you out...after all, they still have the computer correct? I hate to see families in court against one another...but if you are not on good terms already then perhaps you should take them to small claims to recover either your money or get the computer back. (as a last resort you know)

Good luck to you! And don't fret! If you take care of it promptly, then you will avoid legal repercussion and there are so many ways around bad credit when you are getting loans/buying house/car...you just have to find the right lenders.

[gauge14iv, MSN, APRN, NP]

Paid vs unpaid - on an old debt does not change how it looks. The only thing that matters in terms of how it "looks" is how many days behind the payments got (60/30/90/120 etc)

If you have a debt in collections and it has been there 2 years or longer - be careful about paying it!!!! The day you pay it, starts that "7 years on your credit report" clock ticking all over again. What you CAN do it this - bargain with them to pay it in exchange for a letter saying the whole mess was a mistake and should be removed from your credit record. Dont hand them any money though until you have the letter in hand. That may have to be done in person.

The day you make new payment arrangements starts the 7 year clock ticking again too...

If it's more than 2 years old, the best thing is to just let it go in most cases, depending on your state, in some cases they can't put a lien on your house. In Texas your home is protected by the homestead law. Basically - they get a judgement, but they have to find a way to collect it. The judgements stay there for 7 years too.

Do NOT BELIEVE A WORD A COLLECTOR SAYS!!!! THEY LIE! I had a very similar situation such as your first one and ended up filing a complaint with the FTC about the collector.

[Sheri257]

If you have a debt in collections and it has been there 2 years or longer - be careful about paying it!!!! The day you pay it, starts that "7 years on your credit report" clock ticking all over again.

The day you make new payment arrangements starts the 7 year clock ticking again too...

Not sure where you get this info. Maybe people should call the credit bureaus to find out for sure but, that has not been my experience.

I wouldn't let the bad debts stand either if you can pay them later. When you go to apply for a mortgage, for example, a lot of times they want you to pay those items because it makes the application look better.

Any effort to pay, no matter how small, always looks better than no payments at all.

[Sheri257]

It is best to avoid filing bankruptcy at any cost, especially with the new bankruptcy laws.

I agree with this. I've never had to file but my husband did before we were married. No matter how clean our credit is for years now, it still comes up all the time. I have to keep my credit separate from his because of it. Don't let anybody tell you there aren't consequences with bankruptcy or, actually, bad debts in general. There are ... plenty.

And the bankruptcy stays on your record for ten years, not seven years like other debts. So ... it's a real pain. While you may get out of paying certain debts with bankruptcy, you do pay the piper down road.

[Sheri257]

there are so many ways around bad credit when you are getting loans/buying house/car...you just have to find the right lenders.

True ... but at what rates and fees? Usually you have to pay through the nose on those deals when you have bad credit. It's very expensive. One way or the other, you end up paying the debt ... really. Might as well pay the bills on time and save your credit.

[gauge14iv, MSN, APRN, NP]

My husband is a mortgage loan officer - thats where I get my info :)

They may want you to pay off certain debts when you apply for a mortgage - that is true - byt THEY will stipulate which ones. It is generally current debt - not past due old debt. If they are over 2 years old, it is unlikely you will be asked to even communicate with them

Another tip - avoid those so called credit repair places like the plague - they are mostly scams.

[Sheri257]

Well ... all I can say is that there is one hospital, which is the best hospital to work for in my particular area, which does routine credit checks as part of their employment applications. If you don't sign the credit authorization, they don't consider your application.

Whether that's fair or not ... and whether it influences job prospects or not ... that's what they want. I'd rather have that credit report show that I paid all my bills which, thankfully, it does.

You never know when an employer is going to ask for your credit report so, it's probably best to clean it up as much as possible, even if the debts are old.

There are other hospitals in the area that don't require credit checks but, I don't want to work for those facilities. So ... these are the kinds of situations you can run into if you don't take care of your credit.

Bad credit may not prevent you from getting a job, but it might prevent you from getting the job that you want.

[gauge14iv, MSN, APRN, NP]

Im not saying its RIGHT not to pay an old debt - but you do need to be aware of what the effect is on your credit report. What people *think* will make their report look better usually messes it up worse.

For instance - a popular piece of advice given to people erroneaously is that if they want to clean up their credit report, they should just dispute the negative items. So they do - then 30 days later all the negative items come back verified AND they are now dated as the last date of activity being the date the dispute was received by the company!!!! So NOW you still have the negative items AND they appear more RECENT!

DON'T dispute old items (OLD - not recent Im talking about here) OR make arrangemets with them - this updates the "most recent activity" date on the account which is what creditors look at when considering you for a loan or credit. If the item truly is in error and you can prove it - then by all means dispute it.

If you are going for a mortgage or other loan, you should get a copy of your report and talk to a mortgage person well in advance of putting any money down on a house. On couple called DH a year ahead of buying, he spent some time talking with them and they wanted to wait until they found a house, even though he advised them otherwise. A year later, they find a house and call him on a Saturday afternoon - "We just put a contract on a house so we need a mortgage now!" They fill out the app, he pulls credit and they guys brother had stolen his identity unbeknownst to him and run up tens of thousands of dollars of bad debt. They lost their earnest money and the house because it took MONTHS to clean up that mess.

It pays to keep an eye on your credit report on at least an annual basis.

[Sheri257]

For instance - a popular piece of advice given to people erroneaously is that if they want to clean up their credit report, they should just dispute the negative items. So they do - then 30 days later all the negative items come back verified AND they are now dated as the last date of activity being the date the dispute was received by the company!!!! So NOW you still have the negative items AND they appear more RECENT!

DON'T dispute old items (OLD - not recent Im talking about here) OR make arrangemets with them - this updates the "most recent activity" date on the account which is what creditors look at when considering you for a loan or credit. If the item truly is in error and you can prove it - then by all means dispute it.

Ok, well, this clarifies your earlier statements. I can see how this would happen but, then, I've been pretty successful in disputing old times. Only once did an item come back but, I disputed it again and it was permanently removed.

Now most of these items weren't accurate. The ones that were accurate I simply paid. They're not on my report anymore because they're past the seven year window but, at the time, I figured it was better to pay them than not. If a creditor or employer sees that you've paid them, even if it's late, that's got to look better than no payments at all ... don't you think?

[gauge14iv, MSN, APRN, NP]

Again that depends on what the creditor or employer is looking for.

If they are looking at FICO scores it will hurt you, if they are looking for integrity thats different. They dont write loans on "integrity" as a concept though - the FICO score is pretty much the be all end all for lenders. A potential employer may view it differently, but who knows what they really look at.

[Sheri257]

If they are looking at FICO scores it will hurt you.

Why would that hurt your FICO score? I never noticed a dip in the score after I paid the bills ...

[menolly_33]

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