[MUSIC] Hi, there, Michael Bovee with
Consumer Recovery Network. Thanks for tuning in to our
DebtBytes YouTube channel. And today, I’m gonna cover,
it’s a reader question that I’ve had submitted right
here, but I want to talk about it in a different
context than how it reads. So, I’m gonna start
off with saying this. Doing the right thing, or what
you perceived to be the right thing about your
unaffordable debt doesn’t necessarily get you the
results that you’re thinking. How does that add up? All right, so, I want to get
in to the reader question and I’m gonna answer very distinctly
and directly to start with. And then you’ll understand
a little bit better as to how this woman has set
herself up to not accomplish her credit reporting goals. Here we go. We’re up to date, but
drowning in debt. Then I lost my job. At bankruptcy attorney’s advice,
I stopped paying all of my credit cards back
in July of 2014, and it’s January 2016 when
we’re recording this. Meanwhile, I decided
to give up a house and move and underwater short sell
process is happening right now. I decided not to
file bankruptcy, started payments again
in January of 2015. So, this woman has
been paying now for a year after she fell behind
because her bankruptcy attorney told her not to pay, she
decided not to file bankruptcy. Too late,
debts have charged off. Have been paying regularly for one year now, usually more
than the minimum required. She’s paying a total of
$1650 a month at least, across these following accounts,
Amex Blue, B of A, Capital One, Amex Gold, B of A and
a loan for a household item. These are all accounts
that are still with her original creditors. She says at this rate, she’s
scheduled to be out of debt in about two more years,
three total better than five years of
a Chapter 13 bankruptcy. And I would agree with that. However, charge-offs are just
as bad on her credit report, her FICO score’s in the toilet. What can we do? Here’s her main question. Have you ever seen creditors
remove the write-off or the charge-off ding? Okay, so, Krista. The situation where you
agreed to start paying again after a year’s delinquency, or
at least after six months of delinquency, when these
accounts charged off. All the damage has been
done to your credit, and you can not unring that bell,
no. In other words,
you’re asking will AMEX, Bank of America, and Capital One
and these creditors remove that because you continued
to pay them, absolutely not. You have to try and catch those
kind of situations before they charge-off the account. Then there is something called
re-aging, where they bring your account current, even though you
didn’t pay six months of arrears or five months of arrears or
three months of arrears. You just start making payments
again and as long as you make a few in a row on time, they’ll
re-date your account on your credit report so that it doesn’t
appear as if it’s in delinquent. It’s being not delinquent
in perpetuity. Once the charge-off occurs,
it’s not going to be undone. They can’t undo it. So, with that credit damage and your goal of trying to
bounce back financially, I typically find that the best,
and this is kind of counter intuitive, the best way to
do that or accelerate that is to settle your debt with your
creditors for less than you owe. Making it so that you can
get out of debt quicker. Quicker than you could
have in a Chapter 13. Quicker than you could have
now making the payments. And that way, you bring your
accounts to a zero balance owed. The negatives aren’t going to
get any more negative because you settled. All that damage was done when
you allowed them to charge-off. So, focusing on what you can
do in the near term one, two, three years while you continue
to make smaller payments and not pay off the debt it’s
not gonna get you anywhere. It’s not going to
bring your FICO up. I’m not sure what your financing
goals are in the near future, but it’s also going to be the
short sale that’s going on, and the non-payment of the mortgage
that’s bringing your FICO down. So, you’ve got a combination
of things happening. At the time that your short sale
clears, at least to the point where you’re able to get another
home loan which is usually three years, you’ll be done with these
debts and they’re paid off and your credit will bounce
back in that timeframe. If you’ve got financing goals
in the next three years, they’re gonna be very
difficult to accomplish, given the state of your credit. If you want to
accelerate anything, it would probably be to settle
with your banks for a lump sum. And I cover settlement with all
of your banks in other videos on this channel. If you have questions
beyond this, I can answer them in the comment
section below or on the website. See you on the next video. [MUSIC]