Which is worse for credit rating...non-payment or BK?

[lalap123]

Let's say I just want to ride it out and see if I get sued by my creditors...which is worse for my credit report and rating...this or just going ahead and filing bankruptcy???

[junker]

most here will say filing bk, at least you start to rebuild credit quicker. in my case though, after stopping paying everything, in just two years i was able to get financing for a house in florida, just months before someone got a judgement on me.after another year i got credit card offers. my roomate also quit paying at the same time, she was also on the mortgage note, she got even better credit card offers. boa,chase and capital, while in florida, was going to re finance and loan guy told us, they dont even look at bad credit over 4 years old. of course not the case today..luckily the judgement creditor didnt bother to domesticate the judgement in florida, and i was able to sell house in 3 years and relocated back to california, of course, again,, it depends if you are judgement proof or not...

[lrprn]

Let's say I just want to ride it out and see if I get sued by my creditors...which is worse for my credit report and rating...this or just going ahead and filing bankruptcy???

If you are certain you are judgment-proof and have no intent ever again your whole life of wanting to get a car or a house on credit, then riding it out can make sense. Otherwise, bk is your best route.

However, you asked which is worse for your credit scores. At first, both are bad. The difference is that after bk your credit slowly improves until after a few years it almost as good as if you never filed. Just walking away, your credit scores never improve.

[2Bshinyandnew]

Let's say I just want to ride it out and see if I get sued by my creditors...which is worse for my credit report and rating...this or just going ahead and filing bankruptcy???

From all I have read, riding it out is worse for your credit report/rating.

Here is a scenario to show what I mean

My ex husband and I had similar credit scores in 2006, mid to upper 700's. 80% our debt was joint. We were on the same mortgage, etc.

After we split up and everything went all to hell, our credit scores plummeted at about the same rate. When my ex filed alone for BK in November 08, both our credit scores were in the high 500's/ low 600's. 1 month after discharge, my ex's credit score is back up to in the high 600's, while mine with all the debt still hanging on and another 90 days of not paying is down in the low 500's.

We are only one example, of course.

Also, once I finally do file, my credit score will most likely not recover as quickly as my ex's did because I will have a much longer period of time showing without payment. Only one creditor had charged off when he filed and by the time I file it will probably be all of them

[HHM]

Continued non-payment, charge-offs, collection accounts, and eventual Judgements are FAR worse for your credit than BK.

[BigJohn]

If you are certain you are judgment-proof and have no intent ever again your whole life of wanting to get a car or a house on credit, then riding it out can make sense. Otherwise, bk is your best route.

However, you asked which is worse for your credit scores. At first, both are bad. The difference is that after bk your credit slowly improves until after a few years it almost as good as if you never filed. Just walking away, your credit scores never improve.

Back in the 90's, I stopped paying everything as a result of a divorce. The money I got from the divorce, I put in the bank. I started a new business and when the business became, profitable, I bought a new truck and got a house. Last year we traded the truck in for another new truck and bought a car. My previous financial situations never was an issue, but then for some reason, nobody filed any judgements against me. It can happen, but I don't know how prevalent it is.

[MiSSMaGoo]

My opinion would be non payment. Your credit will just continue to stay bad as where with bk you can start to rebuild...

[catleg]

Non payment (call it NP) is much worse. You have to look at both the direct and indirect effects here. Both BK and NP represent an immediate hit but over time you will look better. The NP stuff will disappear after 7 years since your last payment, but judgements can last indefinitely. While NP does work for a few people, for most of us BK is the practical option, and even for the NP's having the BK option in their back pocket is part of their leverage.

Most importantly you should do what's best for you regardless of credit score, whether financial, legal, spiritual, or whatever, managing your credit score should really be the least of your worries. If for no other reason than reckless lending like we have seen is not likely to be repeated anytime soon. Don't let the tail wag the dog.

[HHM]

Non payment (call it NP) is much worse. You have to look at both the direct and indirect effects here. Both BK and NP represent an immediate hit but over time you will look better. The NP stuff will disappear after 7 years since your last payment, but judgements can last indefinitely. While NP does work for a few people, for most of us BK is the practical option, and even for the NP's having the BK option in their back pocket is part of their leverage.

Most importantly you should do what's best for you regardless of credit score, whether financial, legal, spiritual, or whatever, managing your credit score should really be the least of your worries. If for no other reason than reckless lending like we have seen is not likely to be repeated anytime soon. Don't let the tail wag the dog.

Agree, the irony of your quesstion is this...

If you were really concerned about your credit score, you wouldn't stop paying So let's get back to reality and think about what is really in your best "financial" interests.

[catleg]

Agree, the irony of your quesstion is this...

If you were really concerned about your credit score, you wouldn't stop paying So let's get back to reality and think about what is really in your best "financial" interests.

Exactly. I got drunk, will I feel better if I throw up or if I sleep it off...gee maybe I should stop drinking.

[lalap123]

Actually, I think I mis-worded my question. Since I wasn't able to file prior to being late (I'll probably be charged off on all accounts by the time I file in Sept), will this make me look worse to potential lenders down the road? In other words, if I had filed before ever getting a late payment showing on my credit report would it have been better in the long run or will it all be the same after they see a BK on there??

[catleg]

Some people argue that a charge off is worse than a 30 day late, for example.

But after my BK ch 7 in 1997, I did some do it myself credit repair and disputed all the tradelines with OC's which had any status other than Included in Bankruptcy and got all the lates removed very easily.

That was easy cause none of my accounts had been sold pre-BK by the OC's.

Nowadays I'm not sure how successful that strategy would be.

[optimistic1]

lalap, what is major concern about once again gaining more credit after you are going to possibly file a BK anyway?

my view,

I could care less about my credit score, now, or in the future. why?

Because obtaining credit is what got me in this whole mess to begin with.

Regardless of your history, and score, in the future, charge offs or not. You will be able to obtain credit once again, because you are less of a credit risk now. However, your interest rates will be higher than others.

You will be able to buy a new car, and a new house with a FHA loan as long as you meet the criteria, and have re-established your credit.