Advice needed on bad credit situation

[marzipan1027]

Hi everyone,
I'm in a sticky situation and not sure how to handle it. I was discharged in CH7 BK in 2007 and have found myself back in a financial mess. I don't want to end up doing BK again!

1. Going through divorce & was out on disability for 10 months, just returned back to work (I make a decent living)
2. Stuck in an expensive car lease with another 2 years left on it - BAD gas mileage (I want to cut down my car expenses)
3. Debts (credit cards, small loans, & medical bills) are approximately 4 months past due with 1 creditor recently about to sue me.
4. I need to move to a new apartment in February, so I need to fix up credit a little bit beforehand so I can get a decent place but also need to save a little money for this move.

Ok - so I need to save money for the move and get caught up on all my debts, but I also kinda want to get out of this car lease as the payment is so big and gas mileage sucks! It's VW Credit so swapping it is out of the question. If I keep it through the end of the lease, it will really be a big chunk of my income each month. I was thinking about waiting 6 months and rolling it into a new car finance on an economy car with a big down payment, but I might get stuck with an astronomical APR since my credit has been messed up this year. Would catching up on my past due bills raise my credit score enough to get a decent APR or am I scr*wed already because of what's happened this year?
If I do a voluntary repossession or early lease termination, I'll be stuck with a big bill that I won't be able to afford and end up with VW Credit getting a judgment against me as I doubt they'll accept a payment plan!

At this point, my credit cards have been shut off and I can't use them anymore. Should I focus first on the paying off the personal loans with the banks as they're more likely to be quicker in taking me to court and once I get them up-to-date, then start paying down the credit cards?

Thanks!

[AngelinaCatHub]

Hi everyone,
I'm in a sticky situation and not sure how to handle it. I was discharged in CH7 BK in 2007 and have found myself back in a financial mess. I don't want to end up doing BK again!

1. Going through divorce & was out on disability for 10 months, just returned back to work (I make a decent living) Fortunate to even have a job these days.
2. Stuck in an expensive car lease with another 2 years left on it - BAD gas mileage (I want to cut down my car expenses) Never lease a car. You pay through the nose and at the end you still don't own it.
3. Debts (credit cards, small loans, & medical bills) are approximately 4 months past due with 1 creditor recently about to sue me. Pay only minimums on the cards except the smallest balance and pay double to zero the account. Cut up all cards.
4. I need to move to a new apartment in February, so I need to fix up credit a little bit beforehand so I can get a decent place but also need to save a little money for this move. Going to be difficult to do this from what you have stated.

Ok - so I need to save money for the move and get caught up on all my debts, but I also kinda want to get out of this car lease as the payment is so big and gas mileage sucks! It's VW Credit so swapping it is out of the question. If I keep it through the end of the lease, it will really be a big chunk of my income each month. I was thinking about waiting 6 months and rolling it into a new car finance on an economy car with a big down payment, but I might get stuck with an astronomical APR since my credit has been messed up this year. Would catching up on my past due bills raise my credit score enough to get a decent APR or am I scr*wed already because of what's happened this year? VW? Consider a Jetta TDI at 42 mpg and lasts forever.
If I do a voluntary repossession or early lease termination, I'll be stuck with a big bill that I won't be able to afford and end up with VW Credit getting a judgment against me as I doubt they'll accept a payment plan! You cannot C7 for a while but before you get this far, consider C13 as you do not want judgments.

At this point, my credit cards have been shut off and I can't use them anymore. Your credit score is already been screwed. Do what I suggested and pay them up one at a time. Should I focus first on the paying off the personal loans with the banks as they're more likely to be quicker in taking me to court and once I get them up-to-date, then start paying down the credit cards? CC's will sue you as well. Keep them happy with minimum payment if you can. Pay off the smallest balance with double payments or more.

Thanks!

Welcome to the forum. You are a prime example of why we do NOT have a credit card. We use a debit card and if that is empty it simply does not work. We were discharged in 2008 and we have NO BILLS. You are now experiencing what we and you once felt. Total ownership by other people. I consider credit as selling a piece of your life into servery to another party or person. Slavery is the word.

You may consider C13 as you cannot do a 7 at this time. This will get rid of the car perhaps and it will hold the sharks away in court. I know you do not wish bk again but best do so as a practical business move. Best I can. The rest is up to you. 'Hub

[df04527]

Catching up on your bills is not really going to make that much difference in your credit score as the damage is done. If you can pay any off that may help but my opinion is not worth it right now.

[Pjmax]

If your CC's are 4 months past due, if they haven't charged off yet they will soon. Even if you paid them in full now, those lates would stay for 7 yrs., and they really hurt your score. If they are CO'd, and you pay them, it will make no difference in your score. Your scores will probably bounce back quicker from a 13.

It might be a good idea to consult an attorney or 3 now, and get some advice on a 13, even if you have to wait until your divorce is final. (I don't know that you do have to wait, just mentioning it in case that would be in your best interest.)

If you have to move in Feb., you might consider a temporary roommate situation, until you get back on your feet. There are plenty of people in your situation looking for a roommate to share expenses, and they don't necessarily run a credit check.

[LadyInTheRed]

marzipan1027, you might try playing with the calculator at http://cgi.money.cnn.com/tools/debtp...ebtplanner.jsp to determine how quickly you can get your debt paid off. If you can come up with a workable plan to pay off your debt, then call your creditors and see if they will agree to a payment plan instead of suing you. If you can't payoff the debt in 5 years, a Chap 13 might be your best option. I agree with Pjmax that you should start consulting with attorneys now.