Need a better credit Score?... Don't pay Collections or Judgments!

Wow.  I've had friends bring me the Orchard Sub-prime card applications where there are all kinds of fees involved.  They are kind of pseudo-secured.  I've always advised against those.  How long do the cards remain "secured"?

good stuff - thanks!

Stacey:  It's not your place to advise him unless you are educated in the specifics of credit law. 

Paying this could hurt his credit rating if it's out legal SOL.   How old is the debt. What is the date of first delinquency?  Is it the original creditor or a debt collector who is trying to sue him. What kind of debt is it? If the debt is beyond 4 years he is not legally liable to pay this and they cannot sue or collect unless he doesnt' show up to court.

I don't know the specifics - don't give advise unless all the facts are on the table and you have direct experience.  All of those things come into play.

If it's within legal SOL - that's a different story.  Either way he should seek professional counsel.

Legal SOL in PA is as follows:

Pennsylvania Statute of Limitations

Contracts: 4 years, (used to be six).

Contracts under seal: 20 years.

Sale of goods under UCC: 4 years.

Negotiable instruments: 6 years (13 PA C.S.A. .§3118).

 

 

Kate, They ARE suing him, there's a court date, and it is recent debt - within the last 2 years. They have given him the option to pay them a sum of money, not the total amount, to stop the proceedings. He has seen a lawyer who will help him file bankruptcy. His lawyer has advised him to either pay the creditor the sum they are requesting or file for bankruptcy. He doesn't have alot of income and has ALOT of other debt out there. How can he help his credit if he files for bankruptcy?

My question is, and I will only advise him if I know the answer, which one is worse for credit, the deal or the bankruptcy? And can someone still improve their credit if they've delared bankruptcy? 

Stacey - I privated messaged you with a link.  Ask your question there.  Now I have the whole picture.  I was just missing that before, sorry.

I don't know the answer to that question.  I think that the answer is it depends. 

Will paying the debt put him behind on other debts and cause him to default?

Does he have the money to pay the debt or will paying it cause him to go further into debt?

Bankruptsy ends everything as a certain date and and a new clock starts.  The new clock lasts 10 years and then drops off the credit report.  Everything included in the bankruptsy must fall off his credit report.  If he files bankruptsy he must always answer the question "yes" on credit applications when asked if he's filed bankruptsy.   My brother filed bankruptsy and started receiving credit card applications in the mail as soon as it was finaled or discharged.  Dumb, but our banks are predatory.  He would have the ability to get a secrured card like Scott mentions or take one of the non-secured cards and he would likely start to see the credit score begin to increase within a couple of years.   It's been 2 years for my brother and he's back on his feet and able to get and stay on top of new credit.

The real question is, is he behind on other debt now.  Will he just be prolonging the problem by paying the debt.  Will his income be increasing?  the preference would be not to file, but from what you describe, if I were in his situation, I'd probably file for bankruptsy and give myself a new start.  It would not be a decision that I would take lightly.

Stacey - you're welcome, hope I helped a little.

Scott - thanks.  Not sure it would make sense to close the account because FICO adds points for how long the accounts are open.  I guess it would vary by lender.