Question
"Dear Steve,
My husband became disabled while in the middle of a major addition and remodel of our house. He was a carpenter and was doing all the work.
We took on additional debt we hadn't planned on to finish the house and sell it as it was too much on our reduced income. Tried to save the house by not paying credit card debt. Settled many of the accounts. Still couldn't afford the house and tried to sell it. Ended up doing a deed in lieu. That was in October 2011. Still owe Bank of America for two debts total of close to $30,000.
They are in Charge Off Status and I'm unable to contact anyone there that will talk to me. I want to clean up my credit report. Borrowed $8,000 from my brother and owe BOA $30,000. Tried to settle but they will not. I need to know the best way to handle this.
I could afford $250 a month to pay this off, as that is what I need to pay my brother each month. But I can't do both, pay the $8,000 and the $250 a month additional. My goal is to clean up my credit report so we can eventually purchase another house. What is my best option?
Vivian"
Answer
Dear Vivian,
The fastest way to clear out unmanageable and unaffordable debt in 90 days or less is to file a chapter 7 bankruptcy. Immediately following your bankruptcy discharge you will notice the mailbox will start to fill up with offers for new credit. Typically a year after bankruptcy people will be well qualified to buy a new car and it will then take a couple of years of credit rebuilding to get you back in shape to buy a new house at the best rates.
It is doubtful that Bank of America held onto the old debts. They most likely sold them to a debt buyer.
If you have not been contacted by a new owner or collection company the only place to look for additional information would be on a consolidated credit report to see if they've been listed with one of the big three credit reporting agencies.
Typically in these situation the most common problem is people wait too long to file bankruptcy and then they neglect to get back in the credit game to start rebuilding credit quickly.
At this point it would make logical sense for you to find a local mortgage broker you can trust and ask them what steps they would require you to take to get mortgage ready. This guide will help you work on rebuilding your credit.
We can't unwind the clock to do it differently now so let's deal with the current situation and make the best of it.
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