r/debtfree • u/StillApprehensive201 • 4d ago
Advice on where to start rebuilding
I’m gonna try to make this as to the point as possible. I’m 23, I just finished school and am quickly entering my career that has reasonable means of providing financial stability. I have sh*t on my credit (currently low 500s) and want to begin the process of rebuilding so I can eventually reap the rewards of credit/financial wellness. I also want to emphasize- I know very well the poor decisions I made, and knew it when I was making them. Life was different then, but I know I wasn’t responsible.
Debt: roughly 12-15k between charged off credit card accounts, an abandoned small personal loan, little things. I have 2 pending civil actions that have stalled as I haven’t been veritably served but still there just not with dispositions.
My question is: Should I try to contact the creditors taking civil action to settle directly first and then pay off who I can over time? Should I answer to my civil case and go to court or try to settle outside of it? Should I utilize a Debt management plan? I am planning to open 2 secured credit accounts and buy a pack of gum or something every month on each one to utilize 1-2% and have it on autopay. I’m also considering getting with a credit union
Any advice is appreciated. Im ready to finally begin tackling it, just unsure of best ways.
1
u/cantfluketheduke 4d ago
don't take on any new debt during this process. your income stability gives you a huge advantage, use it to knock this out systematically
3
u/SecondAccountYes 4d ago
Generally, anything you can do to reach out to creditors or lenders to avoid court or avoid any kind of lawsuit is always a good thing. That is the best way to avoid any additional fees or the decision from being taken out of your hand and granted to a judge.
I would definitely call all of them to try to work something out or settle some thing or do anything just to avoid going to court and also just to get it over with faster. Your credit is only going to tank until those are resolved. Until those are all resolved., Any progress you make will be negated once those go through.
Debt management plans are great for negotiating lower rates for credit cards If you still have some accounts open, as well as providing some counseling with finances. If you don’t believe that you need the counseling, you can actually do the credit card negotiations on your own. If you do have credit cards open with high balances and high interest rates, you could always call them and ask to be routed to the collections department and tell them that you’re going through financial hardship and that you’re not able to keep on paying those minimums and that you would like to close the account and be put on a payment plan. At that point, you may have to call a few times before you hear a yes because some people work with you and some people don’t, but they’ll drop your interest rate to under 6% and will put you on a five-year plan.
As far as the secured credit cards, you could get one or you could get two. I guess it doesn’t really matter too much at the beginning anyway. It’ll only matter long-term when you’re able to get high credits on both of them because then your credit limit will go up and help Overall.
That’s just my two cents. I would try to settle everything with creditors and lenders and call beforehand and try to avoid any kind of lawsuit or court because those added fees are going to hurt you. Then after that, get everything on some sort of payment plan if you can or at least to a point where you’re income can cover it all, then it’s just getting a secured credit card and giving it time because ultimately, time is going to be your friend here.
Once everything is settled, and you can start the process of paying everything off, then your credit will start slowly improving and overtime, you’ll build a solid history. You said you already have a good income and stable career out of school, which is amazing! That’s the first half of the battle so now you’re just playing catch-up