Re: consumer credit counseling-chapter 2

Posted by Linda on January 19, 2002 at 11:41:09:

In Reply to: consumer credit counseling - the reality posted by Linda on January 19, 2002 at 11:15:51:

Consider the bankruptcy alternative. You see that you are so far under you will never get out. You read the horror stories about CCCS. And you decide, against all advice except your lawyer's, to take bankruptcy. You pay a one-time fee, list all your debts, the lawyer files, and the bk is discharged. Creditors no longer call you, you no longer have to make those payments.

Then you have all those "lates" and "defaults" on your credit report, along with the bk. You dispute each account as "discharged in bk" - the credit bureaus have to report them that way, they change them. This takes a few months to accomplish. It is illegal for any creditor to come after you.

I the meantime, credit card companies and banks have bought your name on a list of bankruptcies. You start getting offers for secured credit cards and high interest loans. Having educated yourself about which companies to avoid, you take two of the credit card offers. You use the cards and pay on time every month, and live within your means. The CCC increases your limit, you use the credit wisely. They lower your interest rate. After a while, they unsecure your card, refund your deposit, and give you their standard terms - not prime but not bad.

Two years have passed since your bk, and your Beacon score, you discover, is 620. A mortgage broker tells you you can qualify for a mortgage at really good rates, so you buy a house. Your credit score goes up to 690. You get prime credit cards, a new car loan, and refinance your house at a lower rate. Then you start getting balance transfer and prime + 1.9% credit card offers.

The bankruptcy still is on your credit report, but gradually all the other accounts are falling off - because "they" are no longer interested in punishing you - you got the "worst" punishment they can give you. All your debt is gone, your credit score is just fine for any purpose whatsoever.

The person who used CCCS still has all those accounts on his report, collection agencies calling, is out all that money. He has a credit score of 560 as opposed to your 690. He gets a "C" mortgage (yours is "A"), he gets a subprime credit card. Still naive, he is dealing with Crooks Country Bank or someone similar, so they start playing games with his payments, his old car is about to quit entirely, but he can't afford the payments on that subprime loan they offered, so he is paying out the nose for repairs....

he is still buried - you are free.

The system is flawed. The person who pays should come out ahead - they don't!!! Live in the real world. See things the way they are, and act in your own best interests.

Linda

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