I have 3 credit cards and an auto loan. One card was recently paid in full after being delinquent for a year. The 2nd one I have made payment arrangements with and will be paid in full as soon as my tax return is received. The 3rd and highest balance (approx $7000 with Wells Fargo), I have payment arrangements set up until I receive my tax return at which time I am going to try to negotiate a settlement. I am a single mom to a 3 year old little boy and fell on hard financial times when I was laid off in August of 2008 and did not go back to work until March of 2010 and then was laid off again in September of 2010 and didn’t get back to work until March of 2011. Previous to getting laid off I had a credit score of 670 and no missed payments on anything.
My question is concerning Wells Fargo mostly. The account was charged off, sent to an outside collector, returned to Wells Fargo and at that time they must have sold the debt. The account now sits with an attorney office in MN (the state in which I reside). I am thinking I am going to offer them approx. $3,000 to settle the debt (balance sitting now is around $7000). Is this a fair offer to make them? I am trying my hardest to get more financially stable for my son, even moved back in with my parents to start eliminating the debt and hopefully get a savings account started once the debts are resolved.
My next question:
I’ve read all about having to claim the amount over the settled amount on taxes as unearned income. So, I am aware of that. I am considered a “low income” household. In 2012 I grossed $25,000. Will having to claim that extra amount on my taxes have a severe impact on me? I claim “0″ on my W2 to insure a lump sum return at the end of the year and because my ex has the right to claim my son every other year (2013 being his year).
And final question:
What recourse do I have, after getting these account settled and paid, to getting my 670 credit score back. Unfortunately, I do not have a lengthy credit history. I purchased my 1st car at 19 (2003) with a cosigner and by 21 I refinanced and had the loan soaly in my name and paid it off in full early. I purchased my 2nd car in 2008 -didn’t even make the 1st payment before being laid off- and do not have a great history with the payments since I was not working. I just got it taken out of repossesion status in September of this year and have not been late on a payment since. So, I’m at a total loss as to how to get a good score back so I can get approved to rent an apartment and hopefully before I’m 35 (I’m 28) to purchase a home.
I know this is a lot to take in and some of the info might be uneccesarym but I am not sure how much background you need. Any help at all is so very much appreciated. I just want to put the stress of this behind me so I can build a secure future for my son!
The AnswerIf you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free. Single Mom Struggling to Make Ends Meet and Paying Off Debt. - Sam by Steve Rhode