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I am in credit card debt of @6000, pretty much all of which is over 120 days past due and balances gone into write off or sold to collections.  I had a Chapter 13 which was dismissed in Nov. of 2019. The only outstanding balance is my car. I was going to refile Chapter 13 but have to move out of state. My question is this;  Would I be better off to do a new chapter 13 or voluntary repo on my vehicle and file chapter 7?  Or do I try to settle/make pmts to collections?  i hope to be able to buy a home within the next 2-3 yrs.



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Hey there, @annabell93! I'm not an attorney, so I can't give advice about whether refiling Chapter 13 vs. filing Chapter 7 would be the better option.

But what I can tell you is that making payments on debt in collections doesn't really help your score because the damage has already been done. That doesn't mean you shouldn't pay it — in fact, they can sue you over it if it's still within the statute of limitations. But just be aware that if you're trying to rebuild your credit to buy a home, paying the accounts in collections won't have much impact. The only way to rebuild your credit will probably be to put down a deposit and get a secured credit card, which will use the deposit as your line of credit. If you're diligent about making on-time payments and keeping the balance as close to zero as possible, you'll gradually rebuild.

Should you opt for either type of bankruptcy, you'll typically need to wait at least four years to get a conventional loan for a home, but you may be able to qualify for an FHA-backed loan in as little as a year. Keep in mind that that's just a minimum for the FHA to back your loan. Many lenders will have much tougher standards and may require you to wait longer, put more money toward a down payment, etc.

If talking through this with an attorney isn't an option right now, you may want to seek out help from a credit counselor through the National Foundation of Credit Counselors at Good luck to you!

Hi @annabell93! As @Dear Penny mentioned, it may be helpful to have someone help you with your finances to help get you back on track. In addition to the National Foundation of Credit Counselors, we've also put together this list of other free resources and what to look for in a credit counselor. 

When it comes to paying collections, just paying them off isn’t likely to affect your credit history in the short term. Once a debt has been paid or settled, the next step is making sure that the payoff is reflected on your credit report.

If you have multiple delinquent debts, you may be wondering whether paying them off in any particular order will affect your score. If you have a mix of old and new collection accounts, paying off the ones that occurred most recently is going to be more beneficial to your score. You can read more about how paying off collections can impact your credit score here.

You need at least a score of 640 to be considered for an FHA backed loan regardless of how long your bankruptcy has been on your credit report. I am just now seeing my BK dropped from one of my credit reports and I only gained 27 points even though it knocked off 174 points when it went on there. And I was expecting at least a 100 point gain with the loss of it reporting. Advice has mainly been that I would see this increase. I am telling you that it is not true. 2-3 years after a BK to obtain a new mortgage is quite aggressive unless you have a HEFTY down payment. 20-30% downpayment. BK was my only option and currently, my array of CC's & loans are all paid perfectly & have low utilization %. Still, I cannot get my score to budge above the 600 mark. Of course, now my CC CL's are just a small percentage of what they used to be even after a decade. I recommend Chapter 7 from experience because this wipes ALL debt (mainly) and you get a fresh start. Chapter 13 just set you up to have to pay these balances plus have a black mark on your report for the next decade. But OF COURSE, CONSULT AN ATTORNEY for the best option for your situation. If you are filing BK and will be bogged down with this for 10 years it may as well clear all qualifying debt. imho.

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