 TITLE: Credit Repair Solutions to Tough Credit Repair Questions CONTENT: Tough Credit Repair Questions and Answers\n-----------------------------------------\n###### Written by: Kristy Welsh\n_Last Updated: April 4, 2017_\nWe know there are a lot of tough credit repair situations out there. We get emails from our readers all the time asking for advice on all kinds of topics from how to fix their credit and rebuild their credit history after filing bankruptcy, to settling debts and dealing with collection agencies.\nUnfortunately, we can not answer every question we get. Below are some of the most common questions we have received as well as a few unique problems. If your question is not answered below, feel free to visit our discussion forums where hundreds of people post credit and debt questions and answers every day. Or, browse through our site where we have posted hundreds of articles on those very same topics.\n**Q.  I declared bankruptcy about two years ago.  Are there some things I should know before applying for credit? Are there any hidden dangers or concerns to worry about?**\n**A.**  The good news is you will eventually be able to get a car loan, home loan, or even a credit card with the same rate as a guy who has perfect credit. It just takes a little time and hard work but you will be able to establish a good credit history.\nYou can be treated as an \"A\" credit risk once you are two years out from a bankruptcy (two full years since the discharge) if you:\n1.  Have re-established **new** credit (not credit cards or mortgages you had before the BK) on at least **three** accounts.\n2.  Have made all your payments on time and have no negative items.\nSo, how do you re-establish credit?\n1.  Get any kind of credit card you can, secured or unsecured, gas cards, or department store cards. Take out a small installment loan with a credit union.\n2.  Maintain a small balance on these new accounts, even if it's only $20, and PAY THEM ON TIME! Make sure to use only 30 percent of the available credit limit - do not max out these new credit cards.\n**Please Note:** For this to work, ALL of the above steps must be followed, no exceptions!\n* * *\n**Q.  If I file Chapter 7 bankruptcy, will it reflect on my spouse's credit report?**\n**A.**  No, your spouse's (ex-spouse or not) bankruptcy will not show up on your credit report. If you have joint credit with your spouse (or ex-spouse) and they include these accounts in the bankruptcy, you may be in trouble, even if the court said your spouse was responsible for this debt.\nFor those married to someone with an old bankruptcy, if you apply for credit\/loans together, it will show up on the joint credit file. If you can swing qualifying for a loan without your spouse's income (meaning you apply for a loan or credit card by yourself), your spouse's credit won't ever be an issue. Otherwise, your spouse's credit may hamper the qualification process.\n* * *\n**Q.  We got in over our heads in debt several years ago, and closed most of our credit card accounts but we still have a ways to go to pay them off. I called the companies to see if we could get our interest rates reduced but I got nowhere with them. Most of them said they couldn't reduce the rate on an inactive account, and I'd have to re-open the account which means having to go through a credit check. Is there anything else I can do?**\n**A.**  Well, as far as reducing your rates, I know you can always \"ask\" lenders to do this, but since you've signed a contract with them to pay at an agreed rate they really don't have to do anything about it for you.\nNow, if you weren't paying on these accounts, and they were seriously delinquent, they might give you a break, figuring something is better than writing off the debt. I haven't heard of rate reductions in such circumstances, but I have heard of them often settling for a lower amount than what is owed.\nWhy not transfer your balance to another card? If you've been paying on time, I think you'd have an army of credit card companies sending you such offers. Yes, it means reapplying, but most of these companies offer very low rates for balance transfer. One source you can look up is our page of recommended credit cards. Or, you can go to a credit union and take out a loan to pay them all off. I am sure their interest rate would be lower than what your credit cards are charging.\n* * *\n**Q.  When I had back surgery, the insurance company paid their portion which was close to $25,000 and now I owe the hospital about $1,900. I called the hospital to set up a monthly payment plan. They said this was not acceptable and the bill must be paid in full and they normally give people just six months to pay and do not accept monthly payments. They suggested that I put this on a credit card. My husband and I have just refinance some debt and I do not want to put that much on a credit card. Will this medical debt show up on my credit report?**\n**A.**  Yes, medical debts can be put on your credit report if your account goes into collections. And, hospitals are notoriously ruthless for sending delinquent accounts to collection agencies. You can handle it however you feel comfortable, but paying them off right away and avoiding a collection procedure may be worth the cost of hurting your credit rating. Maybe look into a small installment loan or borrowing money from a friend or family member if you do not want to put all that money onto a credit card.\n* * *\n**Q.  My Visa account was recently charged-off. The bank called and offered to settle with me for 50% of the amount due. They said if I complied they would note the account as \"settled in full\" on my credit report and if I did not, my credit rating would be further tarnished if other departments and agencies became involved in the collection process. Should I pay them at this point or is my credit already ruined?**\n**A.**  If the credit card company offered to settle, you may be in a good position to further negotiate with them. Contact them and see if they will take even less, say 25 percent of the amount due. If you explain to them you are trying to settle a lot of debts and you only have so much money to go around, they may be interested in taking whatever you can offer them.\nOnce you come to an agreement (in writing of course) with them to pay off the debt, you will want to get the credit company to agree to list your account as \"PAID AS AGREED\", not settled. Listing an account as \"settled\" is a black mark on your credit. You will also want to make sure you have this stipulation in writing from the credit card company so there is no misunderstanding down the road.\nFor more information on how to do this, I urge you to read this article on settling your debts.\n* * *\n**Q.  Can a collection agency issue you a 1099-C for a debt that you owe? Is this really taxable income?**\n**A.**  A 1099-C is a tax form issued to you and the IRS by a company saying that you earned income. The IRS has ruled that forgiven debt should be considered income, and therefore if you settle on a debt, the amount forgiven should be considered income.\nBut, if you haven't a) settled with the collection agency and also you haven't officially had the debt collection agency prove that b) the debt is yours and c) the collection agency owns the debt. Therefore, they shouldn't be issuing you a 1099-C at all, in our opinion. If they do issue an 1099-C, you can appeal this to the IRS. For now, I would send them a letter stating you don't want them to contact you any further. This is also your right under the FDCPA.\n* * *\n**Q.  I was given a default judgment because I didn't show up to court. In fact, I was never notified that I needed to do this. I am attempting to get the judgment set aside because I was never notified of an impending court date. How can I do this?**\n**A.**  You have a judgment against you and the only course of action is for you to file a motion to vacate, since you were not notified of the court date. This is called improper service. In order to file you need to gather the following:\n*   When was the judgment granted? Depending on your state, you typically only have one year or less from the date the judgment was granted to file your motion.\n*   You need to know what the proper method for service is necessary for your state. You can find out the proper method of service in our free process server requirements by state chart.\nIf you follow our guide, you should have no problem filing a motion to vacate on your own, but you still might consider consulting with an attorney. In legal matters, this is always a good idea.\n* * *\n**Q.  My American Express account just went to a collection attorney. I also just enrolled in a debt settlement program to deal with this debt. Should I tell the collection agency I'm in a debt settlement program?**\n**A.**  If you tell the collection agency you are in a debt settlement program, you are pretty much admitting to the debt. This could hurt your chances of a good settlement, and certainly hurt your chances in a lawsuit. Don't do this.\nWhy not handle the debt settlement yourself? Get out of the program you are in and save up the money in a separate account until you have 20% of the balance. You don't need an attorney to make a deal with a collection agency. Many people successfully do this on their own. We have a complete, free, online debt settlement guide on this site. We go over everything in an easy to read, step-by-step methodology.\n* * *\n**Q.  I sent a \"cease and desist\" letter via certified mail to a collection agency asking them to stop collection efforts and they didn't. What can I do?**\n**A.**  You were trying to exercise your rights under a portion of the Fair Debt Collection Practices Act, where you can tell a collection agency to cease contact with you. Unfortunately, in your letter, you used the wrong language. You technically have no right to tell a collection agency to cease collection efforts. Many people make the mistake of using language which does not exercise your rights properly. Exercising your rights under this section of the FDCPA is an all or nothing deal. No contact, period.\nIf you send them the right cease communication letter, and the collection agency continues to contact you after receiving this letter, you can take them to court for violations of the FDCPA.\n* * *\n**Q.  I just submitted a long complaint to the FTC and they sent me an email telling me that they were shipping it off to \"Consumer Sentinel\". This place is accessible ONLY to law enforcement agencies, who have nothing to do with civil matters. I thought we were suppose to have a consumer protection agency, instead our complaints will never be read or acted upon. Who can I turn to now?**\n**A.**  We have found out by calling the FTC, they do put all the complaints into a database called \"Consumer Sentinel\". From this database, attorneys and law enforcement agencies look for a pattern in the database to see if there are frequent complaints about the same company. Then the FTC, your state attorney general or local law enforcement will act to take legal steps against that company.\nYou can always file your complaint directly to your state attorney general regarding the fraudulent practices of a collection agency. They will be eager to hear what you have to say. In some states, the attorney general's office has a separate consumer complaint division, in others, the state AG office records and processes consumer complaints internally. END