Can a bad credit rating save you from bigger problems? Hasn’t it done just that for many young people? I’ll explain how with a couple true stories.
Good Credit Rating Story
My friend started his adult years with good credit. Soon he was able to get credit cards at will, as well as finance cars, snowmobiles and more. He made the payments, and went deeper and deeper into debt while he was at it. When he was 30 years old, he had over $20,000 in credit card debt, plus loans on cars and business tools.
Eventually it was just too much to handle. After considering bankruptcy, he was convinced that the credit card companies would reduce his balance due if he just threatened to declare bankruptcy. However, he had to stop paying on the cards, or the credit card companies wouldn’t believe he was in financial trouble. He did this, and then drafted a nice letter to the companies, explaining his situation. Most cut at least 30% off what he owed, but he had to pay the remaining balances immediately, which he did with a home equity loan.
As a result, his bad credit rating wasn’t as bad as if he had actually declared bankruptcy, so he...
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