Frequently Asked Questions

Will paying off an old debt raise my credit score?

Not always. If a debt is less than seven years old, paying it could improve your credit score, IF it is showing on your credit report. How much depends on how old the debt is.

If the debt is older than seven years, by law it should have already come off your credit report. The credit rating agencies should not be considering it in assigning your score, so repaying it would likely have no effect on your score.

If the debt is less than seven years old, but is not showing up on your credit report, paying it off will not help your score, AND COULD EVEN HURT IT. This could happen if the creditor reports the payment, since your credit report would then show a debt that was formerly delinquent.
So, if you are thinking of paying off old debt, it is important to prioritize:

FIRST PRIORITY: Tax debt. Tax debts to federal, state and local governments accrue penalties and interest at an astounding rate. And, the government has multiple ways of collecting the debt that are not available to general creditors, such as seizing your tax refunds or government benefits, levying on your wages, and seizing your property.

SECOND PRIORITY:
Child support or alimony obligations, and any other obligations you incurred as part of a divorce settlement. These debts are not dischargeable in bankruptcy, and failure to pay can even land you in jail.

THIRD PRIORITY: Any creditor that has sued you and obtained a judgment. A judgment will normally constitute a lien against your property, and may give the creditor the right to garnish your wages or bank account.

FOURTH PRIORITY: Any debt upon which you have been served court papers, even if a judgment has not been entered. If you have been served, a judgment is likely in the near future.

FIFTH PRIORITY:
Debt that has been handed over to a law firm for collection, especially if it is a local law firm. A collection lawsuit is much more likely to be filed by a law firm than a general collection agency.

SIXTH PRIORITY: Other debts that are showing up on your credit report. Pay the newer debts first, as these affect your credit score more than older debts.

SEVENTH PRIORITY: Other debts that are not showing up on your credit report.

If it is not possible for you to deal with your debts in this way, it may be time to look at your bankruptcy options. STEER CLEAR OF THE DEBT MANAGEMENT AND DEBT SETTLEMENT FIRMS THAT YOU SEE ADVERTISING EVERYWHERE. The statistics are clear that these services rarely solve debt problems. More often, they are the only ones who get paid, leaving you further in debt and further behind.

Every payday loan company will have varying qualifications for being eligible for a payday loan. However, they usually require that you have steady employment and can meet other terms they may set forth. Usually, a company will not require you to give them a reason for the loan but you should be prepared if you do need to provide this information. You will need to provide proof of income, as well as let them know when you will be paid next. You may even be required to have a checking account. You will have to show that you are at least 18 years old and provide them with proper identification. This is all part of the filing process for the payday loans. It can be scary to have to file for a payday loan, but if you do not have another option it can be a good way to quickly fix a money issue.

An important thing to note before filing for a payday loan is that they tend to be very expensive and often have high interest rates. Therefore, if you do apply for a receive a payday loan, you must pay it off quickly.

Other Frequently Asked Questions:

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Morgan & Morgan attorneys can help settle your debts such as credit card debt, auto loans and mortgage debt. Contact us if you need assistance with baknruptcy or have any questions about the process. No problem is too big or too small for us to help.