I am a single mother and currently have a bit of a financial problem. My credit score is 627 due to high debt from student loans (which I am payin off) and 2 maxed out credit cards (one $2500 and another $500). I also have about $10k in collection from $4000 in hospital bills and the rest an updaid credit card.
I make about $30K per year plus another $12K in child support.
I am getting a settlement for the amount of $67K. I have never received this much money and have a few questions. What are the tax implications on this amoount?
I know I need to pay my debts. I want to pay down my credit cards to 30% of their balance. What about the items in collection? How do I handle that?
When my credit gets better, I want to buy a house and a car. I plan on putting some $ down on the house and putting as much down on the car to have little or no car payment.
Should I buy these items at the same time so neither impacts my credit? or buy the house first then the car or vice versa?
I'm not certain what the best strategy for you is, but one thing for certain is those debts must be paid down to improve your credit score.
The credit card debts of $3000 could easily be taken care of with the settlement money, then you may want to negotiate a monthy payment to the collections agency for the hospital bills and then consider a used car.
Once your credit worthiness is better you could consider housing? Consider talking with USAA's financial advisors they're there to help folks like you.
All the best.
Definately agree with n8tureboy and Angela!
Please remember to set up an emergency fund once your debts are paid.
Your credit score may not improve for 60-90 days depending on how quickly the creditors report the changes to your accounts. If they dont update within 90 days definately take action by contacting them directly to verify your accounts are now back in a favorable status, such as paid in full.
Good Luck & Happy Holidays!
I commend you for reaching out here. Getting our finances in order after debt can be quite stressful - been there for sure!
I have passed this along to one of our financial experts to reach out to you. They will surely help with the questions you have below. Best of luck to you! Thank you for posting in Community.