Dear Debt Adviser,
I filed for bankruptcy back in 2006. I have since gotten back into debt (about $2,000 in credit cards and $10,000 on a car loan). I also have a student loan debt (of approximately $45,000) for which they are garnishing my wages for about $400 a month ($200 from biweekly paychecks). My credit score is really low right now because the new credit card debt I have is all in collections, and I have been late on my car payments on several occasions. I also had a car repossessed back in 2007. How do I repair my credit and get my credit rating back on track? Is there any hope of me doing this? I want to buy a house someday, but right now that looks like an unobtainable dream. Are there reputable credit repair companies out there that will not charge me a lot for their services?
-- Maria

Dear Maria,
Your credit rating is a reflection of what is going on in your life. You must first get your life on track, and your credit will naturally follow. As an example of what I mean, let's take a look at your recent history. You filed for bankruptcy in 2006, so you either had your debts eliminated in a Chapter 7 filing or entered into a repayment period in a Chapter 13 filing that should be over by now. Either way, your debts were satisfied, and you came away with a clean debt slate, except for your student loans. But now you no longer have that clean slate. What happened? As with many people, life happened.

But it's not too late by a long shot. You can get back on track. To begin with, I want you to take a good look into why you are getting into debt and more importantly, having trouble paying your credit obligations on time and as agreed. Is it overspending, poor choices or something else? Until you know the source(s) driving your financial problems, you will continue to live a cycle of debt, collections and general financially driven misery.

Credit repair is not the answer for you, but life repair is. Accurate, negative information contained on your credit reports cannot be removed permanently until the reporting period has ended. Credit repair companies will gladly accept your money but can't fix your bad credit or solve your problem. I suggest you begin repairing your life by contacting a reputable, nonprofit credit counseling agency to help you get to the bottom of your credit troubles. Your certified credit counselor will thoroughly review your finances and ask the right questions to help you decide what behaviors are causing you to end up with unwanted, unserviceable debt. Then, your counselor will help you determine the best course of action for you to pay off your current obligations and avoid problems in the future.

It is likely you will need to make sacrifices now to achieve your financial goals. But aren't you already sacrificing because of your financial problems? The kind of sacrificing I'm talking about will eventually break your debt cycle and perhaps lead to you owning your own home one day. Your sacrifice may as simple as developing a spending plan that you stick to or as complicated as needing to downsize your housing, transportation and making other life changes. Whatever it is, only changes in your life and behavior will get your credit back on track.

Good luck!

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