Should I bite the bullett and pay Dell?

Should I bite the bullet and pay Dell?

I have no more than 3 months to go until I need to lock in my interest rate on my mortgage. I'm $500 away from $0 balances on everything (will be zero next 2-6 weeks).

I have 2 paid collections.

A 30 day late in January (2 days past Cap1's cutoff for reporting, having trouble getting them to budge)

And then there's Dell. CO for $2,119. They had ER Solutions as the CA, who I wouldn't budge on as far as wanting a PFD. I think they offered to settle for 65%.

Now, there's a new CA. I have about 12 days left in the original 30 to dispute. They're offering $1165.69 to settle, so 55%. The account charged off in March 2006. Debt incurred in VA, but I now live in TX, so SOL is 4 years (initial delinquency in December 2005). I'm essentially judgement proof since wages can't be garnished in TX and since any savings I have is tied up in 401(k)'s, which can't be touched by any non-federal debtors.

Now, according to the myFICO score simulator, if I can lose this $2119 balance and get all else to $0 balances, my TU score will go up 20-60 points and my EQ will go up 0-40 points. You can't run the simulator on EX.

Now in the past, I've found the simulator to be fairly accurate, within 10 points of what I ended up with for TU and EQ.

So with so little time to go and no headway made with Dell and their CA's, I'm considering settling for 2 reasons - A)I'd lose the $2,119 collection balance, and B)It would greatly help my utilization since the limits I have are kind of low. (probably drop from ~90% to about 15%).

If not for the mortgage, I'd be content letting the SOL expire and then seeing if Dell wants to make a deal in exchange for deletion, but even 1/4 point in my mortgage will save me well over $1,165.69 over the life of the mortgage, so what do y'all think?

FYI, I've disputed and it came back verified. Never disputed with ER Solutions when they started collecting. And as I said, have 12 days or so to dispute with ARS National.

 

FYI, ER Solutions and ARS National are only collecting for Dell, so only the Dell TL has been reported, no TL for the CA's.

Also, I am approved for my mortgage as long as my middle FICO score is 600+, which, as you can see, it now is (and those scores are counting a 80% utilization on CAP1, which is down to 50% and will be down to 0% in 2-6 weeks). So I don't need to pay this to get a mortgage, but if it raises my score, it could very well be worth it.

The original balance was around $1400 with the $2119 representing collection costs added. I was thinking of offering $700. Considering the date this was charged off, is the account worth that much even?

Finally, what's your gut feeling for having $0 in outstanding collections vs. having a DOLA on this account so recent? The $0 should outweigh the DOLA, right, and scores should go the way that the myFICO simulator indicates, right?

 

There are many reasons bills go unpaid missy. Lack of funds is certainly one, but so is lack of performance of the purchased good or service.

The computer had 2 160GB hard drives, set up so that ~half of every file was saved on one hard drive, half on the other.

I did not buy the extended warranty because Dell's rates are ridiculous.

36 days after I received the computer, one hard drive died. I lost all of my programs and memory and had to have the bad drive stripped out leaving me with a computer worth about $550 new that I had just paid $1500 for.

Since it was 6 days past the return period, Dell basically told me to F*$# Off. So I did the same.

At the time, I didn't know I'd get a better job offer in a place where owning your own house was actually affordable for a single income family.

So in short, yes, I can afford the house and 5 years worth of the ridiculous mortgage payments I'm going to have, since we bought less house than we wanted. Plus, I figure now that I care about my credit and have slightly educated myself about credit, within 2 years I'll have a 720+ score, if not more, and can easily refinance. The broker I'm working with is only looking at no prepayment penalty loans for me and, if I use him again at refinancing, he can limit those closing costs to <$1000.

 

As much as I respect bizwiz' contributions, I'd love more input from what some of the other long timers think...

 

As for the DOLA and 7 years, I can see this being a big deal if I only had a year or so left on the reporting SOL, but I have 5.5-6 years left on that SOL. So I don't think that's a strong argument to not settle, as the zero balance, even though more recent, has to be better than having $2119 count against my utilization when I only have total revolving lines of around $2000 to begin with.

As for the manual review, I'm nearing automatic approval on a My Community mortgage (similar to FHA without the low loan limits). My broker has told me in the past that at my income level, a median FICO of 620 should get me there. And I should be at 640-660 on the median by 3 months from now.

Even if I do require a manual review, if asked why I settled for less, I could, I would hope, be able to explain the situation with the computer, maybe just saying that I stopped payng when the computer broke as I negotiated with Dell, and that the final settlement amount was the cost of the computer less repair fees that shouldn't have been incurred. Stretching the truth a little, but not much, and certainly not a lie.

As for "Good" lender, what's your definition of that? Anyone who'll give me money at a decent rate, in my mind, is a "Good" lender. If your definition is something else, why should I care about getting a "good" lender? There job is done up front. If I close, they're done, they just sit back and get paid, so I really don't see what "good" lender means or why it matters...

 

Duh! I knew this. Why did I not realize that when replying?!? Too many damn rules to learn in too short a timeframe!

Sound advice as usual biz. I don't know what you do for a living, but I bet you could earn a bundle teaching credit repair...

 

Spoke to ARS National today, Dell's CA. The lowest they were authorized to settle for, they said, was $1,060, so slightly more than 50% of the reported balance of $2119. I turned it down since I think this amount is too high.

What do you think this account is worth? First delinquent 12/2005, opened in VA, I now live in TX. VA SOL is 3 years, but I guess they can now go by the TX SOL of 4 years, which is ~2.5 away.

Since I live in TX, no wage garnishment is allowed, and I have no real liquid assets they can go after. In fact, if they decide to go for judgement, I can get paid from work directly to a debit card that is not tied to any bank account, if need be. So I am essentially judgement proof, as I've already stated.

So what do you think this account is worth? And Biz, I know what you mean about mentally being worth it to get rid of it, but I don't mind playing all the games they care to play re: phone calls and letters. I'm mostly concerned with settling for as little as possible and improving my mortgage rate in the process.

Also, any ideas as to how much settling for $1060 or less could improve my score for having no delinquent accounts and not having that $2119 balance work against my utilization? Do you think I'm looking at a 5 point FICO increase? 10? Could it go as high as 20 or more higher? What do you think?

Thanks!

 

Dell won't speak with me directly about this account and both CA's they've hired to collect have informed me that Dell won't do a PFD.

And I know the TL will remain and still hurt, but again, not being reported by a CA, only Dell, so not a collection account but a CA. Regardless, the real increase I'm hoping to achieve is due to the outstanding balance. From what I see, it appears the $2119 is counting against my utilization.

Considering my current revolving credit consists of Crown Jewelers ($500 limit, $0 balance), Target ($200 limit, $0 balance), Orchard Bank ($300 limit, $0 balance), and Cap1 ($1175 highest balance, $561 current balance, will be $0 balance by 7/22), as well as AU on father's Chase card with $20k limit and $17k balance (bought his lease out without telling me after he added me as an AU) and AU on wife's grandmother's CC with $12k limit and ~$1k balance (not reporting anywhere yet, maybe ever), I think getting that $2119 balance down to $0 would help a decent little amount, maybe as much as 15 points, no?