A relative of mine is going to try to buy a house w/ a 35,000 down payment, but her credit is in the low 500s. On her credit report she has 22 bad CC accounts - all charge offs - for a total of sbout 20,000. She has 2 CC accounts in good standing, paid on time for about a year, but she has never paid the charge offs. Her ex-husband has not paid her child support for two years now. She has been to court, but he doesn't have anything to give her. He lost his business, and he used to give her 1600 a month for child support. She depended on that money for her kids, and when he stopped paying she had to choose what bills to pay. Her lawyer at the time told her not to pay CCs & ignore bill collectors. What should she do? Can she get a house?
She is under the impression that even if she pays it her score will not improve enough to get a house.
well nol, wont increase score, but I do not think she has a great chance of getting approved with 20k in chargeoffs, but with them all paid she may... also she can try to negotiate payment for deletion... Also, she can just dispute them and start that process...
I don't think they will give her a loan when she owes such a substantial amt in charged off debt. If I were her I would pay off the credit cards and then use the rest as her down payment. Then continue to make timely payments on her current credit cards for about a year. While she is doing this she could work on disputing some of the items. Hopefully, some will drop off. In the meantime, her score should raise a little. Plus she would have that year to save even more for a deposit. That is just my opinion. I really hope she decides to wait. Good luck to her....
How can she dispute it? Can her court documents from suing him show the 3CCC that she is trying to recover money? Also, I have read about how people on this board pay them, and their credit reports show it as a negative anyway, whats does she do then?
Oh..I just read the previous post. I did not think about negotiatiing. Yeah..that is definately possible with the sum of money she has saved. I think that might work out even better for her.
paid or unpaid it will be negative on the report, but we are trying to say is that it is really difficult to get a mortgage when you have unpaid bad debts... The creditors can put a lien against the house.
okay, your friend could save 35k w/o receiving child support, but she couldn't pay her cc bills? whatever i suggest she get copies of all of her reports and immediately start disputing. How old is the debt? is it near the sol? I would think that she would want to do at least some of the charge offs as payment for deletion, unless she wants them to come after her for judgments when she gets the house. I would dispute the biggest worst first, and go from there
1 - Her parents are selling a property they own this month and they are giving her the profit that they are going to make with the specific purpose of her buying a house with it. 2 - How can you dispute a debt that is yours? She doesn't want to get out of it - and she wanted to work out payment for them, but her lawyer told her not to - for whatever reasons. She had perfect credit until 2 years ago when she just stopped paying, so none of it is going to fall off anytime soon.
That is a pretty bizzare question from someone who has been posting here since July 2001, as your header suggests. As for the debt: Paying accounts that were charged off generally does not increase one's score. However, it is a precondition for mortgage eligibility. To qualify, she does not need to pay all of them - just the ones that survive her disputes. Granted, 22 chargeoffs make a very bad start. It can probably be done, but will take some time. Saar
Not good. 1- The debts are hers, not her ex-husbands, as you seem to imply. 2- The down payment source is her parents. Unless she plans to bury that money in her accounts for at least 6 months, the mortgagor will doubt her ability to pay. 3- The mortgage lender may tolerate the down payment gift & sympathise with the lack of child support. But they'll wonder why she's willing to stiff 20 CCs out of 22 when she can now afford to pay them off. Have her read this article & others at http://mortgagealmanac.com. Good luck!
I would suggest she do nothing until she gets this cc mess straightened out. A lender is just not going to get involved with someone with that many chargeoffs. Her best bet may be a negoiated settlement at 35 to 40% of the amount owed. Wait 2 years, keep her credit clean she can qualify for a FHA loan at conventional rates. Right now, she just has too much baggage. Someone asked about the SOL. What state does your friend reside. If the SOL is 3 or 4 years, the advice may be different.
ok. this is easy. If she owes 22k in debt she won't get financed because the mortgage company will be concerned with the ccs going to judgment and then attaching to the property. Right now she has no assets I'm guessing so it's not worth the trouble of going after her or the accounts just haven't aged enough yet. She should not under any circumstances let her parents give her money until her cc situation is resolved. cleaning the reports is the least of her problems, the underlying debt is her real problem: that and the cash flow situation (although 22k of credit card debt is a huge problem in an of itself) 1. negotiate a settlement and have the parents pay it directly 2. have her declare bk, wipe the debts while she has no assets, then buy the house with a 20percent no doc loan. If her parents give her funds while in this situation the creditors may discover the funds and/or the house she'll then have equity in and go after her: result... she'll lose the house, the money and the creditors will reap not only the debt but outrateous fees and atty fees and interest... the creditors will find a way to seize her assets if she has them... settle the debts while she has no assets... with money or bk, then have the parents help her get the house... otherwise her parents money will go down the toilet... as an aside, her parents could buy her a house in their name and have her make the payments and live in it until her situation gets better one way or another... just don't let her set it up where she loses her parents money too
Good advice, Marie. As for the debt: after a year of persistent disputes and validation requests, her reported debt (on average, less than $1K with each lender) may be reduced from $20K to $4K. If that happens (and it's not impossible) I'm sure Marie would agree that BK should not be considered. Saar
IF she doesn't get sued,AND can wait out the SOL while she is disputing and/or paying off the debts,she can find a house with a lease option. Once she is clear of the SOL, or has taken BK ch7,(which I think is likely best for her and her family in the long run) she can buy without any worry about liens. This assumes she is not in a State with Homestead exemption.
I'm going to put my foot in my mouth on this one, but why doesn't she use a portion of her $35,000 to negotiate her debt with her creditors. She ran up the debt, and has the money - she should pay for it. Secondly, how can BK help her? The accounts charged off two years ago, so she has approximately five years left for them to continue reporting on her credit reports. If she files BK she is stuck for the next 10 years (plus it becomes public record - meaning not so easy to dispute off). After she pays off (settles the accounts) with her creditors she can always dispute them and some of the 20 chargeoffs should come off easily. Most creditors aren't going to verify after they get paid. Dani
I agree with LK.. I used that same approach except I had 24-25 negative items originally. I was able to get every single one of them removed. Also be sure the SOL has passed as well.
Well, I agree with Lizardking that I'd do it his way now... but I also have hand held several people offline through these processes and they get very nervous, upset, and unsure of themselves trying to bully these large companies who, for all their lives, have intimidated them simply by size and power and assumed knowledge of the system and the laws... It certainly can be done that way, it won't solve the underlying debt or the debts continuing to pop up on the reports unless they sue all 3 cras at some time like he did... well, you know how it works. In the last 6 mos you've had the debts sent to other collection agencies and you know how to back them off but I dare say most people aren't like us in attitude or in knowledge... I guess I just didn't want to see him pay the debts and have little to show for it. Paid/settled isn't really going to help the score, which means they can pay 40k in high settlement amounts and still need 20 percent down for a no doc loan... that's a lot of money. I agree with the ethical idea of paying debts, but after they've been doubled or tripled by fees and crud, I no longer believe that. That's a racket and it's ridiculous... and Lizardking's way will work with patience, tenacity, and chutzpah... but it wouldn't get them in a house in the next few months... that would take longer his way. I think any of the ways we've suggested are better than trying to buy a house and not dealing with the underlying debts... after all the credit report is just a report. If the debts are within the sol to sue then the even if she could get a mortgage with all this... the creditors will then see an asset and it will give them reason to sue and go after the house: because it's there for the taking... regardless if they can report the debt or not. I would also suggest she does some research on the debts. Likely this is out of control and she may not know if some have gone to judgment yet... I am sure she is fairly judgment proof right now and with the individual debts relatively small, intimidation is a better collection technique than suing... but that would change with a big asset reported for her.
