Payoff charge offs?

[Anonymous]

My husband lost his job a year ago and we had to do a voluntary lease return on our truck. they sent us a bill for 12000.00 after they sold it. Well it is now a charge off. What do we do, try to start making payments on it or let it go? His score is really low. 520 and we want to buy a house in a year or so. It will take us forever to pay it off.

[Boswd]

How are your scores?   Was the lease in your name or your husbands?

[Anonymous]

My scores are in the 600's, need at little work, but his is low 5's. the lease is in his name. I dont work, so getting a mortgage with just me wont happen.

[Boswd]

that makes it tough.   Going for a mortgage with his scores which will be the primary one they will look at since he is the one working is going to be hard.   Owing this is going to be a problem trying to obtain a mortgage even with a sub prime.   You could probably still get one, but do you want those terms?

What I would do if I was in that situation would be, putting off purchasing a house for a bit, if you can, work on getting that debt down and work on your scores and past debt.   Debt to Income ratio is a major factor in the approval process.  With scores in the low 500's you would no doubt be going sub-prime and you have to ask yourself is this something I want to get into.   Your terms are going to be horrible more than likely.    so would it be worth it to you to put the thoughts on buying a home on the backburner for a year or two so you can pay down the lease of the car and work on your husbands scores to be able to get a better mortgage?   It could save you thousands of dollars in the life of the loan.  

[Anonymous]

I want to pay it down, but they want the full amount. We cant afford their terms, if we could we would have still paid on the lease. I am at a loss. I was told not to agree to a settlement of the amount. Is that right?

[Boswd]

What were the reasons cited for advising not to take a settlement?   Can you afford the settlement?  Has it gone to a collection agency yet?     I'm surprised the company won't work out a payment plan with you.    Ask to speak to a different representative.

[Anonymous]

A mortgage broker told me not to settle. We havent been offered one yet, but we could and thats why I am asking. We wont get it paid off anytime soon though.

[Anonymous]

And we were sent like three letters demanding payment but not from a collections company, then charged off.

[Boswd]

So it sounds like you are still dealing with the original creditor, which is good news. If it goes to a CA than it's a double ding on your report.      If your mortgage broker told you not to settle than I would be hesitant  on settling.   Did he say why?    some lenders frown upon seeing a settlement, some don't care as long as the matter is cleared up.   I would ask him/her why setteling would be bad in this case, and it never hurts to shop around for another mortgage broker, one who doesn't care if he see's a settled for less on your credit report.