Can I get a new mortgage or refi? COs in past

[Anonymous]

In 2008, DW had a catastrophic illness (recovered nicely, great surgeon!) and I was not working, thinking I could retire.

We had six CCs and an auto that were COed, and narrowly escaped FC on the house..

I found work and we got a mortgage modification, house is still current.

To obtain and keep my Security Clearance to continue working, I had to hire a law firm to manage and clear paying off the debts to the OCs, or to CAs if the debt was sold.  All were taken care of except the last two.  I paid off Honda Financial outside the law firm.

One CCC never contacted me and never sold the debt and I was occupied with the others.  They sent a 1099-c last December and I reconciled with the IRS and they know not to expect a greeting card from me for the holidays this year, lol.

The other CCC sold the debt but the CA would not reasonably negotiate with the law firm and it did not get resolved. 

I am not in the law firm's program now, its been about 5 years and I was laid off when the entire site was closed.

The SOL in FL is 4 years and everything is well past that date and some of the lates and a couple COs are dropping off my CRs, the last one is the auto and it will be gone in Feb 16.

My questions are:

Is the 1099-c debt gone, since I had to pay taxes on the resulting 'income'  and the OC told the IRS it was noncollectable?

If a mortgage company (or potential employer) pulls a 'full report' will the one that is unsatisfied show up and would the LO / UW insist that I have an agreement to repay it in place before approving a new loan or refi?

How long would those items show up in a 'full report'?  It has been almost 7 years now.

The last two CC amounts are substantial to me and would be impossible for me to pay outright.  I would need a multi year repayment arrangement to pay each of them.

Thanks in advance for info and opinions.

[coterotie]

Chances of a "full report" are slim for mortgage or other credit purposes.  Security clearance will require you to disclose, however writing an explanation that you tried to pay but they refused to correspond with your counsel will probably take care of this.

If you are past the SOL, then you have a couple of options:

1. Ignore them - they can continue to try and collect but they can't actually do anything to collect other than send you increasingly nice letters appealing to your good nature.
2. Entertain a settlement offer that doesn't include any reporting of any kind to a credit reporting agency.  Be very careful and do your research to make sure that anything you say or do doesn't reset the SOL.

THe 1099 debt is gone and you shouldn't have had to pay anything to your rich uncle because you were insolvent at the time the debt was charged off.

The other good news is that if you were current before they went past due, never brought them current, they will actually report positively on your credit report once the 7 years is up as bad news lasts for 7 years and good news lasts for 10.

You should be able to pull a score and see how a refi would go for you.  I can't address how the modification impacts this process.

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@Anonymous wrote:

In 2008, DW had a catastrophic illness (recovered nicely, great surgeon!) and I was not working, thinking I could retire.

We had six CCs and an auto that were COed, and narrowly escaped FC on the house..

I found work and we got a mortgage modification, house is still current.

To obtain and keep my Security Clearance to continue working, I had to hire a law firm to manage and clear paying off the debts to the OCs, or to CAs if the debt was sold.  All were taken care of except the last two.  I paid off Honda Financial outside the law firm.

One CCC never contacted me and never sold the debt and I was occupied with the others.  They sent a 1099-c last December and I reconciled with the IRS and they know not to expect a greeting card from me for the holidays this year, lol.

The other CCC sold the debt but the CA would not reasonably negotiate with the law firm and it did not get resolved. 

I am not in the law firm's program now, its been about 5 years and I was laid off when the entire site was closed.

The SOL in FL is 4 years and everything is well past that date and some of the lates and a couple COs are dropping off my CRs, the last one is the auto and it will be gone in Feb 16.

My questions are:

Is the 1099-c debt gone, since I had to pay taxes on the resulting 'income'  and the OC told the IRS it was noncollectable?

If a mortgage company (or potential employer) pulls a 'full report' will the one that is unsatisfied show up and would the LO / UW insist that I have an agreement to repay it in place before approving a new loan or refi?

How long would those items show up in a 'full report'?  It has been almost 7 years now.

The last two CC amounts are substantial to me and would be impossible for me to pay outright.  I would need a multi year repayment arrangement to pay each of them.

Thanks in advance for info and opinions.

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[Anonymous]

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@coterotie wrote:

THe 1099 debt is gone and you shouldn't have had to pay anything to your rich uncle because you were insolvent at the time the debt was charged off.

The other good news is that if you were current before they went past due, never brought them current, they will actually report positively on your credit report once the 7 years is up as bad news lasts for 7 years and good news lasts for 10.

You should be able to pull a score and see how a refi would go for you.  I can't address how the modification impacts this process.

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Thanks for replying.

When the 1099-c was issued, I was not insolvent and actually got an extension on taxes to see if I could qualify.  I was working at a good job and had some assets, mostly my home equity, and company 401k.  I did not hire a cpa or tax attorney and just before the extension ran out, I caved and submitted the tax return showing the added income.   

The main reason I am asking about the possible ramifications of having a CO not settled is that I would consider relocacting within FL to get a new job if I had a good expectation that I could obtain a new mortgage at an Ok rate without long delays.

I am not good as a renter especially in a multi unit type of place.

My scores are all improving and I am in the mid to high 600s with Fako scores, although EQ was 706 on CK this week.

Thanks