10-21-2008 11:27 PM
I am currently a renter and have been for about 6 years ago.
I was thinking down the line of possibly buying a house one day.
However, there is a chance that I may have to enter into a DMP for one creditor (Discover Card - account is suspended but reporting current) because this is the only way to pay this off within my budget.
I do have positive tradelines which are increasing my credit score because of decreasing balances.
My question is: how do mortgage companies view a DMP? If I proceed with the program, this would be my first one ever in my 11-year credit history. The only reason I'm having to do this is to avoid default on the account.
10-22-2008 06:31 AM
FHA will allow you to purchase while in a dmp. Same as while in a ch13 bk.
Actually it is both positive and negative.... for obvious reasons.
10-22-2008 12:17 PM - edited 10-22-2008 12:18 PM
Excellent suggestion UpUpUp and yes, I've been talking to them a lot over the past two weeks.
Discover told me they could put me on a payment plan, but it would only be for 1 year and the committment they need from me is more than I can do in my budget right *now*. Hopefully this will change within the next 6 months.
I should also note that the Discover payment program's APR is higher. Currently, I'm paying 23.99% (on top of late- and over-the-limit fees of $39 a pop which they put under "purchases"); their program would reduce it to 19.99% but the DMP would reduce it to 15.99%.
10-22-2008 12:21 PM
DallasLoanGuy, you bring up another good point - I've heard that in some cases a DMP is construed just as bad, if not worse than, a bankruptcy. Never understood that. If you're in a DMP, they have a defined limit of time to pay off the creditor and the creditor still gets their money. You get to keep the payments showing "current" on your credit reports.
Isn't a DMP a better option than defaulting if you can't meet the minimum payments the creditor's asking?
Since this is Discover I'm dealing with, the word on the street is either that they won't offer a settlement until your account's 90 days delinquent (which messes up your credit too) or that they will sue you for the balance.
Thanks to both of you for listening. This is a situation I've never been in before, so I'm learning as I go.
10-22-2008 02:36 PM
any time you have to make paymetn arrangements outside of the contractual ones it is a bit of a hit. Of course, that is better than letting them C/O.
Also, Usually for DMP they will make you close all open credit account (at least when I looked into it.) this will hurt your score.
Talk to discover some more and figure out a way to get this paid off through them and you will be alot better off in the end.
10-22-2008 03:05 PM
I would consider anyone willing to work out an agreement to pay their bills MORE favorably than someone who files bk..... or just lets everything go to collection. my personal opinion.
Yes, it is bad..... but I think FHA actually treats them the same. their opinion
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.