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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