01-18-2013 06:59 PM
First of all, much thanks to the help I've received via this forum, not only from posting my own plan, but also just from reading what others have gone through.
I've managed to increase my scores by 20-31 points in the past 6 weeks, by doing some of the "easy" stuff. But now I'm down to the hard items.
There are numerous threads on these forums about how difficult CapitalOne Auto Finance can be. It seems that nobody has ever gotten a PFD through them.
Here's the situation I need help with:
1). Truck totalled, didn't have gap insurance, left me with a $4500 balance to COAF that I couldn't pay.
2). DOFD was 09/2010.
3). COAF diligently updates every month that it's charged off.
4). They have made zero contact, zero effort to collect, and have not sent it off to an outside collection agency.
My goal is to buy a house sometime in 2013. I met with mortgage broker today that told me that I won't be able to use a VA loan because of the existence of my chargeoff from COAF. I live in a 6-year SoL state.
As I've read in these forums, COAF won't PFD, but they will settle. I could probably cough up 60% of the balance due if I had to.
Question: If I settle for less than full amount, I assume it reports as "paid, closed, zero balance". However, will the "paid for less than full balance as PIF" hurt me more or less than having the charge off?
I don't *need* to use my VA loan benefits, it's just one potential option. Other home loan programs don't have the pay your charge-off requirement. My concern is that doing the settlement with COAF will restart the clock on the debt, and it will be reporting as now, instead of 2.5 years ago. I'm afraid that might drop my scores worse than just leaving it as a charge-off.
Thanks for the advice, I do appreciate it!
01-19-2013 07:16 AM
After a ton of research, I discovered an interview with a FICO representative that stated a reduced settlement for PIF is scored identically as a chargeoff, since it indicates that the debt was not actually paid.
01-19-2013 07:55 AM
It might be looked at differently under a manual review. However once it is paid/settled you could start the GW process. Plus if it's settled, it's done. You won't have that debt looming over your head anymore.
01-19-2013 08:13 AM
Yes, that is true. But my real concern with doing that is that the action date will be brought current, which would kill my chances for FHA financing since it would then be within their 2-year window.
01-19-2013 08:35 AM
I don't see how it would, they would probably make you pay before closing anyway, it depends on the lender. I paid COs off right before my FHA mortgage, and many others have too. Have you talked to your loan officer of mortgage broker?
01-19-2013 08:40 AM
Thanks for the reply. Yes, I met with a broker yesterday, but we were really only talking about a VA loan, didn't get into FHA.
I guess it wouldn't hurt to call COAF and find out what kind of deal they'd make. Reduced settlement is better than having it show up, or even potentially end up in court with a judgment later, which other readers on here say is a common COAF practice.