Feeling Hopeless

[Anonymous]

HI there,

My husband and I thought we would be on our way to purchasing a home next year.  Then the reality hit...

Student Loans (these are husband's mine are all current)

$9,600 Chase loan in Collections (Private) - Could not afford payment 1k down $400/month payment plan or $5k settlement offer

$66,000 US Bank loan in Collections (Private) - Paying $200/month to Collections Agency

$2,500 Stafford Loan in good standing (Federal)

$15,461 US Bank loan currently in forbearance - 13 Late payments (Federal)

*The date of first delinquency is in 2012 for most of these...so the SOL doesn't really help

Judgements

$811 for a Credit Union Credit card for being 60 days past due in Summer 2014.  Brought the account current the day after and is currently paid off

Credit Cards

$1,761 Discover

$1,837 Best Buy

$2,204 Zales

$2,249 Amex

$2,543 Capital One

$3,071 Maurices

*The only credit card in my husband's name is the Zales card.  Once that is paid off (in a few months) his credit card utilization will be 0.  The remaining are in my name.  I also have several zero balance credit cards that I've added my husband as an authorized user in order to hopefully boost his scores.

CC Total: $11,416.  (The good news is I should probably have all credit cards paid off by December)

Right now his scores are: Equifax 620, Transunion 593, Experian 566.  I checked the three "mortgage scores" though and they were all in the mid 500s.

Husband's income is around $85k.  I only work part time as we have a newborn son.  I'd imagine that means any sort of home loan would have to be through my husband.

My question is: How do I start rebuilding in order to reach our goal of home ownersnhip?  Most of the answers I read in similar situations are "pay off the student loans in collections."  Honestly, it's 66k. I just can't do that...or even a settlement for half. What should I do?

[Anonymous]

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@Anonymous wrote:

HI there,

My husband and I thought we would be on our way to purchasing a home next year.  Then the reality hit...

Student Loans (these are husband's mine are all current)

$9,600 Chase loan in Collections (Private) - Could not afford payment 1k down $400/month payment plan or $5k settlement offer

$66,000 US Bank loan in Collections (Private) - Paying $200/month to Collections Agency

$2,500 Stafford Loan in good standing (Federal)

$15,461 US Bank loan currently in forbearance - 13 Late payments (Federal)

*The date of first delinquency is in 2012 for most of these...so the SOL doesn't really help

Judgements

$811 for a Credit Union Credit card for being 60 days past due in Summer 2014.  Brought the account current the day after and is currently paid off

Credit Cards

$1,761 Discover

$1,837 Best Buy

$2,204 Zales

$2,249 Amex

$2,543 Capital One

$3,071 Maurices

*The only credit card in my husband's name is the Zales card.  Once that is paid off (in a few months) his credit card utilization will be 0.  The remaining are in my name.  I also have several zero balance credit cards that I've added my husband as an authorized user in order to hopefully boost his scores.

CC Total: $11,416.  (The good news is I should probably have all credit cards paid off by December)

Right now his scores are: Equifax 620, Transunion 593, Experian 566.  I checked the three "mortgage scores" though and they were all in the mid 500s.

Husband's income is around $85k.  I only work part time as we have a newborn son.  I'd imagine that means any sort of home loan would have to be through my husband.

My question is: How do I start rebuilding in order to reach our goal of home ownersnhip?  Most of the answers I read in similar situations are "pay off the student loans in collections."  Honestly, it's 66k. I just can't do that...or even a settlement for half. What should I do?

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This is obviously going to take long term dedication and determination to fix. A three to five year plan at minimum. There just isn't a quick fix here. First thing to do is get a tight, strict budget set up and stick to it like glue. Cut any needless expenses out that you can. Then I would start by completely switching priorities over to hubbies debts, forget about paying down your balances for the time being, since you scores are just not relevant. So just pay the minimums plus a bit extra on those, and bank as much cash as possible over the next few months - then counteroffer Chase $3500 on that first account. Maybe they bite maybe they don't, either way its paid in a few months. Then throw everything at the stafford, and get that out of the way, just so its one less item on your plate, and a paid, good standing loan in his history. Once the US Bank loan comes out of forebearance, keep up on it, and throw more at the $66K balance, while stashing cash aside for an eventual settlement offer. Once you've got $10-$15K put aside, start making offers to them. In the meantime, get hubby a couple of Cap One cards, grow them slowly over the next few years, while keeping them paid off. Those will be the basis of his score growth over the next few years, while this elephant gets eaten. Once you are in a position to settle the big one, then you should be in a position to start planning a home purchase.

[Anonymous]

Thanks for your feedback.  I should mention that I have OK credit and can probably get my score to the 700s within a year or so.  If I also go in on the loan, will that help the situation? even though my income is dismal?

[Anonymous]

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@Anonymous wrote:

Thanks for your feedback.  I should mention that I have OK credit and can probably get my score to the 700s within a year or so.  If I also go in on the loan, will that help the situation? even though my income is dismal?

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Probably not - they are going to use the scores for whoever's income is being used.