Open Collection

[Anonymous]

Hello,
Quick question. My hubby and I are looking into buying a home within 12-18 months. We have had very many years of derogatory marks on our reports. We spent years very very low income and honestly came down to rent and food or paying bills. We chose the Rent and Food because we have 4 children. Anyway, we started cleaning things up last yr. we each got a Cap1 secured for $225, then my husband got Credit One $500 and Verve $400 and Fingerhut $300. We have since closed Verve because interest rate was insane. So now we have a few derogatory marks like I had mentioned. I am currently in credit repair. My hubby I don't want to do repair on. Well, not with a company. He has 1 open collection for $12,000 now can We enter into an agreement to pay back and still get qualified for a mortgage? Or would we need to pay it in full? Or even settle? I feel like a hamster on a wheel with this one. The rest of our things are tiny compared to this and we will be able to PIF on them all. But, this one will be impossible to PIF. Any advice is great!!

[Anonymous]

How old is the $12k collection and what is it for? Paying that off, even if you could, won't get it off your report. It would take it out of your utilization which may show you a credit score bump. But you don't have the funds to pay it right now anyway. When you try to app for a house, it will get figured into your DTI. I would actually take a look at all the little collections you mentioned and contact each creditor and try to pay for delete. Get as many of those OFF your reports as you can. Don't pay unless they promise to delete (in writing). The problem is you will have to pay them in full to even get that option so make sure you have the cash. Tackle the $12k last. You will likely have to do a settlement on that one, which would post the new account balance of $0 but will remain on your report.

[Anonymous]

you also MIGHT get through underwriting if you have most/all the other stuff paid off and delted- and you are actually in a payment plan with the last large collection.   You could apply with a letter of explanation/copy of payment agreement -

It will factor into your DTI -but might not get you kicked out of the game.   Just another thought.   

[Anonymous]

Thanks everyone,
The $12k is an old utility bill. We were low income and on medical. Even though we paid, it was never the full amount because we live in NH and heat with electric. Some months our bill was $800-$900 from December-March... Ugh once we were able to pay anything we had moved. We have no problem paying it off since it's our responsibility but just can't all at once. I'm wondering if we should wait until January this way we have a large down payment. Maybe out payments won't be as much... Idk, I'm so lost. It was so many years of mistakes... I'm so angry with myself.

[Anonymous]

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@Anonymous wrote:
Thanks everyone,
The $12k is an old utility bill. We were low income and on medical. Even though we paid, it was never the full amount because we live in NH and heat with electric. Some months our bill was $800-$900 from December-March... Ugh once we were able to pay anything we had moved. We have no problem paying it off since it's our responsibility but just can't all at once. I'm wondering if we should wait until January this way we have a large down payment. Maybe out payments won't be as much... Idk, I'm so lost. It was so many years of mistakes... I'm so angry with myself.

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Don't continue to be angry with yourself.  It won't change the past.  The positive thing is your working to rebuild your credit.  We've all been there-made poor credit choices, and now are working to change things.  I don't remember seeing what your current scores are.  A 12-18 month plan is good.  One thing to take into account with the collection is that if you seltle you will more than likely get a 1099 from the collection company for the difference and it will be reported as income.  When will it fall off his report?  Is is beyond the SOL? You need to strategize when to attempt to make the settlement.   You mentioned one bankcard, but do you have a second?  For maximum reporting, it is good to have a second card at least.  Welcome to MyFico.  This is a good family to be in and everyone is really helpful.

[Anonymous]

I did just get Cap1 QS, my scores are
Equifax:556
TU:597
Exp:621

[Anonymous]

I have not been in the situation of applying for a mortgage with an open judgement, but I think I read that it could still be done if you were in a satisfactory payment plan with the creditor from the judgement, with something like 6 months or more of paid receipts.  That would mean a plan agreed by them so you arent paying  like 10 a month on the 12k judgement.

I am pretty sure there is a much different SOL for judgements and that they can be renewed if not satisfied.  That would be something from your state's legislation and you might be able to find info by googling.

Have you considered using the NACA program to buy a house, or the USDA?  They arent available in all areas but your could get more info in the Mortgage section of the forums.

I know buying a house can be accomplished, sometimes it just takes more time.

GL

[Anonymous]

Thank you! It isn't a huge
Want, just open collection. I will definitely be in a payment plan as soon as I save enough to knock 4000 off the top. USDA is an option since the town I want to buy in is a usda town. I know this can be done just need to stay focused. Thank you all for your help!

[Anonymous]

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@Anonymous wrote:
Hello,
Quick question. My hubby and I are looking into buying a home within 12-18 months. We have had very many years of derogatory marks on our reports. We spent years very very low income and honestly came down to rent and food or paying bills. We chose the Rent and Food because we have 4 children. Anyway, we started cleaning things up last yr. we each got a Cap1 secured for $225, then my husband got Credit One $500 and Verve $400 and Fingerhut $300. We have since closed Verve because interest rate was insane. So now we have a few derogatory marks like I had mentioned. I am currently in credit repair. My hubby I don't want to do repair on. Well, not with a company. He has 1 open collection for $12,000 now can We enter into an agreement to pay back and still get qualified for a mortgage? Or would we need to pay it in full? Or even settle? I feel like a hamster on a wheel with this one. The rest of our things are tiny compared to this and we will be able to PIF on them all. But, this one will be impossible to PIF. Any advice is great!!

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I'm not sure about the underwriting in your state but where I live (AZ) having an open collection of that size will probably be a factor in UW. I just went through a refi with 3 collections. Two were medical and they did not care about those because they were medical and both were under $300. I also had an old CO ($2317) ready to come off my CR in Jan. tbut it was a factor in the rate and term I was able to get on my loan ;-( 

A collection of $12,000 is probably going to hurt in terms of a mortgage loan. You may want to ask a couple of mortgage companies before they do any work or pulls on credit if they would be willing to do manual UW with the collection or one in a repayment plan.  I would probably call the utility company and try and work out a plan suitable for you. They may even be sympathetic, try and help by giving you an acceptable/doable repayment plan, even reduce the debt and/or remove the collection once paid. It doesn't hurt to ask. The worst they can do is say no. And you always want to be nice, dripping with honey (catch more flies). Are they still sending you bills? Have you researched to see if they file in court? It is always best to deal with before this happens so it doesn't go that far. Hope this helps.

[Anonymous]

Judgement*** not huge want