fico rising now need to make decision

[Anonymous]

Hi,

In the past few months my TU score has gone from 677 to 703.  Might have been as low as the 640's earlier this year.  Not sure why, other than paying off a $2500 CC balance in full in September.  Total CL @10K.  Big problem is a 116K home equity line of credit balance that is 2 years away from entering repayment phase.  Account is suspended, been seriously late (30,60 days) in Summer 2013. 4 inquires in the last 2 years, 3 new accounts in the past 1 1/2 years.  Other than that no debt, no late payments on current cards (over 2 years), under 5% utilization on one card, zero balance on the others.  Received an quicksilver upgrade from a plain platinum last month and a 1K line increase on another starter cap one card.  I also received two pre-approved offers from chase last week (sapphire preferred and slate).  I already have a freedom (1200 CL) and Amazon (3500 CL) through chase.  Not sure if I should go for another one.  My annual income is 50K tax free with low rent but have the line of credit that in two years will require a 1000+ monthly payment.  I don't live where the LOC was taken out in 2006 and that property's title has been seized by the county in 2011 due to non-payment of taxes.  I don't own the title, I'm just the primary borrower on the LOC.  I'm single, 53 and in fair health.  I'd like to do some traveling next year but my health is becoming an issue.  I already am on permanent disability.  My income is VA and Social Security disability.  My car loan was paid by the LOC, is 3 1/2 years old and has a lot of miles (80K).  Only savings I have is a small gold coin collection that is dropping in value (currently valued about 3K).

Any comments?

Thanks.

[NRB525]

Sorry to hear about the challenges you are having.

That is a very strange situation to be in with the property, so to get a perspective on the real estate: Which state is the property in? Is the security only the property, or is it a personal loan? Is it a Recourse state, or Non-Recourse state? Who owns the property, and if it is the security for this loan, how did that security get recorded? Is there any equity in the property? Is there a first mortgage, or only this LOC? Is there a renter of the property? How much are the unpaid property taxes? Are you the only signer on this LOC? Does the LOC bank know the property is in arrears for property taxes? Who is responsible for the property taxes if you don't own the property? Has a sale date been set? It's been over three years, typically an auction would be held by now?

The reason for the questions; depending on the circumstances, you need to make some choices about how to proceed with that property. What are your communications with the county?

You likely have a good reason for holding on to it, can you share that reason?

[Anonymous]

Wow, thanks for the response.  I know so little.  Here is what I know.  I am the primary borrower on a Home Equity Line of Credit that I took out to pay my stepmother's bills back in 2006.  She was the secondary borrower and her condo was used as collateral.  I was living there at the time.  There was no mortgage at the time of the loan.  The bank offered me a $125K line in 2007 and I maxed it out on buying gold that I sold before the market went up.  I put the proceeds of the sale ($86K) into an account held by my first  VA-appointed fiduciary.  She was indicted for fraud in March 2014, at which time I was forced to get a new payee.  What happened to that 86K is still being investigated by the US District Attorney in Portland, Oregon.  I am not on the title or deed of the condo used for the loan.  My gambling therapist did a title search on Saturday and found out about the tax lien on the property.  Bank of America, who issued the LOC, is not mentioned anywhere on the title.  My stepmother was responsible for the taxes which she apparently stopped paying in 2011.  I moved out in 2007 and returned to Oregon.  The loan and property are in Massachusetts.  I have no idea what laws are involved.  I don't know if my stepmother is alive or dead or where she is.  I haven't seen or heard from her since June 2010.  I rarely hear from my brother who never mentions her. This has caused me extreme emotional distress (I'm 53 and on disability for bipolar disorder).  I have been a gambling addict and compulsive spender, and lent a lot of money that was never repaid, most of my life and this loan got me in big trouble.  I stopped making payments during the summer of last year but decided, after getting the collections calls, to start paying it again.  The loan has been current for over a year now and I have been paying $500 per month toward the principal balance which is now $116,000.  The $1000+ monthly repayment bills start in Aprll 2017.  I attempted a refi earlier this year but my stepmother ignored the bank's request, since she is on the loan and her participation was required.  My attempts to call and send her certified letters came back ignored and unopened.  I only make the payments now to protect my fragile credit and as a moral obligation for what I have done.  The bank can't garnish my disability income, but they can destroy my credit and make my life miserable. I entered inpatient gambling treatment in September after years of unsuccessful attempts to stop.  I have 4 months of abstinence at the time of this writing and completed the program in October.  I live in a small apartment in a retirement home in Oregon.  

Last month my new VA-appointed fiduciary (I'm determined to be incompetent to handle my VA income) has been requesting documents to determine whether the VA can continue to make the payments on the loan.  I'm living within a budget and my payee is putting $1000/month away into a VA account that I can't touch unless I ask my payee for money that she must authorize.  So, I can afford to make the payments.  My VA disability is permanent and I've been on Social Security Disability since 2002 and was reviewed two years ago.  I have six active credit cards that were all issued after June 2012.  None have been late and my current outstanding balance is $100 (total credit limit 10K plus an AMEX green card).  The recent CL increase, upgrade to Quicksilver and the preapproved Chase cards seem to indicate my credit is improving.  But what to do now?  My payee and the VA are reviewing my case and I'm continuing to work with my gambling therapist.  I found myFico forum a week ago after getting the Chase offers.  It's been quite helpful.  I am single and live a lonely, quiet life.  I play music when I'm not spending hours vegging on the web.

Thanks again for the response.

Sincerely,

Analog9

[NRB525]

Ok, thanks for the details. Again, sorry for all the trouble you have to go through.

First item, Massachusetts is most likely a "recourse" state, meaning the foreclosure process is a little more strict than in "non-recourse" states.

It is odd that the LOC is secured by the condo and a title search did not turn up a perfected filing. It might be better to get a title company to check, they have access to more records. Do you have the loan documentation? Is that with the VA fiduciary? That is going to be important to locate, so someone can read through the fine print, which hopefully the fiduciary is already doing.

So the tax lien is just a lien, the property is not siezed yet? That explains why it isn't auctioned.

It sounds like your VA fiduciary is your most important ally right now, and that they are working through options to make the best of this for you. That is very good.

What are the reasons you want to apply for more credit? The cards you have are relatively new, and the limits are adequate right now for the kinds of spending you should be looking at. Until the MA property is sorted out, you should avoid creating other complications, in my opinion. That way, you keep on your path of controlling your spending, getting used to living within your means. Credit is nice to have, but you want to stay away from taking on more debt. Having a small amount of usage on the cards you have, paying them in full after the statement reports each month, is going to be the best way for you to improve your credit score. The size of your credit line is not important to your credit score, what is most important is that you make your bill payments on time. And in your case, it's important to keep that open balance small, so it stays at a level you can deal with. Just as important, keeping the number of cards you have to track at a small number. You have a limited allowance to work with, you need to stay within that in your monthly actual spend and pay patterns. It looks like you are doing that, with the $100 balance, that's very good to see.

Good luck!

[Anonymous]

Hi,

From your credit profile it seems like you have good insight into my situation and have provided answers that I was looking for.  I will continue to address my loan situation and abstain from more credit applications that I don't really need, though the card for traveling next year is appealing (Chase Sapphire Preferred).  The preapproval is there until the end of January.  I'm grateful for the credit I do have and will continue to work within my budget.

My payee has most of the documents she needs.   I meet with my gambling counselor twice weekly and will see him today.

By the way, here are my current open credit card accounts:

Chase Amazon Rewards 3.5K CL 100 balance (use regularly)-most recent card obtained 3/2014

Capital One Journey (student card with 1% cash back) 3K CL (1K surprise line increase two days ago)

Capital One Quicksilver (upgraded from classic platinum 11/2014) 2K CL

Chase Freedom 1.2K CL

USAA Classic (no rewards, $35 annual fee) 1K CL (oldest current card opened 6/2012, thinking about cancelling)

AMEX Green (no preset limit) rarely used, but have 23 years of history with AMEX, $50 credit for $95 AF issued 10/2014

I recently canceled paypal smart credit ($800 CL) and paypal credit ($400 CL).  I closed my ebay and paypal accounts earlier this year.  I was ripped off tens of thousands of dollars on eBay but continued to spend compulsively prior to entering treatment in 9/2014.   Now I spend carefully but must always be mindful of my past.

I have about $6000 in my VA account that my payee controls, $3000 in gold coins and the $116K LOC debt.  I have a car with 81K miles on it and have the title.  My monthly discretionary income after bills are paid is about $1200.  In addition to that about $1000 is being put into my VA savings account that I can't touch without authorization from my payee.  That money can be used for travel and car repairs, so my need for another card like the Sapphire may be unwarranted.

So that's my story.  Thanks again for your time and insight.

Take care,

Analog9

[Anonymous]

I found out today that my stepmother is alive, still living in the condo and that the tax lien has been removed.  I called the tax office in the town where the property is located. So I will continue to make the payments and abstain from further credit applications unless absolutely necessary.  Thank you.