Question about Lates / Baddies

[Anonymous]

If you have a chargeoff from over 3 years ago and is still being reported sporadically .. does that count as a late on a motgage qualification? DOLA is July 2006. This is my only bad besides a stupid medical collection for $100 from 2003 that is only on TU (got it deleted from EX and EQ)!

I had a Chargeoff from a well-known bank for $1900 in July 2006. It is marked as July 2005. DOLA is July 2006. What happened was I got divorced and the card is in my name. My ex stopped making payments (she charged something). So in July 2005, they set up an auto payment plan and took out $100 per month to pay it which I authorized. Balance then was like $3100. I thought it would continue until paid off which was fine by me. A year later (July 2006) they stopped auto withdraw. I noticed a month later and called them. They said they only did it for a year (I never knew that) and that it went to collections. I offered to pay the full amount off a few months later and they said I had to deal with the collection agencies. Problem is the collection agencies (I dealt with three so far) are ignorant, rude, and broke the FDCPA rules every time. I'd ask to validate by certified letter and a new one would get the debt within six months and it would start over. Each time then, the bank would report the debt to the reporting agencies and I would get an alert for a major derogatory.

This MAJOR bank is in trouble and I hope they go under. All a bunch of crooks. I offered to pay  in full for it to be marked paid in full or paid as agreed and they wouldn't take my money. Will I still qualify and will I be required to pay this? SOL I believe is up in a little more than a year (July 2010). I wouldn't even know who to pay. My MyFico reports say the last late or bad was over 3 years ago.

Thanks for any insight.

[Anonymous]

That should not be a problem, but if it is not out of SOL plan on paying it.  Even if the LO does not make you pay it, when you buy a house all the people jump out of the woodwork to come after you for old debts because threatening a lien on your house gives them alot of power.  Better to arrange for payment at close of purchasing a house,  Do not pay it now as it could have a bad effect on FICo score.

[Anonymous]

Thanks for the reply mickie08!

I'm not positive how to calculate SOL but I thought it was from the DOLA, or is it from Date of First Delinquency? I think PA is four years.

Anyway, I wanted to pay it before. I try to keep cash on hand for this purpose. I thought maybe someone would validate the debt but then it goes away and comes back later as another claim from a CA. Although no CA's for this purpose ever showed up on my CR. Currently all cash is going to a downpayment on a house this summer / fall hopefully. Would paying it off now destroy my scores or would it lower the outstanding debt owed as the account still shows a $1900 balance? How would I go about "paying it at close"? I heard this before and what happens if they want it paid? Do you take the money to close and pay it then and to whom? If I don't have to pay it I can easily take care of it if the matter comes up after buying a house.

Thanks for your help!

[Anonymous]

Here is the how and why of pay it at close.

When you pay an older collection, it can re-age it and it can actually hurt your credit score.  That is qhy you always here people syaing not to pay old collections unless they arrange a pay-for-delete.  So, here is how you go about doing it.

You arrange to give the escrow agent the money and they will contact the creditor to pay it off.  That way there is no worry about a credit score hit right before purchasing.  Also, it will give the UW comfort knowing that arrangements are in place to pay it off.

[Anonymous]

I didn't know this could be done. I thought escrow was just for housing .. like taxes, insurance, etc. Sound good. I would just need an extra 2K now besides the 3.5 down for FHA. Grrr! Hopefully I can come up with this if needed. Thanks for your help again!

[Anonymous]

That is the best way to get it paid off.  The underwriter may not even require it, but it sounds like you would like to pay it off and get it out of the way.   BTW, after you do pay it off, hit them with a GW letter explaining the divorce, etc and see iif they will change it to paid as agreed and remove the charge off.  It might not work, but it can't hurt.

[Anonymous]

I'm hoping the UW doesn't require it because $2K extra at closing might be tough if not impossible depending on what more capitqal I can save and raise this spring. I want to contact them but don't want anything to disturb my scores at this point. I would send them a letter asking for deletion or paid as agreed after closing just to get it done. I will look into the possibility of doing this at escrow if possible. Thanks!

[Anonymous]

There is a good chance that 2K that is not past SOL may be required to be paid.  The UW will be concerned about a possible suit/judgement/garnishment.  In that case they can pull the entire amount out of your paycheck with no warning to you putting you at risk of deafult on the mortgage.