2 responses to “Can I get approved for a mortgage with collections on my credit report?”

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  Net Advisor July 4th, 2010 at 17:16

  Josephine

  You better go see an bankruptcy attorney before you think about buying a piece of real estate with collection accounts still on your report.

  $2,000? is that all? You might be better off to have the attorney settle those debts if you can pay them now, and it might improve your score.

  I would not attempt to do this on your own. There are legal issues here.

  Disclaimer:
  I am not an attorney; this is not legal advice. Go see one. most have free initial consultations.

  Check your “state bar organization” for free referrals.

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  CatDad July 5th, 2010 at 01:16

  Anne

  If you apply for a mortgage they are probably going to want to see all defaults paid off. Check with your mortgage lender on this first. These accounts would age off your credit report anyway in two years as seven years is the max. amount of time they can stay on your credit report.

  FYI: Renewing contact with debt collectors out of the blue for old credit card debt can stir up trouble. Almost all collection agencies that deal with old charged-off debt like this are very aggressive/nasty and you might be unpleasantly surprised at how they respond to your offer to pay off the debt. Your effort could be met with threatening, abusive collection calls…threats of lawsuits…and once they find out that you are willing to pay they will probably add on all sorts of fees and they’ll come after you for two or even three times the original amount of debt.

  If you’re going to pay off old-charged-off debt anyway, then you might as well negotiate the lowest, rock bottom settlement you can possibly get, being that the negative charge-off notation is going to stay for 7 years on your credit report, regardless of whether the charge-off is paid or unpaid. …Offer 25%

  DO NOT admit in writing to owing the debt…if you do you might trigger a lawsuit against yourself.
  DO NOT tell them that you’re trying to clear your credit report for a new mortgage. If you do they’ll use this info against you to extort a max. settlement out of you.
  DO NOT give them your phone numbers. Keep all communications in writing.

  Mail them a vaguely worded statement like:

  I am willing to settle this matter for 25% of the original amount. This is in no way an admission of this debt, but rather an attempt to settle this matter. Your firm must send me a written agreement on your company’s letterhead that you will accept this amount as “payment in full” and that this issue will be settled. Upon receipt of this agreement, I will mail you a money order for this amount.
  ==================
  - Settled/Forgiven debt is treated like earned income with the IRS…any debt that is forgiven must be added to your next year’s income and you’ll have to pay whatever additional taxes