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Ricjason8

Advice on PFD on 2.5-3 year old charge off

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Hello all,

 

I am trying to get a mortgage in hopes to buy a house.  I have one chargeoff (TD bank for about 12k, unsecured "mortgage loan- home improvement") with a last payment on 4/2017, and chargeoff on 7/2017.  I used to get collection agency offers before but I have since stopped getting them from my mail.  When I go to my TD bank account, it says that the balance on the loan is $0- closed.  My credit report says that the account is also closed.   How should I go about this situation?  My SOL is 7 years.  So I still have ways away and waiting out isnt an option for me.  I have the capability to pay for it full, is it possible to get an offer by OC? any advice is appreciated. 

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you need to figure out if it was assigned or sold to a CA. If it was sold then the OC will not be able to do anything for you.

 

Did you get a 1099 for the charge off? For that amount I'm surprised you haven't been sued.

 

Is a CA reporting it to your four major consumer credit reports?

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No I do not remember getting a 1099 for a chargeoff.  How do I go about getting this?

 

I am was under assumption it was sold to CA due to the fact that I was receiving offers to pay less than amount from one company called NCB then another company after a few months. Then I stopped getting offers last year. 

 

How do I go about figuring out who is reporting? How do I decipher this from credit report? all it says is TD bank.  sorry for newbie questions. 

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Does the paper credit report you have list the data furnisher for the trade line about which you are questioning?    If the line of information on your credit report says TD Bank, then TD Bank is the one providing the information to the bureau.

 

The issuing creditor is the one responsible for issuing the 1099C.

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19 hours ago, Ricjason8 said:

No I do not remember getting a 1099 for a chargeoff.  How do I go about getting this?

 

I am was under assumption it was sold to CA due to the fact that I was receiving offers to pay less than amount from one company called NCB then another company after a few months. Then I stopped getting offers last year. 

 

How do I go about figuring out who is reporting? How do I decipher this from credit report? all it says is TD bank.  sorry for newbie questions. 

If they did not send a 1099-C, you really don't want to poke the bear.  Do you REALLY want to have to deal with the paperwork for another $12K of income?  Even if you qualify for the insolvency status that precludes having the taxable event, it is STILL adding the IRS into the equation.  Not worth poking that bear if you ask me...

 

The paper may or may not have been sold.  You would have to look at the letters you were receiving since the language makes it pretty clear if they own it or if they are working it for the OC.  Getting offers in the mail does NOT mean an account was sold.  You HAVE to look at the language.  In some instances, the credit report may also indicate to whom paper has been sold, but not always...

 

Unless a mortgage entity tells you they want something in writing, then the reporting of zero due and the absence of a third party on the report COULD be sufficient to just let matters reset.  Be assured however that the moment you DO make the mortgage application and the reports are pulled, the matter may result in the sleeping bear being awakened.  This would include the prospect of litigation...

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What’s the worst that can happen when there is litigation? Risk of lien on the new house? And what’s the worst case of that? Sure to pay full of 12k? I can pay full of 12k . If it is OC who still has it, what’s the likelyhood I can settle or pfd at this point(2.5 years from chargeoff)?  

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34 minutes ago, Ricjason8 said:

What’s the worst that can happen when there is litigation? Risk of lien on the new house? And what’s the worst case of that? Sure to pay full of 12k? I can pay full of 12k . If it is OC who still has it, what’s the likelyhood I can settle or pfd at this point(2.5 years from chargeoff)?  

What's the worst?  Much depends on post-judgment remedies in your jurisdiction.

 

Beyond the lien, spend some time with a calculator and see what a decade of 8-10% post-judgment interest will set you back on the $12K judgment plus what will probably be another $3-4K in attorneys fees that will be awarded.  THEN realize that this will, at the latest, have to be addressed when you sell the house (if you are even approved for it in the first place).

 

Now factor in the jurisdictions that allow for garnishment of wages and levying on financial accounts.  How set are you to wake up the day after your direct deposit posts only to find out you have no money because the account had a levy placed that drained it...good luck with telling your mortgage holder and all of your other creditors that you cannot pay them.  Now instead of a lien, you run the risk of foreclosure since the levy actions will be more than a one-time occurrence...

 

Maybe you don't live in a State that allows the garnishment or levy actions...but you DO seek to gain employment with an entity that runs any manner of a credit check.  You won't get the preference over the applicant that DID take care of their financial affairs...

 

The list of potential negative outcomes goes on...

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I'll suggest what I recently recommended to someone else:  Take the plunge and seek mortgage pre-qualification from a lender.   You can describe your current situation and intentions with respect to buying a home in vague terms:  Tell them that you intend to start looking shortly and wanted to see what your loan prospects are before you move forward.  If they ask you about your debts, go ahead and say that you had an unresolved debt with TD Bank in 2017, but aren't sure what the status is since they aren't in active contact with you

 

This should permit the lender, after review of your credit report, to be up front with you and directly advise what your best prospects are.  You needn't bring up the prospect of paying the TD default; if it factors into your situation, they'll broach the subject.  This exercise should leave you with a very clear understanding of where you stand.

 

I personally would advise initiating a pre-qualification with Quicken Loans/Rocket Mortgage. 

https://www.quickenloans.com/

 

Complete the requested information requested on their website (area where you'll buy, desired purchase price / down payment, who would borrow and available income, and authorization to pull your credit report).  You'll likely be promptly contacted by a loan representative with whom you can feel out your prospects. 

 

I did this in September when the possibility of relocation arose and I wanted to get a feel for whether we might be able to purchase a new home in advance of selling our current one (and, if so, under what terms).  It was an invaluable experience.  There were a few phone calls, during which specifics were hashed out.  At the close, I simply said I would consider the information I had obtained and if the relocation became a real prospect, I'd be in touch.

 

An advisory, Quicken marketing is aggressive.  They'll call back soon thereafter, and will keep calling until you pick up (6-8 calls a day were typical).  We simply answered a call, explained that we weren't ready to move forward yet and would be in contact ... but until then, we asked them to remove us from their call list.

 

It took 2 such requests, but then the calls died cold.  When we were ready to buy, we decided to go with DCU (our current lender).  As I suggest, the info gleaned from Quicken was invaluable in permitting us to pick up with DCU on fairly sure footing.

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Thanks for the advice Hdporter. We have gone ahead and applied for prequalificafion from J.P. Morgan chase. And have been prequalified successfully.  Honestly everything is moving so fast. We actually found a house we want to close today.  

 

One of the benefits at work is having a subscription active for Hyatt legal representation at my disposal. So real estate and debt matters are covered. Is it advisable to just utilize a lawyer to settle with the bank? Is it even possible for pay for delete? I’d rather much get this off my report even if it means paying in full. 

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Some updates:  Going thru a Mortgage application, the mortgage broker informed me that they pulled up my report and they see that the loan I had chargedoff was a being reported as secured "mortgage" loan.  My memory was that I took out an unsecured loan.  And at the time that I took out this loan, I did not own any property.  The loan was labeled Home Improvement.  After ravaging thru my files, I finally found the agreement terms of the loan, and based on the language, I think its UNsecured loan.  I showed this to the broker and he agree that it does look like it is an unsecured loan.   How should I go about this?  Try to contact Credit bureau and dispute the inaccuracies?  Is there a chance to dispute it to be deleted? How should i dispute it if so? Any advice would be appreciated. thanks in advance.  

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There is really no such thing an as "unsecured" loan. If no real estate secures it, it is secured by whatever assets / employment the borrower has. Mortgage companies do not like to see a 12K debt within the SOL, because it could result in wage attachments that impair your ability to pay.

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keep you updated.  I Opt-Out yesterday via optoutprescreen website.  It may take 5 days.  Is there a way to verify when it finally is opt-out?  

 

I will follow peoples advice and will send a Dispute a letter to all 3 CRAs.

 

Please let me know If I am doing this correctly. 

 

I printed the dispute form. and Will fill it out with Blue Pen.  And under Reason for Dispute, I have to write these in hand written form:

 

Dear Credit Bureau,

This letter is a formal complaint that you are reporting inaccurate and incomplete credit information.

I am distressed that you have included the below information in my credit profile and have failed to maintain reasonable procedures in your operations to assure maximum possible accuracy in the credit reports you publish.

Credit reporting laws ensure that bureaus report only 100% accurate credit information. Every step must be taken to assure the information reported is completely accurate and correct.

The following information therefore needs to be re-investigated. I respectfully request to be provided proof of this alleged item, specifically the contract, note or other instrument bearing my signature. Please provide proof that this contract type is infact a Mortgage loan rather than an unsecured loan. Failing that, the item must be deleted from the report as soon as possible:

TD BANK, acct. 123-34567-ABC

The listed item is completely inaccurate and incomplete, and is a very serious error in reporting. Please delete this misleading information, and supply a corrected credit profile to all creditors who have received a copy within the last 6 months, or the last 2 years for employment purposes.

Please advise me as to the correct name and current address of this creditor, the name of the account holder, and the reported date of first delinquency,as any account I might have had at one time would be obsolete.
If you can obtain this information, I also would need the name of the person providing this data, and the manner in which it was provided in order that I may pursue additional legal remedies.

Additionally, please provide the name, address, and telephone number of each credit grantor or other subscriber.

Under federal law, you have 30 days to complete your re-investigation. Be advised that the description of the procedure used to determine the accuracy and completeness of the information is hereby requested as well, to be provided within 15 days of the completion of your re-investigation.

Sincerely,

 
Enclosures: (Circled account(s))
-------
 
 
Please let me know if I should add the Red marked above.  Or I should go generic and hope they cannot verify the loan?  I am confident that the loan is an unsecured loan, rather than a Mortgage loan (Secured) that is being reported and actually holding up my pre-approval for a Mortgage loan.

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opting out doesn't help with dealing with this type of account but it can delay the other half of credit repair.

 

don't play games with disputes; using crayons and hand writing does nothing to improve your dispute opportunities. And it might mean some $8 an hour illiterate GED data entry clerk is left to check which box your dispute falls under. good luck with that !

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There appear to be as many suggested means by which to enter a credit bureau dispute as there are ways to skin the proverbial cat.  I have qualms with many of them, but am not about to claim that my preferred methods are the only (or even best) ways ... they're simply what I find most rational.

 

That said, I think your letter gets in the way of what you most presumably want to achieve:  a change in the loan classification from Secured to Unsecured.

 

Personally, I'd advise keeping the dispute terse, clear of any excess verbiage, and simply cite that the tradeline is inaccurate in stating the debt is Secured.  I'd assetr the loan is unsecured, and attach just enough of the original loan paperwork that is sufficient to establish this.  (kudos for having your records in sufficient order to have located your document.)

 

I'd then simply follow with the request to investigate the tradeline and modify it to the appropriate status. 

 

(No need to remind them of what they're legally required to do as follow through.  They've done this once or twice before.  btw, that legal follow-through simply requires that they verify the reporting with the creditor, mindful of the documentation that you've submitted.  The only circumstance under which they're required to delete the tradeline is if the creditor fails to respond.  If the creditor confirms the inaccuracy, it's corrected.  If the creditor affirms the current reporting, the reporting stands ... with particular room for you to follow up, having provided definitive evidence of the inaccuracy.)

 

The problem with "everything but the kitchen sink" language in a dispute is that it obscures that which you most hope to accomplish.  In many cases, the 10 second CRA review the dispute gets results in a very generally worded dispute to the creditor that simply asks for verification of the tradeline, without citing anything specific in dispute.  Such disputes invariably see a conclusion that isn't satisfactory.

 

And re legaleagle's input, it's technically accurate (your paperboy can attempt to seek a small claims court judgement against you for an unpaid bill and then seek enforcement by attaching property, so (yeah) I guess every debt is potentially secured by property.  But if you default on a loan secured by specific property, the route by which that property can be seized is MUCH more streamlined.  Bottom line, as leagleeagle asserts, most all debt can be enforced through property seizure -- but there's still a boatload of a difference in the implications of Unsecured debt vs Secured.

 

As that difference plays out here, all other things "being equal" (ceteris parabus, for Eagle), with an Unsecured debt, there's a chance a mortgage lender might not insist on payment of the debt in order to close the mortgage.  In the case of a Secured debt, a lender might be concerned that a court might find it reasonable to put a lien on your new home as a means to enforcement of the debt, and will likely be insistent that the debt be paid.

 

The FAR GREATER question re the $10k debt is what do you intend to do with it;.  Now speaking strictly for myself, having put myself in your shoes, having said you possess sufficient funds to repay the debt and acknowledging that the debt is accurate, I'd pay if off in full.  And, yes, I'd make an effort to see if the creditor was willing to enter into a PFD.  (Simply given that they haven't been binging on your door for repayment, I'd expect chances are slim that they're sufficiently motivated.)

 

If, on the other hand, you're interested in sliding out from under the obligation, if possible (and, since it's $10k they haven't been aggressive in trying to collect, I can understand the appeal), the start by getting the CRA to restate the tradeline as Unsecured (for reasons noted above).  Just be prepared for that effort to drag out, with no certainty that the mortgage lender will free you from the obligation to pay the debt in order to release funds for your closing.

 

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Should the steps be : 1)Dispute via CRAs for verification of the loan with/without focus on loan classification being inaccurate? then when verified, approach the OC for a PFD?  

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21 hours ago, Ricjason8 said:

Should the steps be : 1)Dispute via CRAs for verification of the loan with/without focus on loan classification being inaccurate? then when verified, approach the OC for a PFD?  

If the plan is PFD, why bother disputing the classification of the debt? Seems like you’d just be adding an unnecessary step.

Edited by DPB

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I've been preoccupied this weekend so haven't had a chance to respond:  briefly, please note that in the last two paragraphs of my prior post I suggested that seeking CRA debt reclassification or a PFD of the debt were two separate, disjoint actions -- the choice of which is to be determined by your decision as to how to handle the debt going into the mortgage app. 

 

As suggested by others, if you decide to allocate resources to paying it in full (and in the process, seek a PFD), then there's no need to reclassify the debt on your credit reports.  If, instead, you decide to see if you can continue to "float" the debt, successfully getting the CRA's to reclassify the debt as Unsecured will potentially make your lender more amenable to the possibility that you not settle the debt in order to close the mortgage (no guarantees on that).

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On 1/18/2020 at 9:27 AM, hegemony said:

opting out doesn't help with dealing with this type of account but it can delay the other half of credit repair.

 

don't play games with disputes; using crayons and hand writing does nothing to improve your dispute opportunities. And it might mean some $8 an hour illiterate GED data entry clerk is left to check which box your dispute falls under. good luck with that !

The other issue with the game playing is that, if the matter were to ever go to litigation, you THEN get to explain to a judge why you were an idiot playing games.  NEVER submit something that you would not want a judge and/or jury to review...people who are serious about fixing their credit don't play silly games.

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