Time or pay for delete?

[Atl-Marcos]

So as many people on here I've gotten myself in a bit of a bind. Not going to really go too deep into the details, medical issues, no income, extensive hospitalization, etc. Using credit cards to pay medical bills and such. 

The long and short of it is around 10 accounts went to collections totalling around $89k in debt. Last payment made was September of 2019. The smoke has kind of cleared now and everything is in collections. I still have 6 accounts in good standing with no missed or 1 missed 30 day payments. My credit score is a 530 according to Barclays(higher than I thought it would be).

Here's what I show right now:
Discover - $2k limit $1,500 balance Opened 2015 100% on time
Cap 1- $1.7k limit $1.5k balanced Opened 2011 100% on time
Barclays- $500 limit, $0 balance Opened 2016 1 30 day dlq
NFCU LOC - $15k limit, $15k balance Opened 2016 2 30 day dlq
NFCU LOC - $15k limit, $14k balance Opened 2016 0 dlq
BoA Auto Loan - $17k original, $8k balance Opened 2017 1 30 day dlq

 

I could probably increase the score by paying off some of my credit owed as it's not that huge of an amount but maybe not due to the recency of the delinquencies. I'm more worried that they are going to drop credit limit if I pay them down or close the accounts altogether. And of course there is SOL and court to consider as well.

 

The NFCU LOC is so bothersome. Whenever I pay any of it down they just take out payments for a vehicle they repossessed while I was in the hospital. 

 

Just not sure what path I should take. It just seems like time is all I have. Not sure it makes any sense to pay off any debt that is in collections as there doesn't appear to be any benefit. Health stuff is mostly resolved, and working again with almost $200k in income so of course them suing me is quite likely. 

 

So is it just a matter of waiting for the delinquencies to get older? 

 

Does pay for deletes still actually work, and would it even make sense given the breadth of all of my bad accounts? 

 

How long does it take to go above 600? 2 years after first delinquency? 5 years? The full 7 years? 

 

[hegemony]

for the accounts that charged off, have you obtained PAPER copies of your reports to determine the DOFD? What is the SOL in your state for an affirmative defense in case you are sued? 89K is a lot of have hanging out there.

 

Paying a CO account will not have much if any of a positive impact of FICO scores. The tradeline will remain as a CO. Paid or unpaid doesn't matter. So your best bet is to try to PFD and only pay if it means avoiding a suit and judgement. Paying the OC is preferred. I would never pay a CA for an out of SOL debt without a written PFD. 

 

For the open accounts with lates, have you tried goodwill letters?  You have terrible utilization and with your income there is no reason to be revolving credit card debt. Have you hit discovery up for a CLI?

 

Most credit unions have cross-collateralization as you have found out. What has NFCU communicated to you regarding the repossession? what will it take to clear it?

 

TL/dr: get paper copies; stop carrying balances; worry about getting sued; try goodwill letters.

[centex]

To the extent possible, keep the accounts open and in good standing that are presently IN that condition.  Some people ARE fortunate enough to have an account or three that survive a downfall like you are dealing with. 

 

Some entities are more prone to sue than others.  Even within the same lender, it can depend on where you live as to the likelihood of litigation commencing.  You should be able to check local dockets and gauge probabilities.  You might also have a slight heads-up if something DOES get files simply because online docketing makes searches a possibility even before service occurs.  I have seen some who actually got a head start ON their Respondent's Original Answer precisely because they were proactive...

 

Hege already covered the cross-collateralization issue that you have going on with NFCU.  If you have a local branch, you MIGHT want to see about going in and speaking to an Officer at the branch...those are the people who can sometimes help separate the wheat from the chaff in getting resolution.

 

That said, with no income, you may be a prime candidate to explore BK in either Chapter (leaning towards a 7).  For the BK, many attorneys in that arena will do a basic consultation at no cost.  If you make arrangements to talk with them, have your paperwork in good order.  Attorneys like clients and prospective clients who come in with stuff in order.  Nothing is worse than the client who just shows up with a box of chaos...well, other than the no-show and the client who doesn't pay the agreed-upon fee.  For something like this, coming in with the records in order shows concern by the client ABOUT their situation...chaos just says "I really just want someone else to fix this." Which one do you think gets the benefit of discretion with respect to the setting of a fee...

[Atl-Marcos]

1 hour ago, hegemony said:

for the accounts that charged off, have you obtained PAPER copies of your reports to determine the DOFD? What is the SOL in your state for an affirmative defense in case you are sued? 89K is a lot of have hanging out there.

 

Paying a CO account will not have much if any of a positive impact of FICO scores. The tradeline will remain as a CO. Paid or unpaid doesn't matter. So your best bet is to try to PFD and only pay if it means avoiding a suit and judgement. Paying the OC is preferred. I would never pay a CA for an out of SOL debt without a written PFD. 

 

For the open accounts with lates, have you tried goodwill letters?  You have terrible utilization and with your income there is no reason to be revolving credit card debt. Have you hit discovery up for a CLI?

 

Most credit unions have cross-collateralization as you have found out. What has NFCU communicated to you regarding the repossession? what will it take to clear it?

 

TL/dr: get paper copies; stop carrying balances; worry about getting sued; try goodwill letters.

SOL sucks it's 6 years and I'm only a year in.

 

Understood on the CO accounts. That's kind of what I figured it's just about time, I didn't see that paying them or settling them actually helps. And with 10 bad collection accounts even if I managed to PFD 2-3, the 7 I couldn't would outweigh the ones that played ball. 

 

I haven't tried goodwill letters, I'm just now trying to get my finances back in order. I haven't paid off the credit lines because I'm worried that they will just close the account. My thought process was to keep the balance for the first two years that most of the damage is being done with the new CO accounts and then after I cross that two year barrier pay them down. I don't "need" credit right now. Just looking towards the future. What I don't want is to pay Discover off for instance and them close the account down or set the limit to $300. 

 

I've watched the score go from a 480 when everything hit back last October now up to 530. So maybe I'm gotten past the initial credit score shock so that paying the debt down won't cause them to close down the accounts? That was why I was holding off on paying them down. While maybe there's 10 points hidden in there somewhere by showing zero balances, it's not likely that I'm going to go anywhere close to 600 by paying them down. And of course I have no interest in paying NFCU down if they are just going to take that money and pay down other accounts. 

 

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You might also have a slight heads-up if something DOES get files simply because online docketing makes searches a possibility even before service occurs.

That's a good idea. It's probably getting pretty close to where they will start to pursue these types of avenues now. 

 

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That said, with no income, you may be a prime candidate to explore BK in either Chapter (leaning towards a 7).

Don't believe I could qualify for a BK7, I'm working again now. HHI close to $200k. 

[centex]

I missed the fact that you were working again. 

 

If the accounts have not actually charged off, another avenue is to pursue a Rule 5000 adjustment with the cards issued by banks.  It is an FDIC rule that permits a legal re-aging where the customer has expressed a desire and intent to basically make things right.  After the equivalent of three months of payments (often in a lump sum), the account is reset on the reports as if no delinquency had ever occurred.  The key to THIS is getting it before the charge-off event. 

 

Be aware that you have to escalate this sort of a request...the front-line CSR's won't have a clue for the most part.

 

Another option, given that so many of your accounts in that list only have a single delinquent cycle, is to inquire about a courtesy adjustment.  In the current environment, a sob story might actually get a one-time courtesy.   

 

In the interim...shovel as much as you can to getting it paid down, putting it towards the highest APR first. 

 

You STILL need to get all four paper reports though...only then can you properly triage the damage.  And, even if you have some that you just say 'screw it' and let go, make sure to hang onto ALL of the statements you get, even if it is only a record of the increasing late fees.  You ALWAYS want to know more about the account that any third-party might have...

[insolent1]

NFCU will not do pay for delete or simply leave you be. Credit Unions and NFCU in particular will apply payments to secured items such as vehicles and leave the LOC untouched while the interest grows. 

 

[Atl-Marcos]

I thought I would follow up on this post. So it's been a little over two years now since my date of first delinquency. 

 

I've been sued and garnished by multiple lenders. Citi sued and got a garnishment for $10k that has since paid off. BOA sued for $12k, it's currently being garnished now and will be paid off in April. SOFI is suing me, although I don't know if they will garnish- that one's for close to $34k- at a garnishment rate of $2.3k a month that will be a LONG garnishment. And Synchrony is suing for a couple of $2.5k balances. Then currently I have two balances with Amex, two with chase and a CC from NFCU for around $38k in addition to the above. 

 

My income has radically shifted as I've taken on some additional work and am now closer to $500k of income from my previous $180k and way up from my loss of pretty much all income for a short time there. The extra income is in the form of 1099 work and not able to be garnished(I think), and my spouse working, they are only garnishing my $150k of primary income. 

 

We've paid down the CLOC from NFCU which get paid off next month. We've paid off around $50k of debt that was current from myself and my wife. And put some money in savings plus increased retirement accounts for both of us. 

 

My question is, given higher than normal income, yet a fair amount of outstanding debt. What is the best way to handle this? I'm assuming the BOA one, there's no point in negotiating for a lessor payoff because they know they are getting paid. But could I make a settlement with SOFI or Synchrony. Assuming I could get payment arrangements at roughly 30c on the dollar. I could pay off most of my outstanding debt for around $23k. I'd do that if I could and just get this behind me. I have offers for payoff of the Amex, Chase and NFCU. But SOFI and Synchrony are pending judgment. 

 

My current score is 590 (non-fako). Would it be possible to wrap up the garnishments, make the payment arrangements for the outstanding debt and then qualify for a house by the end of 2022. Assuming I want to buy a house for around $400k, income is around $500k, downpayment of 20%. I believe as long as there are no collections I should be clear to get a FHA loan.  

 

Any advice on how to proceed?