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settling card debt that was converted to a loan


theGman
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hello

over covid, i had several card debts converted into 5 year loans with interest rates between 0 to 5.9%

 

i have some money coming in now and wondering if

 

1. can i request a settlement to each of these loans?

 

2. what is a good settlement offer?

 

3. what impact will this have on my credit? (it is currently solid all around except for above 100% of credit balances and a few 30 days late last year - due to bank errors ---> all of this i can try and fix).

 

thank you!

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To the best of my knowledge, any debt settled at less than the face value will be noted as such on your credit report and will be scored similar to a default.  It will tank your score and likely become an obstacle to obtaining new credit from most sources until at least a year or two has elapsed.

 

However, admittedly, I don't have any factual experience from which to report.  That said, I certainly don't expect that the banks have incentive to make this a painless prospect for you.  < obviously you need for solid input from others >

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18 hours ago, theGman said:

thank you @hegemony

question is how much will it hurt credit if i was to enter the market for a mortgage in the next 3 to 6 months? 

 

It's going to kill your mortgage scores, which could very well either disqualify you for a conventional product or jack up the rate.  

 

Or it could force you into taking a subprime FHA loan (which is redundant).

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On 6/29/2021 at 2:03 PM, theGman said:

thank you @hegemony

question is how much will it hurt credit if i was to enter the market for a mortgage in the next 3 to 6 months? 

If you are mortgage seeking, the LAST thing you want is ANYTHING on the reports suggestive of financial issues.  Settlements are big giant red flags...

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