QUESTION
What is the best way to pay off debt in collections to buy a home?
Asked on Jan 23rd, 2013 on Bankruptcy - Mississippi
More details to this question:
I have a bunch of things in collections, about $3,000 not including my school loans. They are way past due. I’m trying to get a home loan and clear up my debt. What’s the best way to go about it? Do I offer them 25% of what I owe them and have it say paid in full or just pay it all in full? Do I need to have them sign to take it off my credit report or to say paid in full?
2 ANSWERS
Getting a mortgage with delinquent accounts will be difficult. I suggest you address your credit issue first. Initially, if you offer less than the full balance to resolve accounts, it will damage your credit. The more you pay, the more likely the creditor will report you "paid in full", "never late" and the like. This is up for negotiation. I would have to see the details of your accounts to give you accurate advice. But one bit of advice would be to contact a lawyer who specializes in debt settlement.
Answered on Jan 30th, 2013 at 8:01 PM
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Your best option is for you to get them to tell you what they will take. Always smart to make them make the first move in negotiations. Sometimes they will do better with their first move than you expect and you could end up paying less. As for the credit report, they are unlikely to remove the collection but are legally required to mark it as paid if you pay the amount they are willing to accept. If they do not update the collection to show that it was paid, you should dispute the item to the credit bureaus for whichever credit reports its showing up on.
Answered on Jan 29th, 2013 at 5:19 AM