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Answers (19)
- Adrian Gastelum, "Mortgage.Expert"
- Contributions:47
In AZ the statue of limitations on collection ends on year 3. If it has been over three years not very many lenders will care about those collection. Remember lenders care about themselves and the property they will soon finance. Once over three years no collection can attach itself on a residence because it's illegal and that is what lenders truly care about. The reason you might have a lower fico score is maybe not enough good debt to drive up that score. Get a secured credit card and you will probably see some positive movements
John, that is incorrect information.
It's true that unlike credit cards or loans, medical bills that ARE NOT in collections or for which you have a payment plan do not (should not) appear on your credit report. However, if left unpaid, the hospital or doctor's office that you owe may eventually send it to a collection agency. Collection agencies often report medical debts to the credit bureaus. Collection accounts of any type are detrimental to your credit score. Although medical collections are weighted differently, they still have an impact and according to the Fair Credit Reporting Act, can remain on your report for up to seven years. As witnessed by the Op's credit score, if it were any other type of collection totaling $300,000, their FICO would be virtually incalculable with that amount in unpaid collections.
It's true that unlike credit cards or loans, medical bills that ARE NOT in collections or for which you have a payment plan do not (should not) appear on your credit report. However, if left unpaid, the hospital or doctor's office that you owe may eventually send it to a collection agency. Collection agencies often report medical debts to the credit bureaus. Collection accounts of any type are detrimental to your credit score. Although medical collections are weighted differently, they still have an impact and according to the Fair Credit Reporting Act, can remain on your report for up to seven years. As witnessed by the Op's credit score, if it were any other type of collection totaling $300,000, their FICO would be virtually incalculable with that amount in unpaid collections.
- John Stokrp, "ficopro"
- Contributions:20
If the collections are reporting to the credit bureau as "medical collections" the affect they have on your credit score will be little if any. "medical collections" are reported to the bureaus, but since they are medical the credit bureau scoring model doesnt include them in the score calculation.
Its VERY critical that the collections are being reported as medical if they are medical. Collections of any other type are VERY negative and will seriously affect your score.
I owned a mortgage credit bureau for 20 years. I know how the scores are calculated. There must be some other reason your scores have dropped.
- Brian Wiesner, "MonacoMortgage"
- Contributions:47
DO NOT contact the creditor and try for settlement. If you have been dormant for over 2 years leave it alone. Once you even contact them on the phone and ask a question they can "re-activate" the collection and it will show current...and your scores will go down. REPEAT, do not contact them. Attorney is a good first step, just for future protection from a suit, but not as a settlement conduit.
This is not an impossible deal to do. It may cost $20 for a credit report, but you can get it analyzed by underwriting pretty quickly.
This is not an impossible deal to do. It may cost $20 for a credit report, but you can get it analyzed by underwriting pretty quickly.
- mymortgagebrokerjoe
- Contributions:129
no lender is gonna give you a mortgage with 300k in collections. i would be shocked if you got a DU approval! your only shot is to wait out these collections for two or more years, dispute the derogatory tradelines, and wait for them to be deleted. negative info can only be reported for seven years from when they first reported it, so once they become outdated, they have to be deleted. if what u say is true, i would wait these collections out. rates and home prices are gonna remain low for some time. btw, i personally negotiated a hospital bill of $40k down to $5k. thats a little more than 10 cents on the dollar.
- Steve Mancilla, "Cal Steve"
- Contributions:58
My friend,
You have been through quite an ordeal...21 days in ICU!
Your situation is very, very unique.
A) Celebrate Life!
B) get legal counsel on the EXACT potential repercussions of:
i) continue doing nothing
ii) trying to negotiate a settlement for pennies on the dollar
C) Then decide if you wish to go forward in trying to obtain home financing.
D) No matter what the end result...continue to Celebrate Life!
Best wishes,
Steve
You have been through quite an ordeal...21 days in ICU!
Your situation is very, very unique.
A) Celebrate Life!
B) get legal counsel on the EXACT potential repercussions of:
i) continue doing nothing
ii) trying to negotiate a settlement for pennies on the dollar
C) Then decide if you wish to go forward in trying to obtain home financing.
D) No matter what the end result...continue to Celebrate Life!
Best wishes,
Steve
- Michael Emery, "MikeEmery"
- Contributions:7293
As this still seems to be an active thread, one question that should be asked is has the hospital sued you in an attempt to collect the debt?
If they haven't attempted to collect the debt, it's possible that the statute of limitations has lapsed and the hospital may not longer be able to collect that debt.
Unfortunately I'm not an attorney, so BEFORE you make a payment on this debt, CALL AN ATTORNEY. By making a payment on this past debt, you may be resetting the clock on the debt, which could allow the hospital to sue you.
If they haven't attempted to collect the debt, it's possible that the statute of limitations has lapsed and the hospital may not longer be able to collect that debt.
Unfortunately I'm not an attorney, so BEFORE you make a payment on this debt, CALL AN ATTORNEY. By making a payment on this past debt, you may be resetting the clock on the debt, which could allow the hospital to sue you.
I 100% agree with Erez on this one and think Deborah's advice is malpractice. By negotiating on a 300K collection that is not actively being collected is a recipe to give this person a 495 credit score and no possible chance to buy anything. I would throw her out of the office for giving bad advice. I bet she would originate a loan for someone that defaulted on a 300K mortgage 5 years ago!
You should peruse this, you will most likely get a DU Approve/Eligible and there are lenders that will approve this for you. Your job history, income, credit score all work so all you need is the right person to put the other pieces together for you.
Don't give up, it can be done.
- Bill McDonald, "novabill"
- Contributions:17
I am in agreement with others here that indicate concerns about the amount of the collections. 300k is a very large number.
I think the loan could be possibly be done. If you found a lender that will underwrite to Desktop Underwriter findings you may have a better chance as there is a decent chance that you can get an automated approval from Desktop Underwriter.
- Liberty Mortgage
- Contributions:470
I do a huge amount of FHA loans- High medical bills do not stop you from getting financing- even with 300K in medical collections. The reason you can still get financing is because the collection of $300K occurred around 2005 -2006. The lender would be concerned if this just occurred as they are worried about potential judgements that would then affect your home. In this case, no judgement proceeding has occured and FHA would in fact insure this loan. This loan would pass the muster so long as your Debt to Income is in check and we recieve a FHA DU Approval.
- Kris Covert, "NW Mortgage Guru"
- Contributions:35
Hey Need a break. have you talked with anyone yet? My suggestion is find someone that is willing take on the challenge, it is possible, but the chances are not high. I am not sure where you live, but I would love to help if I can, I love challenges so if you want to talk about it, visit my profile and shoot me an email. I have colleagues I could refer you to if I am not licensed in your state.
Thanks
Kris
Thanks
Kris
- Deborah Garvin, "loanmonarch"
- Contributions:438
I think my underwriter would throw me out of the office if I tried to get him/her to sign off on 300K of collections. Medical or not. I would recommend contacting creditors and negotiating a settlement...at this point they would take pennies on the dollar. Document the heck out of it...get everything in writing and keep scrupulous records.
I would work with and counsel a consumer in this situation, but I would not originate the loan until the plan was in place....
I would work with and counsel a consumer in this situation, but I would not originate the loan until the plan was in place....
- Edie MacGray, "Mortgage Power Girl"
- Contributions:29
Medical collections are usually forgiven on FHA but this is such a high amount. You would have to write a really good letter of explanation, but this would most certainly be scrutinized by the lender. Good luck...you can always try!
- NeedABreak
- Contributions:4
No I have not paid it. We were working to get assistance but since I make more than whatever they determined the minimum is, I was not able to get the assistance. They are not even trying to collect it, it's just been sitting on my report since 2005. I cannot file bankruptcy or I would lose my job so that is not an option. I guess I'll just have to go have 17 kids, start smoking meth and live in a box on the street and then would qualify for free healthcare and housing. This is the only country in the world where getting sick and being the working uninsured can financially ruin you. It sickens me to see all the people walking away from $300,000 obligations that they signed up for and able to buy houses after and I still cannot. What a great country!
- wetdawgs
- Contributions:26791
Are you saying that with $300,000 medical debt you've not paid any of it nor worked with the providers to negotiate what it takes?
If I were a lender, I'd run the other way.
If I were a lender, I'd run the other way.
- Michael Mullin, "WA and CA FHA Expert"
- Contributions:369
NeedABreak - I've been doing FHA loans a long time and I've never seen a lender look past that amount of medial collections. Maybe a couple of thousand but not on the level you are talking about.
The main issue is that the lenders will assume you will have to file Bankruptcy at some point to clear all those collections, and they don't want to get dragged into that.
The main issue is that the lenders will assume you will have to file Bankruptcy at some point to clear all those collections, and they don't want to get dragged into that.
- Norm D Plume, "America Needs Nixon!"
- Contributions:1670
Typically medical debt isn't looked at that hard.
I started to say the same thing this morning; until I saw that it's $300,000 in collections. I thing any lender is going to look real hard at that.
I started to say the same thing this morning; until I saw that it's $300,000 in collections. I thing any lender is going to look real hard at that.
- Ed Brophy, "Ed Brophy"
- Contributions:455
Typically medical debt isn't looked at that hard. There may be lenders who will require payoff, so the short answer to your question is it depends on the lender. Your best bet is to speak with a mortgage professional to get the answers you seek.
- NeedABreak
- Contributions:4
Anyone?
Can I get an FHA loan with unpaid medical collections?
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