So many good people experience times in their lives where they face financial adversity. The 2008 recession in particular impacted millions of people. Throughout the course of my career I’ve had to set many people straight on the topic of old debt that I thought I would blog on the topic in hopes to help more people understand their rights and how to make educated decisions.
Step 1: Obtain your credit report. You can do this for free once per year simply by going to www.annualcreditreport.com
Here you will have what is on the three big credit bureau’s: Equifax, Transunion and Experian.
Go thru your entire report with a highlighter and highlight anything derogatory and all “old debt” items you see. Now, you may be surprised on some of the dates you see. For example, let’s say you had a credit card debt of $10,000 dating back to 2008 and the credit card company turned your account off in 2009 and began their collection process. Now you see that same “old debt” but the date says it’s a debt where they stared collections in 2013. How can that be right? Read on.
Step 2: Find your state’s Statute of Limitations. In short, what this means is how long your creditors have to collect on your debt. So go back to the $10,000 credit card debt from 2009. If your state has a statute of limitations of 6 years, they can only go after you until 2015. But now it’s 2017 and you’re still getting collection calls and/or threatening letters in the mail. So many people ask me, “how can they just adjust the date beyond the statute of limitations”? The answer is they can’t, but in the next point I’ll explain what happens.
Step 3: Find out if a law office or attorney bought your debt! It doesn’t have to be a law firm; in fact, many of these companies are nothing more than sales organizations/credit collection companies that simply try to scare people into paying on a debt the original company sold off to them! These are companies that use in many cases, very aggressive, somewhat shady business practices to scare the lights out of you in an effort to collect. They purchased your debt for pennies on the dollar and set up very aggressive campaigns to frighten you into one of a few things: 1. Admitting you owe the debt. When you do this, they “re-age” or what’s called “park” your debt. This is a big reason people see old debt “within the statute of limitations….again…and again…and again”. An illegal practice, especially when the creditor did not notify you in writing that they intend on re-aging your old debt. 2. Say or may any notion that you intend on paying. This can take you backwards and resurface even the oldest of debts. The easiest way to handle these people is to “hang up” on them.
Should you find yourself fighting an old debt, here is my recommendation:
- Do research on the company coming after you. Are they really a legit law firm or posturing themselves as such?
- Write back to them within 35 days of their initial contact. Request verification of the debt. They legally must show proof that you owe them, proof of the actual sum and proof that they are entitled to collect.
- If they are harassing your cell phone, home phone or mailbox, write them a letter to cease all communications with you. They must comply with the Fair Debt Collection Practices Act.
- Dispute any “re-aged” actions you see on your credit report directly with them; and not acknowledging in your letter that you owe the money.
- If you don’t see the date removed on your credit report, you can write directly to the three main credit bureaus directly. They legally must remove it if they do not written confirmation.
Over the years, so many people in these situations simply are not educated on their rights as a consumer. As a result, “old debt” prevents many people from moving forward with their plans to get a mortgage and own the home they wish to live in.
If you need help or advice on this matter, I would be happy to help. Thanks for taking the time to read my blog.
The information on this website is designed to inform and educate only. The views and opinions expressed herein are simply those of the author and do not reflect the policy of my company.
2017 home sales came out of the blocks strong in January; growing at its fastest rate since 2007. According to the National Association of Realtors®, houses were on the market for an average of just 50 days. In January of 2012, the average turn-around time was 99 days.
Optimism inserts money, primarily investor money, into the marketplace. When investors are optimistic and the stock market rises and shows stability, banks typically loosen their guidelines. Low interest rates, more forgiving mortgage guidelines, low and no down payment mortgage options and rent increases have put the housing market in gear, and it’s just starting to get heated.
Inventory remains the only issue as there is currently just a 3.6-month supply of inventory nationwide; which happens to be the lowest in history. That means if no new houses are listed, by May there would be no existing homes for sale in the market. I expect builders to be licking their chops and that’s a good thing for the housing market. When our country is building, it means people are confident in their futures. Business owners have positive expectations and employees are feeling comfortable with job security which is leading people to look at both new and existing homes. With rental prices increasing, millennials and other first time home buyers are taking advantage of low down and no down payment mortgages.
What about Sellers? Is it a good time to sell?
The simple law of supply and demand tells us that when there is more demand than supply, the value of sellers homes should rise right? Wrong with today’s sellers. Sellers today seem to think the market has reached its peak and prices will be declining. They are acting like we are in an economy on the decline, often taking the first reasonable offer and listing their homes for less than they should. This psychology perhaps is coming from the aftermath of the real estate meltdown as many people are satisfied with “getting out clean” or making very little on their real estate.
If you’re a buyer, you are in POLE POSITION right now; the market favors you. If you’re a seller, consider choosing a Real Estate Agent that properly educates you on real market trends and factual data; you may find that the sale of your home is more lucrative that you think!
In the fourth quarter of 2016 we witnessed a great number of mortgage lenders loosen their approval standards. We also saw a spike in interest rates, but if history is an indicator of where interest rates are going for the remainder of 2017, rates should flatten or even perhaps show a slow decrease.
Recently sworn in Treasure Secretary Steven Mnuchin stated out of the gate that mortgage rates are likely to stay low for some time. Statements from high ranking officials such as Mr. Mnuchin often keep rates in check. Add historical data to that, when interest rates spike up quickly (they went up 80 basis points from November 2016 to January 2017…which by the way, is one of the largest spikes we’ve seen in such a short amount of time) history shows a long, slow decline in rates. Most people are assuming a continual increase in interest rates, but that very well may not be the case.
The housing market rise and surging stock market has created optimism among lenders. Minimum credit scores have been reduced; documentation for the self-employed has reduced; and maximum loan-to-values have been increased. Banks have also made concessions with individuals with less than perfect credit and have low and no down payment mortgages (VA, USDA, FHA). Today, very few banking institutions create their own lending models. Most will follow the lending guidelines set forth by Fannie Mae and Freddy Mac, in addition to FHA, VA and USDA. What’s loosening are the investor overlays; meaning, if FHA says a minimum FICO score is 525, a banking institution may insert an overlay, bringing the credit guideline to 580.
To support this trend, mortgage processing software firm Ellie Mae has approved 77% of the almost 4 million mortgages they processed last year. The end result is cautious optimism in the US Housing Market.
So what does this mean to you? It means if you’ve been turned down getting a mortgage, you should consider trying again. If you are self-employed and went through a few struggling years after the mortgage melt down, time has passed and banks seem to be prepared to start lending to you again. Whether you’re in the market for a new home or an investment property, 2017 could be a very optimal time for you to act.