Collection Account from Carmel Financial on my Credit Report
I have a revolving credit trade line that was charged off 2/2009. I do not know what the balance was at that time, but I do know it was significantly lower than the $5400 credit limit. This is with Carmel Financial.
Recently this debt, after having not reported for several years, started showing as FP on my credit reports and the reported balance is increasing.
It is now up to $5200.
It is past SOL and due to fall off my credit reports in Jan 2016, but is hurting my score and jeopardizing my ability to get a mortgage.
It is (and has always been, I think) with Carmel, not a collection agency.
What is the best way for me to handle this?
—Ann
I want to make sure I understand what you have going on, and what your goals are. It sounds like Carmel Financial was a legitimate credit line or loan taken out all those years ago that went unpaid. It is this underlying issue, the unpaid collection account Carmel Financial has on your credit reports, that holds down your credit scores or will prevent you from getting a home loan approved.
Whether the account is being reported as a revolving, or as a personal loan (PF), is not something I would waste any time on. Not given your goal of getting a mortgage.
The amount that Carmel Financial says is past due is something that can impact the outcome you are looking to accomplish, if before January of next year. I may be reading too much into the situation and background information you gave, but I see the issues as:
- You have a legitimate dispute with the amount being reported as owed.
- You are highly motivated to get a home loan, and will settle.
Starting your negotiations with Carmel Financial using an inflated balance can impact how much you settle for.
Carmel Financial Showing on Credit Report
I do not know if you have disputed the Carmel Financial trade line with any of the credit reporting bureaus yet? And I do not know whether or not you have a pending offer on a home, or are set to close on a home loan when this came up? Depending on the answers to those two questions, my feedback, and your options, will narrow a bit from limited time, and possibly from losing some leverage.
Your credit report disputes about Carmel need a fact set. In other words, what is inaccurate or out of date about what they are reporting? Based on what you have shared so far, the amount owed and the type of loan are wrong. Both of those provide a basis for filing a credit reporting dispute. But neither, once corrected, get you closer to mortgage loan approval, as they are not the reason you would then be declined. You would be declined the loan because of an unpaid collection from Carmel Financial.
That leaves disputing this off your credit report with the hope of it being deleted. That is not all that much of a stretch. Some negatives being reported by lenders and collectors (that are this old) will sometimes not bother to respond to the dispute investigation from the credit bureaus . Perhaps there are conditions (changed CMS or other technology challenges) that cause them to not fully trust the information in their files, and they do not respond to a dispute for that reason.
You are less than a year from this falling off your credit reports, and they cannot sue legitimately to collect. If you have net already tried to dispute this, why not? It is worth a shot. Just know that it is a long one.
If you already sent a credit reporting dispute and got nowhere, you could still legitimately argue some things, but to what end? If you have 60 to 90 days to mess with this, let me know in the comments. Even then, any additional dispute efforts may just result in a different balance being reported, which is not going to help you close your loan.
Resolving Your Debt with Carmel Financial
Paying or settling the collection with Carmel Financial in order to get your mortgage loan approved can look differently depending on the circumstances and their willingness to accept any offer.
If you simply resolve to get this put behind you with the goal of saving the most money in a negotiated payoff for less, and in the shortest amount of time, the steps to take from here are straight forward. The only concern I have is how collectable you look to them. If this collection with Carmel Financial is the only blemish on your credit report you will appear highly collectable. And if you have recent hard inquiries on your credit reports evidencing you are trying to buy a home, you are going to look perfectly collectable. At that point, it will boil down to how the collection people at Caramel view the real time value of money, meaning… do they risk you bailing on your home loan goal and get paid nothing if they try to hold out for how much they think this old debt is worth, or do they take whats on the table by realizing the debt is worth what you are willing to pay?
Most situations like this are not personal for the debt collectors and creditors, though there are some exceptions. It mostly boils down to negotiating a deal that you can afford, and that they will accept. What I often see is you paying more than you wanted to, and them agreeing to accept less than they would have liked.
If you cannot reach an agreement with Carmel Financial, or any collector they may have the account with, how much do you want your home loan to go through? Are you willing to wait until the collection account falls off your credit?
If they will not deal, and you are determined to get into a home loan before January, you may have to pay off the total. But if you have time, and if it were me, I would pound them to adjust the balance to whatever I calculate would actually be owed. Do you have a copy of the original line of credit agreement? Do you know what your interest rate was when you were in good standing? Do you know what the contractual interest rate was if you defaulted on payments? Can you access information that will tell you what the balance was when you stopped paying?
Post answers to my above questions in the comments below and we can go from there. Anyone with questions or concerns dealing with Carmel Financial accounts in collection, or on your credit reports, is welcome to post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi Michael, thanks for the quick reply. I’ll try to answer all your questions (let me know if I missed any):
1) I have not disputed the trade line with any credit reports.
2) I do not have an offer in on a house but have to purchase the home I lease or move soon, so in need of a mortgage in the very near future
3) There are other baddies on my report that I’m cleaning up, so I probably have 60 days for fiddling, if needed.
4) I do not have a copy of the original agreement, unfortunately, and have not received statements from Carmel Financial for years, so do not know what the balance was at the date of last payment. I had thought about contacting them to get a statement. Bad idea??
5) My credit report currently looks like a murder scene, so except for the mortgage CR pull, I don’t look very collectible.
My underwriter says the open collection will not be a problem (VA loan), so I am more concerned about what it’s doing to my credit score because the credit line is so high and is showing my total usage at 96% (and climbing because they keep adding to the balance every month). I would like to settle with them for something, but would like to start negotiations from the “last payment received” or “charged off” point.
If you are ready to negotiate with Carmel Financial for a lump sum pay off equal to roughly 40 percent of the balance as of today, I would make progress in that direction. Being hung up on the balance that negotiations begin with is not productive in this situation, while negotiating to get the end dollar result is.
Is that a possibility… the 40-ish percent?
If settling is not on the table at that rate, you could certainly make a go at a better deal. It is not like 20 percent settlements do not happen on debts outside the SOL to sue, because they do. That recent credit report pull was a tip off that would otherwise gum up your efforts.
Otherwise, I would file the credit reporting dispute with the attempt to get Carmel Financial removed. Depending on the response I would adjust my plan from there.
Negotiating a settlement is the most predictable outcome, so depending on your cash flow, goals and that 60 day time line, I would start here.
40% is not an option. I don’t have anywhere near that much cash on hand. I think I may try a GW letter to the CFO for settlement and if that doesn’t work, dispute. Thank you for all your insight and advice. You are providing a very helpful service here.
I would not send a good will letter, or any letter that could be construed as admitting or acknowledging the debt, if you are in Indiana. It could reset the SOL clock for a legitimate collection suit, where verbal communication may not.