Charge-Offs and Collections: Medical, Etc.

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    At the workshop, the presenter said that collections within the past 2 years would need to be paid, settled, or on a NACA approved payment plan.

    Within the past 2 years I have the following collections:

    Emergency room : This actually consists of 3 collection accounts that show up on my credit report. Hospital, physician, and radiology.

    Old cable bill collection. Basically my ex-husband was supposed to return some cable equipment and didn’t. The account was in my name. I believe that the 2 years is actually up in February on this one.

    There’s credit card charge-offs from CapitalOne and Kohls but they are from 2015/2016 so those should not be counted against me, correct?

    I’m just wondering if the medical collections are something I’m going to have to take care of or is it excusable considering that it was an emergency, I don’t have medical insurance, and no one is really prepared for a huge emergency room bill.
    I can negotiate the bills down and settle them for much less, but I would rather put that money towards paying down my credit card.

    As far as the cable bill goes, since the 2 years is up in February, I should be okay to leave it alone, right?

    My intake appointment is scheduled for mid-January so I’m just trying to be as prepared as possible in advance. I’d appreciate it if anyone could give me insight.


    I believe you will need to pay them all in full or be on a payment plan. This includes medical, I had one bill for my son and I had to pay it and provide documentation that it was PIF even though it was removed from my CC by the time my counselor went to submit me for qualification.

    As for the cable bill if you want to be qualified before February it is my understanding it needs to be paid. If you are comfortable waiting until Feb then you may not have to pay it. At your appt they will pull your credit and do your action plan then, if its on there at that time its almost a guarantee you will need to take care of it. What they are looking for is good money management and fiscal responsibility. Deciding not to pay just because its at the cusp isn’t necessarily the best answer in many cases because what NACA and BOA want to know with absolute certainty is that you will in fact pay your mortgage and timely.

    If you can pay it and not mess up your MRF pay it or savings I say knock it out now.


    Does the collection start in 2015 or the charge off start in 2015? Usually a charge off doesn’t occur until 1-2 years of unsuccessful collections. In any event, all derogatory remarks need to be addressed. If it’s on your credit report you cannot get out of it. If it’s a charge off then a LOE will need to be written. If it’s collections then you need to pay them off or start a payment plan. A LOE will also need to be written.

    The only reason an emergency would be OK is in the event it prevents you from making your payment shock savings during the one month the emergency happened. The following months though all need to have payment shock. Let’s be clear, there are no situations in which non-payment of a bill that has not been charged off is OK. Using the emergency/payment shock example you will be expected to pay the bill instead of save and then continue to save after the bill is paid.


    @Nelson my credit report states as follows:

    Updated Nov 1, 2015
    Status: Charge-off

    Okay, so I’ll need an LOE for all the charge-offs and collections regardless of how long ago? And I’ll need to pay the collections only?

    All of my collections total about $3k. I’m pretty confident that I can negotiate them down and settle them for less.
    Would it be better to pay my collections off with my income and as a result make the minimum payment on my Amex, or put the collections on my Amex and continue to make the largest payment possible on the Amex per month? Do you know if one scenario would be better than the other in terms of getting qualified faster?


    Another question… Which credit bureau does NACA pull your credit report from? Or do they pull from all 3. My TransUnion has more items on it then my Experian. That means that my action items could potentially be different depending on which they pull.


    The best thing to do is keep the money trail as simple as possible. I would just pay off your debt without trying to move it around. You also may not be allowed to put your debt on a credit card as banks and collection agencies usually only take check and debit.

    Naca does what’s called a tri-pull from all 3 bureaus. They will do it at least twice – qualification and credit access. You will need to be able to explain everything. Differences aren’t a big deal because it’s well known the 3 bureaus don’t always align 100%.


    @TattedQueen87 a few things to note…

    1) In the workbook it says that NACA will NOT count unpaid medical debt against you, so I would not worry about that. You may still have to write a letter of explanation if they ask about it, but it will not keep you from being qualified. Ask your MC about it, but you should be fine.
    2) The charge offs from 2015/2016 will not count against you but will still need to be explained with a LOE.
    3) NACA does a Tri-Merge credit report which has information from all 3 bureaus.

    Below is what it says in the workbook about medical debt and some other examples that might not count against you.

    “Your Housing Counselor requires a written explanation of the circumstances of each late payment within
    the past 24 months, whether still existing or having been paid off. A written explanation should state the
    reason for the late payment, how it was addressed, and why it is not likely to happen again. You must
    provide an accurate explanation even if the reason given is that you were neglectful and there is not a good
    excuse for failing to make the payment. For example, a statement indicating only that you “will correct a
    payment problem” or “will pay a bill” are not acceptable. Where there is an explanation why a bill was not
    paid on time due to a situation that was beyond your control, your Housing Counselor will evaluate these
    cases individually. Some examples are:
    1. Unaffordable medical bills – since your ability to pay is not and should not be a consideration in
    obtaining needed medical care, late medical bills are more a reflection of our dysfunctional medical
    system than of your readiness for homeownership.
    2. Divorce – this is a very difficult situation where you may have to rely on the cooperation of someone
    who is unwilling to cooperate.
    3. Timing Issue – you made the payment but it was not received due to delivery or administrative issues.
    4. Predatory or problematic account – the terms were problematic; the product was defective or the
    services were not provided as agreed.
    5. Other – other instances where the payment obligation may not have belonged to you or other late
    payments not reasonably within your control.
    You should not be penalized if the payment information on your credit report is not correct.”

    • This reply was modified 2 years, 9 months ago by Peapod0609.


    Yeah its worded a bit confusing in the workbook:

    “Where there is an explanation why a bill was not paid on time due to a situation that was beyond your control, your Housing Counselor will evaluate these cases individually.”

    I guess that means that my housing counselor will need to determine whether or not I need to pay it since it says case by case basis.

    I was hoping that someone on this forum may have had a similar situation and could provide insight.

    On another note yesterday I contacted the collection agencies to inquire about what dates of service these bills are for and they are all for dates of service in 2017 and beyond. Yet they were just sent to collections within the past year.

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