newearth78

Help with improving scores for a mortgage

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EDITED - because I found out a lot of information on my own. The only thing left then is I need help getting a lot of lates removed. Do I dispute them with the CRA's first, or send Goodwill letters first? 

Hi everyone. I have built, ruined, rebuilt, and ruined my credit....I am once again, and hopefully for the last time, growing the hell up and doing it right so I can buy a house next year. I have already paid down my few current credit cards, and just completed a credit counseling repayment plan. My FICO scores have gone up about 20-30 points on each report so far in the last few weeks.

So far, for whatever reason, everywhere else I've posted this, the people have not been very helpful. These are some things I need help with:

#1) I just received two collection letters, each from different agencies. One is for a PayPal Working Capital loan for $2089. The letter/collection is brand new and did NOT hit my credit reports yet. I have about 15 days left to dispute if I want to. I actually have the $ to pay it in full, so I went into that PayPal account to pay it, but I called them as well to make sure if they were paid directly, the collection agency would not report it. The guy on the phone insisted they no longer have control of it, and that I must work with the collection agency now. This doesn't make sense to me - because the letter says "CURRENT CREDITOR: PayPal", and because I am still able to make payments directly in the online account. To me, that normally means the creditor still OWNS the debt. This guy insists they don't. Either way, what is my best option with this one? Should I send a dispute letter first and just see if they send something back? In the meantime, if I send one, does that keep it from showing up on my reports yet? As of yet, it is not on them. Or should I just call them and offer to pay in full, if they don't report to the CRA's? If I should send a dispute letter, do you have a good one that you've used that could help me?  I discovered that this CA nor PayPal report to the CRA's. I already knew PayPal didn't, but the CA clearly stated on the BBB that they also do not report PayPal accounts. So I'm going to hold off on paying this for now and get the Sprint collection paid. 

#2) The second NEW collection letter is also for PayPal, but I have no clue what it is for, or which account it is associated with. I had two business and one personal, and from what I know, I only owed the Business Working Capital. It's for $318.66. Should I definitely just send a dispute letter on this one? Also, same question, if I send an initial dispute letter, will this keep it from hitting my report until it's resolved?  I'm definitely sending a dispute letter to the CA because I do not recognize this debt at all, and have seen a lot of complaints with this company that they are collecting on fraudulent accounts. 

#3) I have one collection currently on my reports. It is from Enhanced Recovery Company for an old Sprint bill/phones from when I switched carriers. I have read a lot of people were able pay Sprint directly and have it easily removed from their reports. Anyone here had that done with them? I believe I did this same thing with T-Mobile several years ago and it worked. ALSO - should I first dispute this with the CRA's? I keep hearing these credit coaches saying everything should be disputed with the CRA's first....is that true? What do you think is the best option on this one? I'm going to see if Sprint will take a direct payment in full and recall the collection to have it removed - OR pay it directly and dispute the collection with the CRA's if it does not get removed, since the original creditor had been paid. 

#4)  Late Payments - from being on that repayment plan with a credit counseling company, it actually DESTROYED my credit. Partially my fault. I had autopays coming out each month that were distributed to the creditors. There were 3 times during it that I had to pause my payment due to finances those months....two were in 2019 and the most recent one was during COVID. But each time, even though I would pick up the payments the following month, they were still marking me as past due because of that one missed month. So now there are tons :( I am sure I could easily get the ones from COVID era removed and that is easier to explain, but I'm not sure what to say about the older ones. I have seen so many Goodwill letters going around, I'm not sure which one to use or how to word it. I also have a few lates from 2019 on my Capital One that I still have, so I'm going to try and ask for those to be removed too. BIGGEST ISSUE

#5) A few of the CC accounts that were under my credit counseling repayment plan have me as a "charge off" on my CR's. This makes no sense, because they were NOT chargeoffs....they were under a repayment plan before any chargeoff could even happen. So I'm really confused about that. BIGGEST ISSUE

Anyway, those are my biggest issues to save/repair my credit right now. Any useful advice in getting these resolved in the best way that benefits my score, and in what order, will be very very much appreciated! I would prefer to do this all myself. I do have the time, I just need the direction/best way to do things. I need my credit to be good in about exactly a year from now so I can get a mortgage. 

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Great morning, 

I wanted to reach out after reading your post. I have been partnered with a not for profit credit repair company. The one thing you do not want to do is pay any debt that's in collection. Truth is the original debt was sold to the collection agency and written off as a tax write off. We actually help with getting those collections and late payments removed of of your credit report. If this is of interest to you feel free to enroll into our Protection Plan to get started.

 

 

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53 minutes ago, Teamdestiny623 said:

Great morning, 

I wanted to reach out after reading your post. I have been partnered with a not for profit credit repair company. The one thing you do not want to do is pay any debt that's in collection. Truth is the original debt was sold to the collection agency and written off as a tax write off. We actually help with getting those collections and late payments removed of of your credit report. If this is of interest to you feel free to enroll into our Protection Plan to get started.

 

 

I will clarify and correct your information.

1.  Collection agencies that purchase debts outright are known as “debt buyers.  Not all debt collection agencies purchase debts..  Instead, they are “hired” by original creditors to collect for those creditors.

2.  Yes, original creditors can charge-off accounts and get a tax write-off.  HOWEVER, that does not extinguish the debt.  Courts across this country have pointed out that fact.

3.  The following is from the United States Code of Federal Regulations (CFR).

26 CFR 1.166-1 - Bad debts

(f) Recovery of bad debts. Any amount attributable to the recovery during the taxable year of a bad debt, or of a part of a bad debt, which was allowed as a deduction from gross income in a prior taxable year shall be included in gross income for the taxable year of recovery.

It specifically states that any amount of a debt that is recovered after a debt is declared to be “bad debt” (tax write-off) must be reported as income the next year.  

Example:  A credit card company charges off a balance of $1000.00 as bad debt.  It sells the debt to a debt buyer for $200.00.  The next year, the credit card company must report the 200.00 that it received as income.  Therefore, it’s a tax break is $800.00, not the full $1000.00.

4. It doesn’t matter if a debt is sold after it is charged off.  After a sale to a debt buyer, the original creditor is out of the picture.  The balance is now owed to the new owner, the debt buyer.  

Your “advice” to never pay debt collectors or debt buyers along with your misunderstanding of tax write-offs is one of the reasons people are sued and end up paying not only the balance but court costs and attorney fees, as well.  

 

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