Medical debt, your Credit and a home – Oh My!

Medical bills and the medical industry/business, it’s a tricky thing for majority of consumers who do not have a clue how it works. You go to the hospital and it seems you get 15 people sending you bills. It works like that a lot depending on what happen to you.

Have insurance? Fantastic! Except don’t for one second think they cover everything, when going to the hospital or doctor in this day and age you need to look at this from a business standpoint. Don’t think that people are competent at their job so if you didn’t get a bill then it’s not your problem.

It is! Non-paid bills, even one that forgot to be sent out will go to collections, go on your credit and the moment it does drops your credit score.

One time I saw a $3.00 medical collection drop a score 43 points, I can only assume it was an aspirin but the point of that story is it’s not the amount majority of the time but a new negative account hitting your credit.

When you try to buy a home (or refinance one) you may hear the loan officer tell you “I don’t care about the medical accounts”. The mistake you make is that what the loan officer is actually saying is he/she does not care about the medical “debt” as mortgage lenders do not count medical debt against you but if the accounts are on your credit then from a secondary standpoint it is a factor that may or can be affecting you and your credit score.

Typically a bill will not be sent to collections until it has not been paid for the standard 90-120 days. There are medical facilities that send them to collections after 60 days as they do not have the staff or department to do that or that it’s just easier to outsource that part of their business.

Here is the kicker, if it hits your credit then your score drops, let’s say it drops your credit 70 points which is very realistic, paying it may bump it up 40-50 points. Hopefully those are the amount of points you need to get the home. If it’s not and you need all 70 points then you need to put your detective hat on. When was the services performed? What is the medical centers procedure for billing services and when do they send bills and then when do they send the follow up round? Do they have your correct address? If you’re lucky and they have the wrong address you have a strong case to get them to delete the account if it’s paid. Threatening a lawsuit in small claims court is a smart move but make sure you’re not yelling when you say that.

The old days of “pay for deletion” unfortunately are gone by most accounts. While some companies do them, most do not unless you can prove that a mistake was made and then leverage that to get a deletion letter.

Any good sized debt you acquire you should ask about financial assistance, depending on the income you make if you do not make much they can write off a good portion of that debt for charity purposes and then establish a payment program with you.

An article I recently read about this gave some inaccurate information so want to clarify if you read it. Most likely it was just a mis-print but here is how medical debt and lawsuits work.

If you get sued due to a medical debt then if you are going to buy a home then that lawsuit MUST be paid. There are no options. If you own a home and you are selling it and there is profit in the sale of the home the judgment gets paid before you get your profit. The judgment will show up on a public records search the banks do.

If you’re aiming for a discount from the collection agency they will not give you a deletion letter also. It’s either one or the other IF they are will to delete the account.

If your trying to buy a card most car lenders do not care about judgments, but credit card companies do seem to care about it especially lenders that offer secured credit cards. While information is limited when applying for this card speak to a manager and ask if a judgment disqualifies you for the card. They will hopefully be able to answer your question.

So in summary, medical debt is a double edge sword. Mortgage lenders do care about the medical accounts on your credit as they affect your score, they just do not have to worry about the medical debt attached to the account.

NOTE: a 30 day recent late payment can drop your credit score anywhere typically from 60-90 points depending on the rest of your credit file.

*** Want to learn more about how the credit system works? Buy my book for easy to understand concepts of how credit works and how lenders look at you at you. Contact me at wayne@waynethecreditguy.com

Hire a Credit Repair Company or D.I.Y – PART II

So it’s funny that if you follow what the credit bureaus ask you to do which is do your dispute online they have designed their system to mirror what the creditors (their paying clients) tell them to report.

How is that an investigation you ask? Simple, it is not.

What it actually is a verification system designed to do nothing but confirm the data they are currently reporting.

While many of you reading this consider yourselves educated understand that these systems have been created by companies who PROFIT off of mis -information as typically mis-information or incomplete information is usually related to lower credit scores.

And lower credit scores does not stop consumers from applying for credit it actually INCREASES consumers applying for credit.

Don’t believe my opinion? Listen to all commercials (radio, TV, newspaper & internet). When you see these advertisements it seems credit is a non-issue, bad credit, no credit no problem.

These advertisements are designed to get people in the door and then throw them at the wall ( in a credit application way so to speak) and see who sticks.

Think of all the people who know they can’t qualify hope they can by applying at these places. AND GUESS WHAT?

All of these lenders pay the credit bureaus to pull their credit and assess them.

Starting to get the picture?

So while I firmly believe it’s in a consumer’s best interest to hire a company that knows how these crooked systems work in favor of the lenders and know how to turn the tables on them choosing the right company is essential so research on them is key.

This industry like all industries have snakes in them and they look to take your money and make it seem like they want to help you, it’s what sales people do.

Then you also have companies (usually the smaller companies) who truly do want to help you accomplish your future financial goals after having some life challenges.

It’ actually pretty simple to identify these types:

  1. Did they ask to see your credit report and ask you questions on the accounts on it?
  2. Did they ask you what your goals are?
  3. Did they make it sound like all you have to do to make your troubles go away is write them a check?

The above are typically major red flags for you to hold onto your money. While it doesn’t negate them from being helpful as I tell people ( my opinion of course ) if it walks like a duck and sounds like a duck…. Its probably a duck.

NOW

Some easy ways where it is not in your interest to hire a credit repair company and “Do It Yourself” are below. As I always say a credit report is like a thumbprint and everyone is different. I could not list all types that you can do it yourself but here are a few major/common ones:

  • You have literally no credit

If you have a zero credit score and NOTHING on your credit report except maybe for 2 small dollar collections then you need to build credit. Getting 2 secured credit cards and using them very little for over 6 months should put your credit file into the 600 credit score arena.

  • The collections on your credit file are approximately 7 years old from the last time you paid on them or utilized their services.

Many times companies make “mistakes” and keep the negative account on your credit longer than legally allowed. If you know these accounts are over the age mentioned sending a certified letter pointing this out should be able to in one shot remove those accounts. Many times it will take more than one letter.

Why you ask? Welcome to the world of credit where the consumer is a by-product.

I hope this article helped articulate some of the differences between hiring someone and doing it yourself. While of course I am more slighted to hiring someone who deals with this kind of corrupt system on a day to day basis there are many people who will read this and fit into the category where they can do this themselves and not pay a credit company.

Feel free to contact me at wayne@waynethecreditguy.com and ask about my book “The Real World of Credit” to learn A LOT more of how the system works if you are thinking of fixing your own credit.

Understanding how the system works is half the job!

Hire a Credit Repair company or DIY, that’s the question – PART I

I was asked to write an article about should a consumer try to fix their credit themselves or hire a credit company to help them.

While at first glance an article on this subject from someone who has a company where consumers pay them to help their credit seems like an article like this would be very one sided. However as a small company we advise many clients’ different avenues to pursue depending on their unique situation.

Many times I have told clients they do not need my help and give them some free advice or there situation is so dire based on circumstances that they need give consideration towards filing bankruptcy. So please understand that this will be part one of an article that will review both sides of the argument and as an adult you can take in this information and make an educated decision that benefits only you and your family. This article will also teach you what to look out for when choosing a company to help you with your situation.

While I will try to get as specific as possible in pointing out the pros and cons for both sides understand that everyone’s credit file is unique so ultimately your file would need to be reviewed individually for the most detailed assessment. But let’s lay some groundwork for the best way to absorb and understand this article and material.

Federal and state law requires a credit company to tell you in writing that this is a service and there is nothing a credit company can do that you cannot do yourself. A good company should also verbally tell you this during your conversation with them.

An ETHICAL credit company will also tell you this verbally so if you are shopping around for a company to help you and this is not mentioned remember this can be a tell-tale sign of a company that only wants your money and may not have your best interest in mind.

A standard statement that is added on while yes it is part of a sales pitch it is 100% truthful which is, “just like you can fix your own car or represent yourself in court it is your right to do so, but be wary as doing it yourself can cause more problems than help if you do not know all the steps and complications that can arise from trying to fix it yourself” . However both examples are dealing with complicated machinery or steps where it is very possible you can do more harm than good.

To generalize the legality of what credit companies have to say, let’s understand what that means. Whether it is an account on your credit that is not yours, an account that should not be on your credit as it is over the 7 year mark or something as simple as your named is spelled incorrectly. All of the above is considered and labeled as a “dispute” or considered “Credit Repair”.

A bankruptcy (generally speaking chapter 7 )stays on your credit report for 10 years, however the negative accounts that are included in the bankruptcy stay on the 7 year timeline. So for example, you haven’t paid many bills for 4 years, you get sued by a car lender who repossessed your car 1 year ago. By Filing bankruptcy chapter 7 if approved if the negative accounts have not been paid in 4 years then they fall off your credit report in 3 more years and you are totally absolved on that debt and it goes away and you do not have to repay it.

The car lender who sued you, that account/judgment which also can get put under bankruptcy where you do not have to pay it and it gets dismissed would fall off in 7 years as it is labeled as a new account.

A tax lien (state of federal) or any student loans as majority are backed by the federal government are the two things that cannot be placed in bankruptcy, everything else can which includes medical bills, apartment fees, credit cards, car repossessions, cell phones etc.

So that is some of the basic credit issues and their timelines.

When it comes to the decision of do it myself or hire someone what I typically have seen in my 11 + years in this industry is when a consumer tries “doing it themselves” then end up making my job harder thus me adding an additional fee for the extra work.

For example the people I come across who contact me saying they tried credit repair on their own typically go online and “click a button” on the preset boxes in the dispute section on the website.

CLARIFICATION:

The credit bureaus said to them and the public, “oh you’re disputing something on your credit use our electronic system that confirms the data you are disputing with what we have on file so we can confirm it electronically and not expend ANY money on actual humans that can conduct an investigation since our system just verifies the information you are disputing with the data that we are reporting.

SO while ALL GOVERNMENT AGENCIES are saying there is nothing a credit company you hire can do that you cannot do yourself. BUT then why are consumers being pushed to work in a system that is designed to verify and not investigate? And what if one of their “box disputes” isn’t your issue?

To be continued…

How different Industries look at my Credit Report

To be an educated consumer requires a good basic working knowledge of credit is essential since credit is the cornerstone of the American economy. You need to think of it as a job, a part time job but still a job.

Everyone knows how important credit is but no one know truly realizes just how important it is until they need something today and then it is too late.

And then your options are:

  • Bury your head in the sand for the next 7-10 years (depending on issues)
  • Try to fix it yourself and hope what you read online works and doesn’t screw things up more.
  • Hire a credit expert (RESEARCH REQUIRED) to help you navigate the system designed against the consumer. NOTE: Try Wayne the Credit Guy! =)

As with most systems in America, many of them are for big business and not for the benefit of the little guy. Case in point, many many years (maybe decades) ago I was notified by the courts of outstanding toll tags debt I owed and I needed to appear in court.

I found this a total joke of course as I was never contacted by the toll tag authority (in Texas) so how can I owe them money? My driver’s license was up to date so they knew where I lived; I have had the same phone number for the last 8 years at the time so what gives? More importantly the toll tag bills at the time were about 50 cents BUT the “Penalty” was $25.00 so each violation was $25.50.

Contacting the toll tag authority gave no reprieve as I was told as the courts are now involved I have to go to court to deal with the situation. I then pointed out many things and then told them what I thought about their job and the company they work for. NOTE—It didn’t help but I felt better.

When I went to court there were two ladies from the toll tag authority there and the entire court room was for people with toll tag issues. It seemed like that entire court was for toll tag business.

The judge was very nice and said before we officially begin I want to explain that the law we are dealing with was financially sponsored by the toll tag authority so anything within this law “seems” to favor the toll tag authority so unless the car was sold and you can prove it or stolen, you owe the money end of story.

BUT, he said we have two lovely ladies here from the toll tag authority that a deal can be made before an official ruling will be made”.

Well, my personal thoughts were now this is what I call Extortion. BUT this is the world we live in, you can’t change the rules BUT you can learn how to play the credit game putting yourself in a better position to win. This is one of the main reasons why the credit repair industry was born. HOWEVER just like all industries there are the good ones and the bad ones so you’re due diligence and research is required to find the right one for you.

HINT- ANY company that gives you the vibe that this is easy and all you have to do is pay them is typically the slick sales person who doesn’t “fix” your credit but only to get you to pay them. So the odds are your being told what you want to hear to get your money so buyer beware!

SO…..

UNDERSTAND this, your credit score will ALWAYS be the first thing that lenders look at but then their systems look into your accounts reporting to see what is most important to them.

Buying a car? The car lender will look at the credit score and then will look to see the car lender accounts on your credit and how you paid them. While they care about all accounts to a certain degree it makes logical sense that how you pay a car loan is more important to them, you may miss a credit card payment or two but as long as you pay your car note on time you’re a better risk for them which will give you a better rate.

Mortgage lenders have a policy term called a “clean 12” which means they want to see no late payments for 12 months. Mortgage late payments can actually cause a lender to say no to your file until the late payment on your mortgage is over 12 months. Now they can give an exception but that is a case by case basis that can go either way.

The same works with credit card company lenders as well as apartment complexes. Lenders look at a credit report as gospel, and unlike the legal system you are guilty until you can prove your innocence. So an apartment complex will look at the report and say according to this credit report you don’t pay the places you live in so why would we let you into our apartment complex when history show you will probably still us. And if we do let you in why should we not request two months of security payments?

Knowing this will not magically fix things for you but better arm you to understand what you will be dealing with and better prepare you to take the proper steps towards putting yourself in a position to succeed.

The additional curve I have to tell you is while state and federal law requires a credit company to say verbally and in writing that credit repair is a service and just like any service it is something you can do yourself. The fact remains if “fixing your credit yourself” was as easy as government and news media says we would all have a 700 + score.

I hope this information helps you towards achieving your future goals. As a Credit Expert having an educated consumer that I can perform my services for and then educate them to a higher level is always our goal. Unlike many other credit companies out there I have tried to amass a large amount of 3rd party credentials to help consumers who were not personally recommended to me help them make an informed decision that I am the right company to consult with and then hire if the conversation goes in the direction they were hoping for.

As I tell everyone, I will tell you the truth of your situation whether you like it or now and if your credit file has the potential to improve to the goal you are trying to reach I will tell you that and discuss how it can be possible so call me now!

Car Repossessions and your Credit

One thing that many people do not understand is how car repossession works when it comes to your credit. One thing is that it does not matter if you give them the car back or they take the car in the middle of the night.

Many times I speak with clients and they said they bought the car, had nothing but problems from the start so they dropped it off at the dealer they were fighting with and said “you deal with it”!

So the first problem is misunderstanding. The dealer sold the car, that’s all they did, think of them as the middle man. They found the product you wanted (the car) and then spoke to a bank that looked at your credit and said they would finance you at a certain interest rate.

Once the deal is done (and the 3 day time frame has expired) then the relationship is between you and the bank as the 1st lien holder.

However many states have a 30 day lemon law if there are problems but many times the dealer tries to bully the consumer, especially if English is not their primary language. Not be pushed around if they try to bully you. And NEVER go back the next day because they “had to redo some paperwork”. I have heard about this many times and somehow everything gets changed and the consumer gets taken advantage of.

One of the best things to do is have a lawyer in your corner but at their prices who could afford it? Not the average consumer. However if you want a top rated law firm in your state for very little contact me at wayne@waynethecreditguy.com and I will fill you in on a little secret that you will be very happy to hear about.

Now for the bad news about repossession and your credit, If your car gets repossessed and for example let’s say the price of the car is $20,000 . The payments are not made and 3 months later (sometimes 60 days) they car is taken back. As the banks are not in the business of collecting cars they sell it at auction and they try to recoup as much of their money as they car. If they only get $10,000 back then according to the contract they are still owed $10,000 more and guess who is responsible? Yes it’s you, and this also goes for you if you cosigned for a friend or family member then what you are telling the bank is that if your friend/family member does pay them you will and that’s something many co-signers are not aware of.

So as you can imagine I always tell people to not cosign for someone knowing what can happen to their credit. And many of those cosigners are not in the financial position to pay the rest of the car off.

So the moral of this story is to help you understand what can happen to you if a car gets reposed what the ramifications are. And how not to be taken advantage of by a dealer and an avenue to help you when you need legal help.