# Settling credit card debt on a closed account



## Montrealer (Sep 13, 2010)

I am working with a client that cannot get approved for his mortgage because he has a closed account with MBNA and want's to settle the debt on it, the balance is currently a little over $10,000.00 and he has not made his minimum monthly payments. 

I have spoken to his mortgage broker and he cannot help with advice! 

1) Any advice on settling this debt?
2) How long will it take to come off of his credit report? 
3) How much should he offer to settle the account 
4) Any other information that would help?


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## the-royal-mail (Dec 11, 2009)

I don't see why this even needs to be asked. The "client" needs to contact their creditor (in this case MBNA) and make arrangements for repayment of what they owe. They are the ones who can answer all of the questions you are asking.


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## Montrealer (Sep 13, 2010)

the-royal-mail said:


> I don't see why this even needs to be asked. The "client" needs to contact their creditor (in this case MBNA) and make arrangements for repayment of what they owe. They are the ones who can answer all of the questions you are asking.


MBNA wants the whole amount and my client can only settle for less.


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## AlwaysintheGame (Mar 29, 2011)

Hi there, 

The client would perhaps need to go through an equity lender and have 20% downpayment. 

Let me know if I can assist you.

Thanks


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## Karen (Jul 24, 2010)

Montrealer said:


> I am working with a client that cannot get approved for his mortgage because he has a closed account with MBNA and want's to settle the debt on it, the balance is currently a little over $10,000.00 and he has not made his minimum monthly payments.
> 
> I have spoken to his mortgage broker and he cannot help with advice!
> 
> ...


I'm confused as to how your client expects to qualify for a mortgage when he can't afford to settle a $10,000 debt. It sounds to me like he should postpone buying a house until he can get his financial affairs in order.


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## v_tofu (Apr 16, 2009)

yikes, thats a scary situation to be in.

why did he stop paying his credit card off? Surely he knew that by cancelling the card or closing the account, that the remaining credit doesn't simply disappear? 

I don't see how you would expect his mortgage broker to give him advice. The only advice I think anyone can give is to pay it back asap. 

I say settling this would be the top priority to think of even going into real estate.


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## the-royal-mail (Dec 11, 2009)

If he can't even be trusted to pay a $10K debt, what indication does anyone have that he can pay off something even more valuable? No wonder they won't talk to him.

How old is this "client"?


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## Cal (Jun 17, 2009)

Montrealer said:


> I am working with a client that cannot get approved for his mortgage because he has a closed account with MBNA and want's to settle the debt on it, the balance is currently a little over $10,000.00 and he has not made his minimum monthly payments.
> 
> I have spoken to his mortgage broker and he cannot help with advice!
> 
> ...


If he were to pay the cc off in full, he would probably be able to have a revised credit report in a couple of weeks, showing the correction.

My only advice would be to negotiate with the lender on the amount, however, even if the lender accepted only 80% payment, I am not sure how that would reflect on the credit report either.


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## MikeT (Feb 16, 2010)

This is comical. If I could short my own house value I would. I guess I could sell it, but I hate moving. Guy across the street just sold his piece of crap house for 990k. And it's a piece of crap built in the 70's on a regular lot with nothing special. And I know the guy has smoked his whole life so the house is probably laced with nicotine and stinks to high heaven. 

And guys like this guy the OP's talking about WILL qualify for a mortgage. He HAS to qualify. Otherwise this whole house of cards might topple, and the lenders can't afford that. So relax. He'll qualify. Everyone qualifies eventually.


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## sags (May 15, 2010)

If the account is closed, it may have been sold to a debt collector. Once there, it will remain on the credit record as a negative credit item for a period of 6 years from the date of default, even if he pays the debt.

The only way to have it removed is to contact MNBA, and if they still retain the account, negotiate full payment with their "written" agreement to have the item purged. This process would take months to complete.

As long as the item is on the credit record, he won't qualify for a mortgage with a traditional lender. He might get a mortgage with a secondary lender, but it would require a large downpayment and would have much higher interest rates.

If he doesn't have the cash to pay off the debt, it isn't likely he would have the necessary 20-30% down payment either.


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## Montrealer (Sep 13, 2010)

Update, my client ended up setting this debt for less than $3500.00 and MBNA told him that it will be on his credit history for 7 years.

He also got a mortgage with BMO and was able to buy a property with me.


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## OhGreatGuru (May 24, 2009)

Lucky client. But I am gob-smacked. The other customers of MBNA have to eat $7500 of his debt. And the customers of BMO get to share the risk of this new mortgage holder with the not-so-sterling creidt history.


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## Four Pillars (Apr 5, 2009)

Montrealer said:


> Update, my client ended up setting this debt for less than $3500.00 and MBNA told him that it will be on his credit history for 7 years.
> 
> He also got a mortgage with BMO and was able to buy a property with me.


Sounds like the deadbeat got a pretty sweet deal. Remind me again why I pay my balance in full?


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## v_tofu (Apr 16, 2009)

Montrealer said:


> Update, my client ended up setting this debt for less than $3500.00 and MBNA told him that it will be on his credit history for 7 years.
> 
> He also got a mortgage with BMO and was able to buy a property with me.












Looks like I'll have to really consider listing my home this summer.


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## the-royal-mail (Dec 11, 2009)

Montrealer said:


> Update, my client ended up setting this debt for less than $3500.00 and MBNA told him that it will be on his credit history for 7 years.
> 
> He also got a mortgage with BMO and was able to buy a property with me.


God help us all.


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## Montrealer (Sep 13, 2010)

I did my job... 

The bottom line is that credit card companies during these times are asking for anything because $1.00 is better than NO dollars, right? 

And apparently it will not be on his credit for 7 years, even less and as the years pass, it will affect him less and less.

Amazing!!! - LOL


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## the-royal-mail (Dec 11, 2009)

I realize what your role was in all of this and realize you're happy with the outcome because it means you got the commission on the sale. What offends me is why a person in 2012 is allowed to skip out on a $10K debt and then come grovelling back years later and pay back less than 40% of that debt. Why should the rest of us be paying back 100% of our debts, then? Where do I sign up to get 60% off on my obligations? Wow.

As well, a person who is so irresponsible isn't really the best fit for home ownership.

This is wrong on every level.


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## Xoron (Jun 22, 2010)

OhGreatGuru said:


> Lucky client. But I am gob-smacked. The other customers of MBNA have to eat $7500 of his debt. And the customers of BMO get to share the risk of this new mortgage holder with the not-so-sterling creidt history.



I'm not making excuses for not paying your bills, you bought it, you're responsible for it. But don't think MBNA is totally innocent here. For them to settle for 35% of the outstanding balance, I'm sure the interest and fees made up a significant portion of that forgiven debt (maybe all of it).


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## Plugging Along (Jan 3, 2011)

Totally agree with TRM. If this person can't afford to pay his debt, how the heck is he going to afford the mortgage.

It's totally irresponsible.


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## Montrealer (Sep 13, 2010)

the-royal-mail, I agree with you but I worked long and hard with this client and have a family to feed and bills to pay myself so I had to do what was needed.

In regards to him, the funny thing is that he told me people who file for bankruptcy are idiots because you can negotiate any and all debt down to 30% and pay it off in monthly installments while your credit will be affected for 7 years or less and only counts for 35% of the total score and the closer you get to the 7 years the less of an impact it has on your credit.

I bet he can also go to a car dealership next month and buy a brand new car at 1.9%


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