Veterans and Debt Counseling – It CAN help!

Under normal circumstances, mortgage lenders can not work with folks who are in Consumer Debt Counseling.   Times being what they are, however, Veterans are able to turn to some of these services, and get another HUGE benefit!

For the last several months we have seen Veterans who are working with NON PROFIT credit counseling agencies, and their scores are going WAY up!  Here are some of the suggestions we have (we do not work for, nor do we get any money from agencies like these – just our suggestions if you want to purchase a home):

• It must be a NON Profit agency that you work with. 
• You need to make 12 months worth of on time payments
• We need a letter from the Agency stating that you are making the payments on time,and that they feel you would be able to handle a mortgage payment of “$XXX.XX”.
• The Letter from the Agency must show us how the payments are being dispursed each month.

The way this normally show on your credit report is this… Many collection accounts show under “Collections” on the credit report, with an updated Balance and reporting date at least one or twice a quarter.  When you go into a Non Profit Credit Counseling Service – you have an account that you are now making principal and interest payments on.

Let’s say you owe the following in Charged Off, or Collection Debt:

• NCO / Sears / $500
• ACS / Pottery Barn / $340
• Provident / Citi / $950
• GMAC AUTO LOANS / $2345

You and the Non Profit might work out a payment of $320 a month.  You pay the Non Profit $320, and they send an agreed upon payment to each of those accounts until you pay them off.  So, NCO might get $16, and ACS might get $20, and Provident might get $85, and GMAC might get $180 and the remainder would go to the NON Profit for processing all of the checks.

In recognition of the fact that they are receiving payment each month (with interest) the companies stop showing the account past due.  They report no further lates, and the account as being paid.  With the accounts being shown as “paid” the credit scores will continue to go UP! (For information about MINIMUM Credit Score Requirements for VA Home Loans, click here!)

I think this is a GREAT service for Veterans, and I encourage you to use such a service if you find yourself with accounts that are seriously delinquent!  It stops the calls, it puts the budgeting into regular, manageable payments. 

To learn more about Veteran Benefits and Home Ownership, click here!

If you have questions about purchasing a home using VA Financing / Mortgage Loan, contact Steve and Eleanor Thorne, First Financial Services, Inc  919-649-5058

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