- Centurion Member
- Posts: 234
- Joined: Wed Feb 18, 2015 9:04 pm
- Location: Texas
I'm sorry to hear you're going through this. It must be incredibly frustrating, especially since you were so close to having it all taken care of when this happened.
Unfortunately, I'm not overly knowledgeable about collections-related situations. However, my understanding is that once Capital One sends it to a 3rd party collections agency, they no longer really have a stake in it or anything to do with it. This is different and NOT the case if they merely send it to their internal collections department, but since you said it's with a 3rd party company, Alliance One, then I'm surprised you're being told that you still need to deal with Capital One for bureau reporting. My understanding is that when a collections agency takes over, they essentially buy the debt from Capital One, so for example if the debt was $1,000, Cap 1 may sell it to Alliance One for, say $500, then Alliance One tries to collect as much as possible of the $1,000 from you, and anything over $500 is profit for them (but obviously I'm making those numbers up. I'm not sure what the going rate would actually be). In that case Capital One would essentially be done with it, and no longer care whether you paid Alliance One or not because it won't affect their bottom line either way. But as I said, collections isn't really one of my most knowledgeable areas so I could be wrong, or they could be doing things a bit differently in this situation.
My advice would be to check out the "Rebuilding Your Credit" forum on MyFico. The folks there would be a lot more knowledgeable on this topic than I could be and you may find old threads that directly address a similar situation. Alternatively perhaps someone more versed on this topic will weigh in here.
On a different note, it's obviously none of my business, but you indicated that a major concern with this ding on your credit is that you're planning to purchase a house soon. Unfortunately, I don't think you're going to be able to completely undo the damage this situation has caused right away. The reality is, it's probably going to take several years - up to 7 potentially - for the damage to fully be undone. This means that any mortgage rates you get in the interim likely won't be as favorable as if this hadn't happened. For that reason alone, I'd probably advise waiting on a home purchase if that's at all a possibility for you. However, a second reason I'd personally advise putting the home purchase on hold for now is that you got into this problem with Capital One in the first place. No judgement here at all, but the reality is that if your current financial situation is such that a credit card debt can spiral out of control, I'd really advise against taking on a mortgage. The stakes will be much higher and payment amount much larger. I know it's not what you want to hear - and again, obviously I'm not fully aware of your entire financial situation - but you may need to take a good hard look if this is really something you're able to take on right now. Ideally, you're going to want to be able to put down at least a 20% down payment to avoid PMI (private mortgage insurance), and to establish a good starting equity stake. Then you're also going to need to be completely confident that you can make the monthly mortgage payments, on-time every month without fail, for the full duration of your term. AND you're going to need a sizable savings in place to handle emergency repairs, on-going taxes and homeowners insurance, and general unforeseen circumstances.
I'm sorry, but based on the limited info I have, I don't think you should buy a home in the near future. As I said, none of my business though, and either way I wish you the best of luck on getting this collections issue resolved and working out a living arrangement that best meets your needs.