What Do I Tell My Banker? I Don’t Want to Get Into Trouble. – Sharon

“Dear Steve,

In 2000-01, I found myself in conflict with my university (in NC where I live) on a policy matter that was never resolved and I had to leave the program. I was left with a lot of consumer debt, over time I have paid off in full or settled nearly all of the debts.

However, in 2001, just after I had to leave the university, one of the creditors (for a credit card) filed a judgement against me. It was never paid simply because at the time it was the largest of the debts, and I didn’t have the means. In 2005, I began a fulltime position in a surgical practice as a member of the staff (excellent benefits: health, dental, eye ins, 401k, rollover year to year healthcare savings account). In 2007, my family gave me the deed to my grandmother’s home with just over 3 acres. Its last county tax appraisal (2002) valu ed it at approx $68,000.

In spite of the economic downturn, this home sits in one of the fastest growing areas in NC and the US according to a recent national ranking. I do not yet know my home’s current market appraisal. My family and I have already put in approx $20,000 to improve the property grounds and the 2 outbuildings. I now need a construction loan to update the house (built around 1952 by my grandmother. I am her eldest grandchild.). My contractor states that $55,000 (approx 80% of its 2002 appraised value) should cover our budget.

I have a banker whom I met with yesterday who thinks this will be easy and quick since I own the property outright. He gave me the application to fill out and thinks all the bank work/closing can be done in 2 weeks or less.

How do I address the outstanding judgement on the construction loan application? I don’t want to omit it as that could hurt in terms of my trustworthiness. I did tell my banker that I hit a hard financial place 9-10 years ago and that I have been trying to take care of all and he appreciated that. As for the judgement, do I need to attempt to pay it at some point soon given that should I get the loan I will have the equity to do so (amount is approx $6000)?

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Sharon”

Dear Sharon,

If the judgment appears on your credit report then I would ask the banker if you can payoff the judgment as part of the refinancing. I would urge you to check your 3-in-1 consolidated credit report to see what each of the three major credit bureaus are reporting about that judgment.

The bank will probably run a credit check on you just as a regular course of business so you might as well look before they do. I strongly suspect this will all turn out just fine for you.

Please update me on your progress by

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Damon Day - Pro Debt Coach

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