My car was repossessed in June 2010 and auctioned for less than the loan amount shortly after. So the account appears on my credit reports as a charge-off and delinquent for the deficiency amount. I would really like ti buy a home so six months ago I started working to repair my credit (which also had an old cellphone bill in collections and high 99% debt-limit ratio on 2 credit cards) I’ve paid off the cellphone bill, gotten a secured credit card and lowered my debt-limit ratio to about 25%.
My credit scores went from low 500’s to 680-660 range in about six months.
The bank that repo’d the car has now offered me a debt settlement for 40% of the $8,000 balance. They will then note the account at “settled charge-off” They never sent the account to a collection agency so I am dealing with the bank directly. My question is: will I ever be able to get a mortgage with a recent debt settlement? I can afford the lump sum if I empty my savings. Alternatively, if I negotiate a 6month payment plan with the bank to pay the full amount so that the account is listed as “paid/satisfied” what is the marginal benefit vs paying less in one lump sum but having a settled charge off? Would that be better or dies it nit matter since the account has been delinquent for a year and a half.