"Paid with Disability"

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A former undergraduate classmate of mine has been deemed "totally and permanently disabled" by his physicians, and has found himself on Social Security Disability.  Navient has offered to consider providing special payment or student loan forgiveness options if he has his physician fill out forms to prove his disability.  The catch, according to Navient, is that, "paid with disability" will appear on his credit report. 

What impact will having "paid with disability" on a credit report have on his ability to get credit cards, loans, or other kinds of credit in the future?  Has anyone on here had experience with this?

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While I don't disagree with you, I was merely addressing the comment about lenders being wary - I specifically said I (p... (more)

SweetClover (Oct. 08, 2016 @ 4:35p) |

There is a 0% chance of all the stuff happening to the same person.  If the moderators would look at the OPs topics they... (more)

Mickie3 (Oct. 08, 2016 @ 9:18p) |

OT -- This is so important in so many ways... and is understood by so few.

debentureboy (Oct. 09, 2016 @ 7:20a) |

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I assume it will mean that you are so gravely disabled that lenders may not see it as being very likely that you are going to be generating high and regular income to pay back loan obligations. Additionally, it means that you did not pay back your loan obligations. But then I think that it may be a Fair Lending Act violation to discriminate against an applicant for credit, literally based on "disability."

"Paid with disability" appearing on his credit report will have zero effect on his future ability to get credit. I am assuming that he plans to tell the truth and list "disability income" as his source of income on all future applications. - JepJepJep

Sorry to hear that your friend has had such misfortune.

I think it sounds like something he might want to do, and probably needs to do -- to have his obligations excused in this way, even if the explanatory phrase that will show up on the credit report is kind of harsh.

Good luck to him.

====
I find the phrase "paid with disability" to be chilling and weird.

Maybe it's just me, maybe it's a common phrasing?

But how can one "pay with" a disability --- one might be offered relief from his/her debt, or might be released from the legal bonds of the debt, or have certain loans forgiven due to demonstrated conditions of extreme and permanent hardship, or something, but to "pay with" one's misfortune? The usage doesn't even feel grammatical, let alone logical.

I have a friend who was able to have her student loans forgiven based on disability. I checked her credit reports on Credit Karma, the words "paid with disability" do not appear. The debts are reported as "closed-transfered".

Is this disability physical or mental?

oppidum said:   Sorry to hear that your friend has had such misfortune.

I think it sounds like something he might want to do, and probably needs to do -- to have his obligations excused in this way, even if the explanatory phrase that will show up on the credit report is kind of harsh.

Good luck to him.

====
I find the phrase "paid with disability" to be chilling and weird.

Maybe it's just me, maybe it's a common phrasing?

But how can one "pay with" a disability --- one might be offered relief from his/her debt, or might be released from the legal bonds of the debt, or have certain loans forgiven due to demonstrated conditions of extreme and permanent hardship, or something, but to "pay with" one's misfortune? The usage doesn't even feel grammatical, let alone logical.

  There are only so many characters that can be used for this code. And there are dozens of options a lender can choose. It's basically to let future potential creditors know that the loan is being paid through disability income. Another option would be paid through insurance, so if some kind of insurance is making payments or paid off the loan. As another poster pointed out, if the person is totally disabled, that would be their income on any future application, and the code on the CR should come as no surprise to the lender.

I have no experience with this, but as a lender I'd consider disability income to be sure to have no future major increase, but also even more sure to continue without interruption. It seems like for an appropriate credit amount, such a borrower would be very low risk.

SlimTim said:   I have no experience with this, but as a lender I'd consider disability income to be sure to have no future major increase, but also even more sure to continue without interruption. It seems like for an appropriate credit amount, such a borrower would be very low risk.
  I don't think a creditor can use the source of your income (social security, disability, etc.) as a negative factor (assuming you didn't write something like drug-dealer on your app).  If I was a lender, I might look at social security disability as a positive factor.  It's a reliable income that will probably continue for life.  That's less risky than someone employed flipping burgers, who might be fired (and lose all their income) they next day.

Neidman said:   I have a friend who was able to have her student loans forgiven based on disability. I checked her credit reports on Credit Karma, the words "paid with disability" do not appear. The debts are reported as "closed-transfered".
  
Would you find out if those student loans were through Navient?  Correct me if I am wrong, but I think that the servicing company determines or influences which words appear on the credit report.  Navient has this explanation, but other loan servicing companies, make different or no comments.

atikovi said:   Is this disability physical or mental?
  
Physical, but I don't think that makes any difference in this case.

I checked...no, not Navient.

Gauss44 said:   
atikovi said:   Is this disability physical or mental?
  
Physical, but I don't think that makes any difference in this case.

  Physical and he can still have a high paying job, mental, not nearly as much.

Next thread: My disabled former classmate and I are becoming roommates, but we can't find a two-bedroom apartment that's affordable for us.

DTASFAB said:   Next thread: My disabled former classmate and I are becoming roommates, but we can't find a two-bedroom apartment that's affordable for us.
Ah, I hadn't noticed that the thread is by a FW member who has shared with us so many of his unusual housing problems over the years!

Gauss44, how did you solve your most recent issue --
in July you asked Fatwallet for advice when were facing eviction from your most recent apartment in Boston (https://www.fatwallet.com/forums/finance/1512562)
but you never updated the thread on how that worked out.

oppidum said:   
DTASFAB said:   Next thread: My disabled former classmate and I are becoming roommates, but we can't find a two-bedroom apartment that's affordable for us.
Ah, I hadn't noticed that the thread is by a FW member who has shared with us so many of his unusual housing problems over the years!

Gauss44, how did you solve your most recent issue --
in July you asked Fatwallet for advice when were facing eviction from your most recent apartment in Boston (https://www.fatwallet.com/forums/finance/1512562 )
but you never updated the thread on how that worked out.

  
He's still there.   He started another thread recently on the topic, but I can't find it now.   Maybe the thread got deleted...   The property was foreclosed on and the guy who was his landlord apparently never owned the place.   The pretend "Landlord" was wanting to remove the appliances out from under OP.    OP is/was apparently squatting during the process because he can't find a place under 1000 in Boston and won't move out of Boston and can't afford more.   No new odors to report  though.


 

DTASFAB said:   Next thread: My disabled former classmate and I are becoming roommates, but we can't find a two-bedroom apartment that's affordable for us.
  Next thread, keeping disabled people on SSI in my home dungeon for fun and profit.  The funny part is that it really happens.

The suspense is killing me. Will Gauss man up and find an apartment? Or will he be still squatting until the sheriff drags him out of there? Forgive me for presuming gender.

Income will dictate  ability to get credit cards, loans, or other kinds of credit.
Most SSDI recipients receive between $700 and $1,700 per month (the average for 2016 is $1,166)
 

svap said:   Income will dictate  ability to get credit cards, loans, or other kinds of credit.
Most SSDI recipients receive between $700 and $1,700 per month (the average for 2016 is $1,166)

  

IIRC, you can't garnish SSDI or attach it, so creditors may be wary on that count alone.


OP:  Ever quit squatting in that apartment and move?   



 

svap said:   Income will dictate  ability to get credit cards, loans, or other kinds of credit.
Most SSDI recipients receive between $700 and $1,700 per month (the average for 2016 is $1,166)

  
Kind of perverse that SSDI pays more than a minimum wage job. 

Doesn't it depend on how much you've put into the system?

atikovi said:   Doesn't it depend on how much you've put into the system?
  
I guess I meant SSI. 

JepJepJep said:   "Paid with disability" appearing on his credit report will have zero effect on his future ability to get credit. I am assuming that he plans to tell the truth and list "disability income" as his source of income on all future applications. - JepJepJep
  

and you know this how?

 

SlimTim said:   I have no experience with this, but as a lender I'd consider disability income to be sure to have no future major increase, but also even more sure to continue without interruption. It seems like for an appropriate credit amount, such a borrower would be very low risk.
  
I have been on SSDI (Social Security Disability Insurance) for years, and was able to get a mortgage for a townhouse in June 2015, with a low interest rate. I have obtained credit with no problems over the years.

atikovi is correct that SSDI is based on earnings and payments from those earnings, just like SSA retirement. The more you earned while working, the more you paid into the disability insurance fund. So the more you receive in monthly benefits. When you reach retirement age, your benefits converts to SS retirement.

SSI (Supplemental Security Income) is a means-tested welfare program for the disabled and elderly poor who have little or no resources. The maximum monthly payment is $733 a month per individual. SSI recipients qualify automatically for SNAP, LIHEAP, and Medicaid.

SSDI recipients receive Medicare after a two-year wait. Low income recipients may qualify for Medicaid (as dual-eligibles, they get help from a Medicare Savings Plan provided by Medicaid, plus Extra Help for Medicare Part D), and may receive help from LIHEAP and SNAP as well.


Mickie3  is correct that creditors can't garnish or attach SSDI - they can't go after SS retirement, Survivors, Widow/Widowers, or SSI either. They are judgement proof, if that is their sole income source. I have never found this to be an obstacle though. If you have assets and/or income other than benefits from SS, creditors can go after those.  Creditors are no more likely to be wary of SS recipients than anybody else. There is a risk when extending credit to anyone, a person could die with no assets, or declare bankruptcy. The creditor may be unable to collect debts from the deceased's estate, and little to nothing in bankruptcy court. A creditor might get a judgement in court, but may never see the money because the debtor has no income or resources. Creditors are more concerned about credit history, SS payments or not - if you have a bad credit history, they might turn you down, or issue credit with a high interest rate.

Looks like OP has officially deserted this thread without any updates, additional info, etc. as they do with all the other BIZARRE threads they start, sooooo... am betting that the "friend" is really the OP (who is in fact a troll.)

SweetClover said:   I have been on SSDI (Social Security Disability Insurance) for years, and was able to get a mortgage for a townhouse in June 2015, with a low interest rate. I have obtained credit with no problems over the years.

Mickie3  is correct that creditors can't garnish or attach SSDI - they can't go after SS retirement, Survivors, Widow/Widowers, or SSI either. They are judgement proof, if that is their sole income source. I have never found this to be an obstacle though. If you have assets and/or income other than benefits from SS, creditors can go after those.  Creditors are no more likely to be wary of SS recipients than anybody else. There is a risk when extending credit to anyone, a person could die with no assets, or declare bankruptcy. The creditor may be unable to collect debts from the deceased's estate, and little to nothing in bankruptcy court. A creditor might get a judgement in court, but may never see the money because the debtor has no income or resources. Creditors are more concerned about credit history, SS payments or not - if you have a bad credit history, they might turn you down, or issue credit with a high interest rate.

  One should not take personal anecdotal evidence and assume it is the norm.

Underwriting most definitely takes into account if your income/assets are judgement proof. If your primary source of income is protected and your assets are limited, someone on SS, SSDI, etc... will find it more difficult to get credit. Many retired people with good credit and decent assets, still find it can be difficult to get significant credit on SS. You need to find lenders who are more likely to consider assets than income.

btuttle said: One should not take personal anecdotal evidence and assume it is the norm.

Underwriting most definitely takes into account if your income/assets are judgement proof. If your primary source of income is protected and your assets are limited, someone on SS, SSDI, etc... will find it more difficult to get credit. Many retired people with good credit and decent assets, still find it can be difficult to get significant credit on SS. You need to find lenders who are more likely to consider assets than income.


While I don't disagree with you, I was merely addressing the comment about lenders being wary - I specifically said I (personally) have never found that to be an obstacle. Lenders assessing risk, are going to be considering the ability of the applicant to pay back the debt. There are lenders out there who will take a risk on someone who has a protected income, and few assets. The quality of credit offered may not be as good as someone with a good income and decent assets. For example: Credit cards for individuals such as myself typically have high interest rates on the balance. But you are right, about finding lenders willing to extend credit, with or (in my and many other cases) without significant  assets.

My mortgage was handled by AnnieMac Home Mortgage, they are one of a handful of lenders that will give mortgages to folks such as myself. I was able to find a townhouse within my price range, with affordable monthly payments (Could not exceed 30% of income). Because I was using a state program for 1st-time home buyers, and a county down-payment assistance loan program (deferred loan, interest free for 1st 5 years, 1.5% after), the lender had to be an approved lender by the state. And I had to take an 8-hour home buyer course, which had to be completed prior to settlement. Interest rates were at a historic low last year, my excellent credit score helped in getting a low rate locked in. Sure, I couldn't afford some fancy-schmancy place, I sprung for a place that needed some work (the entire kitchen needed gutting and replacing, the beat up linoleum needed new flooring over it).

My point is that not all lenders are wary, but yes, I agree with you that it will be more difficult obtaining credit. Just not impossible. I used to get numerous credit card offers, because of my excellent score, and most of them I wouldn't have qualified for, because my income alone was well below their limits. I actually had myself removed from receiving offers. I've had store cards and MC/VISA/Discover, Most were only $3000 to $5000 credit limit, which I never really needed anyway. I actually rarely used credit cards for purchases, and prefer using my PNC Personal Line of Credit with Overdraft Protection. I simply withdraw more money than my account has, and the funds are transferred from my line of credit. I used that to pay for my kitchen remodel and floor installation. I may not qualify for a card with a Sky-high limit, and various rewards, because a lender considers me too risky, despite my credit history, because my income consists solely of SSDI and a trust fund (which also can't be garnished/attached).

But you make good points, one shouldn't rely on anecdotal evidence (mine or anybody else's), my experience has been fairly problem-free. Someone else s experience may be entirely different. Interestingly, when I did get credit offers, even though I didn't meet the income guidelines, quite a few lenders were willing to offer me a different card with similar benefits. Typically the biggest difference was that the credit limit was much lower that the one stated in the offer. They thought I was enough of a low risk to offer me some form of credit.


Mickie3, if not a troll, OP has the worst kind of luck when it comes to rental housing. Neighbors exhausting the kitchen range fan into his unit? Renting from landlord that doesn't even own the property he's paying rent for? And more. What are the odds of the same craziness happening to the same individual with every unit he rents?

SweetClover said:   
 

Mickie3, if not a troll, OP has the worst kind of luck when it comes to rental housing. Neighbors exhausting the kitchen range fan into his unit? Renting from landlord that doesn't even own the property he's paying rent for? And more. What are the odds of the same craziness happening to the same individual with every unit he rents?

  
There is a 0% chance of all the stuff happening to the same person.  If the moderators would look at the OPs topics they started, they would notice that this one overlaps one of the older rental issues that the OP had, so that would mean they have either had the same issue before and happening again, or they are just making all these things up and trolling just for the hell of it.  


 

btuttle said:     One should not take personal anecdotal evidence and assume it is the norm.

 

OT -- This is so important in so many ways... and is understood by so few.    



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