Debt settlement with third party debt collector

[nixadm]

Hello, I am trying to clear up some old credit card debt, I worked out a settlement agreement with one name first source advantage.

The settlement letter I got has kinda blurry wording, I asked for very clear wording but this is the best I got, I just want to make sure once I pay them the original creditor or another company isn't going to come after me.

"This letter confirms that as settlement you agreed to pay $1100 by 6-30. Upon receipt and clearance of the funds we will notify our client to update the records accordingly regarding this settlement. After receipt and clearance of this payment for 1100 first source will cease collection efforts on this account.

Thanks for any help

[RobertEG]

By using the term "settlement," they imply that the payment will satisfy the debt.  Not the strictest of language, but clear enough.

Neither the post nor their letter address any issues of credit reporting.  Have they reported theiir collection, and if so, is deletion of their reporting a desired outcome?

Did your settlement offer also request any PFD or pay for not reporting requirements?

If the debt is satisfied, they only state the obvious that they must cease collection.

Being as they are apparently a client of the OC, and not visa-versa, I dont know who their "client" is.  They are apparently saying they will notify the OC, which again is not a concesstion if the debt is satisfied, it is a requirement.

In summary, if you accept their statement that settlement means satisfaction of the debt, and that is your goal, it looks OK.

However, if CR deletion or non-reporting is also an issue, it does not address that issue.

[nixadm]

Thanks a lot Robert,

The OC is chase, this CA made it sound like since they don't own the debt they can't modify how it shows on my report? Does that sound right, I would love to get it removed.

Thanks for your time.

[guiness56]

The CA cannot modify the OC account, only their reporting.

[nixadm]

So,  ideally the CA could report settled in full? 

[RobertEG]

The term "settlement" is often used to represent two different things.

Broadly, "settlement" means the debt is considered satisfied, regardless of the amount they accepted as settlemennt of the debt.

However, the term "settlement" is usually used on this forun and elsewhere to indicate that the debt was satisifed by acceptance of less than the full amount of the debt, and thus distinguish from paid in full.

When a party accepts less than the full amount of the debt as satisfaction of the debt, they have the option of reporting that fact to the consumer's credit file.

That is done by reporting of a Special Comment of "paid/settled for less."

Reporting of that special comment is never beneficial to the consumer, as it notifies others that the consumer did not fully pay prior debt that they obligated.

One can avoid that reporting by requesting their agreement not to report that additional special comment to the CRAs.  Absent that special comment, the debt appears to anyone reviewing the CR the same as if paid in full.

[nixadm]

Thanks Robert

[takeshi74]

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@nixadm wrote:
I just want to make sure once I pay them the original creditor or another company isn't going to come after me.

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I'd strongly suggest doing your own research on pay for deletes.  There are templates out there that you can reference and you'll want to draft a very clear ageement (i.e. not what's in your OP).  They're not guaranteed by any means but IMO you might as well shoot for a PFD.

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@nixadm wrote:
The OC is chase, this CA made it sound like since they don't own the debt they can't modify how it shows on my report?

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Verify that with them.  Never operate on assumption with these things.  From what I recall the collection agency should be the owner or else they can't collect.  If you haven't already done so, read up on debt validation.  Depending on your preferred strategy, validation can be the the first step in the process or can be used in the PFD itself as pressure on the agency.  Make sure you verify everything I've said as well.  I'm certainly no expert or attorney and I'm just relying on my recollection of things from when I went through this some time ago.

[guiness56]

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@takeshi74 wrote:

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@nixadm wrote:
I just want to make sure once I pay them the original creditor or another company isn't going to come after me.

---

I'd strongly suggest doing your own research on pay for deletes.  There are templates out there that you can reference and you'll want to draft a very clear ageement (i.e. not what's in your OP).  They're not guaranteed by any means but IMO you might as well shoot for a PFD.

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@nixadm wrote:
The OC is chase, this CA made it sound like since they don't own the debt they can't modify how it shows on my report?

---

Verify that with them.  Never operate on assumption with these things.  From what I recall the collection agency should be the owner or else they can't collect.  If you haven't already done so, read up on debt validation.  Depending on your preferred strategy, validation can be the the first step in the process or can be used in the PFD itself as pressure on the agency.  Make sure you verify everything I've said as well.  I'm certainly no expert or attorney and I'm just relying on my recollection of things from when I went through this some time ago.

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Not true.  The CA has collection authority from the OC if the debt is assigned.  The DO NOT have to own the debt to collect.

You should not DV and PFD at the same time.  It can backfire.

[UserID732555]

It is NEVER advised to settle your debt with a FOR PROFIT agency. 

If you have not done this already please contact a non-profit credit counseling agency and speak to a counselor. They most likely will tell you about Debt Management Plans. 

Consumers with high interest credit cards can contact a non-profit Credit Counseling Agency and enroll in a Debt Management Plan (DMP). A DMP is a program in which a credit counseling agency takes outstanding credit card bills, lowers your interest rates to single digits (or 0%) and consolidates them into a monthly payment issued to the credit counseling agency. The credit counseling agency then disperses these decreased monthly payments to your creditors. Clients receive information on their program through monthly statements, 24-hour online account access, and continued receipt of credit card billing statements.  In this way, a check- and-balance model is provided for the consumer. Some benefits of the program include dramatically reduced interest rates, past due accounts brought current, waived over-limit fees, waived late fees, and in some cases, reduced balances owed to ensure debt liquidation in the shortest possible time frame.