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I have a debt that is being reported as open with a balance by the original creditor. The Credit Agency they are working with has offered a settlement. The debt is past the SOL in my state. I am considering paying it because it is affecting my debit to limit ratio. Also, if they sell it to another company wouldn't they have the right to list it also even though the original creditor would have to report zero balance? Would paying it avoid it being labled as a charge-off?
What delinquencies have been reported to the CRAs?
If you are considering payment, then you might wish to offer payment in exchange for deletion of any reported derogs.
If they have no yet reported any delinquencies, and yet the account is in fact delinquent, you could offer payment in exchange for NOT reporting any derogs.
Simple answer is yes, it can. SOL does not automatically erase a debt or require any change is its reported status whether sold off or not. SOL is merely an affirmative defense when sued for an old debt - nothing more, nothing less.
If the OC did not sell the account to the account to the CA, but simply assigned it to collections, then yes they can report it open with a balance. Is there a tradeline for the OC and the CA on the same account? If so, they both should not be reporting a balance, as that seems to indicate the OC sold the debt..
SOL is different than the 7.5 year reporting time frame. SOL is just how long a creditor can legally sue you for a debt. So if you have an account go into default in August 2010, and the SOL in your state is 4 years, then after August 2014 they cannot sue you (they will try but you can use the time-barred defense). However, they can continue to report for 7.5 years past August 2010, which would be early 2018.
Keep in mind that if you pay it, it may not increase your score that much since it will just report as a paid collection. If you get the OC or CA (depending who owns the debt) to agree to remove the collection from your report upon paying them, that will have a better impact on your score.
Only the OC is reporting. The debt is showing as a collection/chargeoff now, however, it also shows open with a balance (why I was confused). If they are allowed to report the balance even in collection/chargeoff status in then I think I will settle it. Paying the settlement will reduce my debt to limit ratio from 55% to zero. Thank you so much for answering!
@Anonymous wrote:Only the OC is reporting. The debt is showing as a collection/chargeoff now, however, it also shows open with a balance (why I was confused). If they are allowed to report the balance even in collection/chargeoff status in then I think I will settle it. Paying the settlement will reduce my debt to limit ratio from 55% to zero. Thank you so much for answering!
Some OCs retain their debt and use a CA to administer it (for example, Cap One does this). Even if they refuse to do a PFD, paying/settling would still be in your advantage, as the balance reported by the OC would drop to zero and they would stop monthly reporting (this keeps the derog looking "new"). My scores boosted 20 points once I settled a CO. Good luck in resolving this!
Thank you!
Please keep us posted with any results!