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Charge Off: Settle or Pay in Full?

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Anonymous
Not applicable

Charge Off: Settle or Pay in Full?

Hi all - kind of stuck with this and want to lean on community expertise on this one. I have 3 accounts that are charged off. Two Capital one accounts totalling about 2k. One of which is with collections and one is still with Cap one. (I am paying this off in full and almost done). 

 

The second is with Barcaly Card and is about $3600. I am torn here because I am not sure what to do. They offered me a 45% settlement. How would this impact my score from a points perspective if I PIF or settle. If I settle, I can make one payment and be done with it. If I PIF, it will take me a little while to repay and the score might take longer to bounce back. Would love to hear thoughts on this and thank you very much in advance. 

7 REPLIES 7
tricie17
Frequent Contributor

Re: Charge Off: Settle or Pay in Full?

Pay in full and be done.  This will leave no negative comment on report and will show paid in full which will benefit you.  

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Message 2 of 8
RobertEG
Legendary Contributor

Re: Charge Off: Settle or Pay in Full?

If the account is settled for less, the creditor has the option of including the special comment of paid for less.

However, if you obtain agreement not to include any reference to paid/settled for less, then the account will appear the same as if it had been paid in full.

I would first make the settlement offer with the condition that they not include any reporting of paid/settled for less.

Message 3 of 8
Anonymous
Not applicable

Re: Charge Off: Settle or Pay in Full?

@tricie17 thats good advice. If I cannot get them to note PIF if I settle I will just arrange to PIF. 

Message 4 of 8
Anonymous
Not applicable

Re: Charge Off: Settle or Pay in Full?

@RobertEG That is a great idea. Is this something I can ask of the rep on the phone or shall I send a letter and get it in writing?

Message 5 of 8
RobertEG
Legendary Contributor

Re: Charge Off: Settle or Pay in Full?

Similar to making a PFD, it is prudent to get agreement in writing, but if they wont agree to written agreement, an oral agreement is still legally binding.

Just a bit more difficult to prove should you later have to pursue breach of contract.

I would not let an agreement slip away based on their reluctance to confirm in writing, but it's your call......

Message 6 of 8
Anonymous
Not applicable

Re: Charge Off: Settle or Pay in Full?

I settled for less than owed and my credit score rose.
Message 7 of 8
RobertEG
Legendary Contributor

Re: Charge Off: Settle or Pay in Full?

Scoring factors can vary depending upon the type of credit.

A charge-off account can be either installment, revolving, or pay in full as billed type credit.

 

If the account, for example, is a revolving line of credit, paying, whether in full or in part, requires update of the balance to $0, which will, if the account is closed, then remove the account from scoring under % util. 

The scoring impact of update to $0 balance will vary dependent upon the new overall % util.

 

However, if the debt has already been sold to a debt collector, then the creditor balance should already have been updated to $0, so settling with the debt collector will not impact % util.

 

It depends upon the individual circumstances of the debt......

Message 8 of 8
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