Charge off on Account for HELOC - should I settle

[anewme35]

i have a charge off on my credit report w/DOFD as 7/2009.  since the short sale of the home back in 2011 i have paid faithfully $100 towards the creditor as good faith.  Never late, never missed.  The SOL for my state (CO) is 6 years.  I have another year +180 days to wait for it to fall off my credit report I am not planing any major purchases anytime soon.  Mortgage is in my DH's name.  I did try to settle just out of good Will, they have agreed to settle but indicated the accoutn will report as Legally Setllted for less than full balance.  will that affect my FICO score?  do I just leave it alone and let it age off?   Do I continue to pay the $100 per month if I go the "let it age off route"... what happens if I stop paying after it falls off of my credit report?  Can they still sue me? 

[Anonymous]

Since you have entered into a payment arrangement after defaulting, stopping that arrangement is potentially a "new cause of action" which *could* potentially reset the SOL. Your state laws would govern this but in most states this is the case. I think there is about a dozen states that require a written, signed repayment agreement to reset the SOL.

"legally settled for less" does not have any additional negative effect on your score. I would suggest settling if they are willing.

[anewme35]

So the settleent could not and should not have any additional negative impact on my credit report and/or credit score?   Are there any positives to settling then? It would change the Charge off status to Legally Settled for Less than owed.  I'd imagine I'd also recieve a 1099-c, correct? Finally I wonder what would/could happen if I just stuck with paying $100 montly until after the incident falls off my report next year.  Kind of like appease them by continue to pay and letting it age off my credit report.  That would cost a lot less than what I'd pay by settling now.

[RobertEG]

You are apparently under the impression that once it "falls off" your credit report, you no longer owe the debt.

The charge-off will become excluded no later lhan 7 years plus 180 days from the reported DOFD, but that does not negate the debt.

It simply excluded the continued showing ot the CO.

The creditor could now, or at any time, also refer the debt to a debt collector or sell the remaining debt.

In either case, that could also result in the addition of a collection to your credit report, which wold also have an exclusion date f no later than 7 years plus 180 days from the reported DOFD.  Ceasing payments could prompt them to sell or refer the debt for collection.

Leave it alone an letting it age off will result in cessation of the negative scoring mpact of both the CO and any collection, but wont satisfy the debt.

Additionally, legal action reains a threat until SOL has expired.