Contract Callers - Settlement or Payment Options

[Oyiwaa]

Hello, 

I finaly received a letter from Contract Callers regarding the $1200 utility bill - it is a legit bill _ I contacted the OC who was able to send me the final bills.  The DOFD dates back to July/August 2007.  They have not yet reported to the CRAs.

I am in mortgage underwriting now, with a closing date of mid May.  My loan officer just informed me that they will refreshen the credit report early May, hence I do not want any new TL at this time.

Contract callers is offering me three options:

1.  A settlement of about $650 to be paid my mid May.

2.  A 4-part payment plan, of about $300 per month, with the first payment expected around mid-May.

3.  A hardship payment plan  - probably for a lesser monthly payment, with the agreed first payment expected around mid-May.

I do not have the money right now for a settlement (option 1).  But I should be able to manage a payment of about $100-$150 per month.  I want to counter offer with two options.

A:  A settlement offer of $600 to be paid in 4 monthly installments of $150 , on condition that they do not report to the CRAs.  

B:  Given that option A could be a tough sell, I want to go with the financial hardship plan of about $150 per month, on condition that they do not report.  

If they accept any payment plan,  can I later (say, after 1 or 2) payments decide to settle the balance?

Thanks - Oyiwaa

[RobertEG]

My primary question is what is the loan officer requiring regarding the debt?

Are they requring full satisfaction as a condition for final approval, that you at least be under a payment plan, or are they only concerned with possible reporting to a CRA, and thus lowering your FICO score?

If only the potential of credit reporting is of concern to them, I would contact the creditor and accept one of their plans with their addtional agreement not to report to any CRA as long as you continue to meet the terms of your agreement.

As for ability to later pay the debt in full at any point, most states have statutes or regs that permit the consmer to pay the remaining indebetness at any time as termination of the contract.  I doubt that would be an issue.

[nativenyer]

I hd a debt with them.  If you do a payment plan get it in writing that they won't report.  I set up payment believing it would keep the account off the report but it didn't stop them and they reported it anyway.

[Oyiwaa]

RobertEG:  thanks for your input - my loan officer is not aware of the debt since it has not on my CR.  My worry is that it might suddenly appear between now and closing in mid-May.  And I would rather avoid that - hence my concern for the CO not reporting it.  I will send them a written note, opting to accept one of their plans on condition that they do not report, so long as I keep making the payments... 

Also, my last question was about the fact that does accepting a payment plan (for full payment of the dept) preclude a settlement of the same debt further down the road...-- in other words, am I stuck with the payment plan once we agree or I can negotiate a settlement on the balance at any time?

Nativenyer:  I agree - I am drafting a letter and will post it over here for comment before sending it to them tomorrow.

Thanks - Oy

[RobertEG]

If you enter into a payment plan, they will most likely reduce it to writing, and it will be a written contract. 

To alter its terms would require renegotiation and their acceptance of any changes.

If the terms are more favorable to them, I would not forsee a problem.

My point regarding payment at any time would most likely require no agreement on their part, as you are most likely entitled under state law to pay the remaining balance on a debt at any time.

[Oyiwaa]

Thanks very much for the explanation.....RobertEG.  

I've decided to take their settlement offer, but with an installment payment.  Here is a draft of a letter I want to send to them.  I will be very grateful for any comments you and others may have.  Thanks.

Dear ...JoeSomeBody,

Thanks very much for your letter regarding the PECO account and your various payment offers.

I am willing to take your settlement offer of $675, in exchange for your company (Contract Callers):

1. Not reporting the account to the credit bureaus (that is if you have not reported it already) or
2. Deleting the account from the credit reporting agencies, in case you have reported it.

I am willing to pay the settlement amount of $675 in three installments, with the first payment of $200.00 payable on April 30 2014, and the second and final payment of $237.50 each payable at the end of May and June 2014, respectively.

If these terms are acceptable to your company, please sign below (or prepare the agreement on your letter head) and return a copy to me, by mail or fax. Upon receipt of this acknowledged agreement, I will give send you a money order in the amount stated above at the agreed dates.

Read, Approved and Accepted By:________________ Date:_____

Sincerely ....JoeNoBody