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PFD after a settlement

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diveforfun97
Frequent Contributor

PFD after a settlement

I was wondering if has ever tried this and had success.  I had a loan that was CO when I was overseas.  When I got out of the hospital I called and they said that they would accept a settlement on the account and consider it paid.  So I did just that....before I started reading these forums.  So the account is "settled in full", which is not good. I have tried GW with the company over and over but with noresponse, kinda stink since it is a place that does military loan, and the reason it went bad was due to being blown up.   I was thinking that I might use the amount that was written off during the settlement as my leverage.  Has anyone tried this and had sucess?  Anyone have any comments on this?  Thanks!!

Starting Score: Sep 23, 2014 EQ 577 TU 583 EX 567
Current Score as of 6/28/17 EQ 628 TU 643 EX 625
Goal Score: 700
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AndySoCal
Valued Contributor

Re: PFD after a settlement

You would have better chance if the account was paid in full. Is the lender aware of why you could not pay during that time?

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Message 2 of 4
RobertEG
Legendary Contributor

Re: PFD after a settlement

It is certainly possible, for someone out there has taken a hit for the less-full amount, and may be enticed to accxept its payment.

Here is the normal course of a bad (unpaid) debt,

The OC will arrive at some point where they will begin to step up acivities for its collection.  Normally not until the debt has been deliquent for over 90-days.

The can then choose to take one or more of three options.  They can keep the account open and just keep reporting additional 120/150/180+ delinquencie, or they can close the account and do either a charge-off of the debt, or an assignment or sale to a debt collector, or both.

Your OC chose to do a charge-off, so therein lies my skepticism about their PFD acceptance after a settlement.  Here is why,

When an OC does a charge-off, that is a business, and not primarily a credit reporting, decision or action on their part.  It is primarily an accounting decision.

What a charge-off does is to enable the OC to shift the debt over from the accounts receivable portion of their ledger (an asset, upon which they have tax liabilty) over to an uncollectible bad debt (which is a tiability) Upon next quartery tax filing witth IRS, the CO recovers, by reduced taxes, a ;portion of the bad debt.

This does not in any way erase the full debt you owe to them. It is accounting an tax stuff.

The OC does not have to report the CO to the CRA.  They usually do, but that is up to them.

Then you reached an initial settlement aqreement with the OC for payment of a portion of the debt.  This may put some money in their pocket, but creates a lot of work for their accounting department.  Whatever you pay them is then reportable income.  So they must then revise their accounting ledger by showing your setttement amount as income, thus also reducing the remaining amount previously rported as an uncollectible liability.

Now, in your proposed PFD offer, you are essentially asking them do readjustment of their accounting once again. Hidden fees in accounting department processing.

Unless the remaining unpaid debt is substantial, I dont see an offer to pay the remaining difference now, in exchange for a deletion of prior, accurate reporting, to be much "leverge."

But, hey, give it a shot!

 

Message 3 of 4
esme
Regular Contributor

Re: PFD after a settlement

I know that this is an older thread, but I was wondering if there was any outcome from this from the OP... or anyone else that may have tried to go this route for that matter.

 

I have a LONG story with HSBC. And I basically ended up settling for less than the full balance because at the time, I didn't even know that I could offer a PFD or at least decide to PIF instead of settling for less than the full amount. I had no idea what the outcome would be for my credit report, I just wanted the collection activities to stop for the least amount of money.

 

Well, fast forward a year later, I have since found this forum and have learned SO MUCH about negotiating with OCs and CAs in such a short period of time. I am hating myself for making that decision to settle for less because even though I had paid according to the negotiated terms, HSBC is still reporting the account as Charged-off/Bad Debt. I mistakenly assumed that it would be updated to Paid/Closed with a $0 balance. Had I known that Charged-off accounts that are settled for less than the original amount owed were considered just as bad as a bankruptcy, I would NEVER have settled for less. I would have worked to scrounge up every last penny to pay the entire thing off and negotiate for a PFD, and if not that, then at least an update to the TL as Paid instead of still charged-off.

 

I've been trying to GW HSBC for months now and they will not change the charge-off status nor will they delete out of goodwill. They've sent me two letters in the mail telling me the same thing, and I honestly don't think they will change their mind no matter how much I call, email, fax, or snail mail. So tonight, I wondered if it were possible to offer to pay the remaining balance that they wrote off and see if they might be willing to renegotiate. I'm glad I am not the only one whose wondered this. Has anyone tried renegotiating after settling a debt for less than the original balance? I suppose it's worth trying... I'd appreciate if others might be able to share their own experiences.


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