Settled LOC Reporting Incorrect Amounts

jake619 · ‎12-19-2012

I have a LOC that was at the highest point $7255. Short version, It was closed by grantor at $7255 and I paid it down to $4400. Bank CO'd the account and demanded PIF. I said no, they offered to settle. I did. Paid $2700 of the remaining $4400. Now they're reporting the account status as "Paid in settlement, $7253 written off." It's inaccurate to me because they CO'd it at $4400 not $7253. What are my options? Does it even matter?

Shogun · ‎12-19-2012

The paid in settlement would be right, but not the amount.

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jake619 · ‎12-19-2012

Correct. Is it worth disputing? Is there any gain?

Shogun · ‎12-19-2012

How about trying for a GW deletion first?

Starting Score: 504
July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge
Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!

June 2017 update: All scores over 820, just pure gardening now.

jake619 · ‎12-19-2012

You mean straight up asking to make the whole account vanish? Hmmm, I guess I did technically pay them.

Shogun · ‎12-19-2012

The debt is settled, meaning nothing is owed. So what's the harm in trying? All they can do is say no. But if you try a GW before disputing would make more sense than trying a GW after disputing.

Starting Score: 504
July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge
Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!

June 2017 update: All scores over 820, just pure gardening now.

RobertEG · ‎12-20-2012

Only they and the IRS know how much they actually charged-off. They may have charged it off before any payments were received on the original debt.

If they charged-off the entire debt, then they have reconciling to do with the IRS should they later accept payment, but that is their internal issue.

You can dispute the amount they asserted to have charged-off, but I dont see any evidence to conclude what it "had to be."

Regardless of the amount accepted as satsifaction of the debt, they are required to report $0 current balance. The special comment paid for less is accurate.

My more immediate concern would be your tax liability on the amount of the debt that was excused by the settlement. IRS considers that as taxable income to the consumer if in excess of $600, so you may get a 1099c from the creditor.

I would leave it be.

jake619 · ‎12-20-2012

@RobertEG wrote:
My more immediate concern would be your tax liability on the amount of the debt that was excused by the settlement. IRS considers that as taxable income to the consumer if in excess of $600, so you may get a 1099c from the creditor.
I would leave it be.

Yep - I'm ready. Thanks for the heads-up though. That was a tough lesson the first time I settled. SLAP TO THE FACE!