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Settlement offers

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AdamNYC
Established Member

Settlement offers

I have two CO'd accounts and have received settlement offers on both:

 

1.  Asset Acceptance settlement offer of $470.44 on a balance of $1,566.14. 

2.  Northland Group (for LVNV) settlement offer of $958.26 on a balance of $2,129.41

 

I have the money to pay both of these.  What would you do?

 

I know that settling these accounts in themselves won't raise my credit score.  But, the LVNV CA shows a util of 145% ($1600 limit, $2129 balance).  So, would bringing that account to zero eliminate the util problem and therefore raise my score? 

 

I suppose my first steps are DV and PFD?  Maybe I'm just ready to throw in the towel and pay these and let time heal my score.  I plan to GW with the original creditors (Capital One and HSBC). 

 

Any advice? 

 

EQ:  629

TU:  565

EX:  768

Message 1 of 10
9 REPLIES 9
AndySoCal
Valued Contributor

Re: Settlement offers

How long ago were these accounts charged off?

FICO Scores XPN v8 802 V2 831 (SDFCU) TUC 803 v8 EFX 807 (10/2023)
Discover 09/90 19,000, JCPenney 10/2008 4,700 US Bank Cash+ 12,000 Citibank Custom Cash 5/2015 11,100 C State Dept. FCU 15,000 06/2023 , 02/2024 Redstone FCU Signature VISA 10,000 Banking: Ally Bank Credit Unions: Lafayette FCU Quorum FCU State Department FCU State Department FCU Pelican State CU Redstone FCU

Message 2 of 10
AdamNYC
Established Member

Re: Settlement offers

One was November 2006 and the other was December 2005. 

Message 3 of 10
Anonymous
Not applicable

Re: Settlement offers

Be careful! I myself have been doing a lot of research on this and from what I have read... If you take the offer, make sure you get them to agree to your terms for payment. As in, send them a payment agreement and request that it is sign before you pay them stating that this amount above is settle for this amount. Alos say once u have paid them, they cannot resell the remaining debt to another creditor or collection agency. There's been stories that they sell the remaining debt to another place. Once they get something from you they don't really care what happens with it.

 

Also make sure you get them to update your creditor report to a positive note first. As in current before you will talk and that once payment is receive that they will report the Cred. Company the account is PAID, and if you can't get them to put paid, at least have it reported as settle (But PAID is better then SETTLED). Just what I've found.

 

Hope that helps.

_-dashUnderscore-_

Message 4 of 10
srjjames
Valued Member

Re: Settlement offers

OK, I just did a settlement deal with a collection agency.  So are you saying I need to send them a letter saying the agreement that we made and have them sign it and mail it back to me before making any payment? Ok, now if they would do a pay for delete with me what do I do about the orginal creditor because the original creditor is still on my report.

Message 5 of 10
RobertEG
Legendary Contributor

Re: Settlement offers

Here are some basic things I would keep in mind.

When you have a debt with a debt collector, it can embrace several different, cumulative $ amounts.  First is the original $ amount of the debt at the time they began collection activities.  Added to that are usually interest accruals on the unpaid debt since that date, and possibly any legitimate fees the debt collector is authorized, under your state debt collection statutes, to assess. Debt collectors will often use very loose language in their settlement offers.  So it is important to use legal language, such as that acceptance of your settlement amount will be considered as legal payment in full of any and all debt.

If you settle for less than the full amount, that is a separate debt status code that the CA would be required to accurately report.  To ask them to report as paid in full when it was not is asking them to report inaccurate information.  I would not suggest that.

 

I am not sure of the reason or wisdom for any DV letter now. First, if it has been more than 30-days since thier intitial collection notice to you, then they can just ignore it as untimely.  Second, even if they chose to respond, all they would have to do is reiterate who the OC is, and the asserted amount of the debt.  You appear to know, and not contest, that, so I am not sure what a DV letter would accomplish at this point.  And third, if the debt is still within SOL, it may be interpreted by them as reluctance to pay, and may push them to go for collection of the FULL amount via a lawsuit.  It would, in my opinion, be an unwarrated risk.

 

As for a PFD, I have similar concerns.  You would be telling them that you will only accept their settlement offer if they additionally agree to an addtional term of CR deletion.

It may work, and it may not.  It is a risk that ohly you can evaluate.

 

As for your % util question, in my opinion, you have not provided enough information to assess its current impact.  You never have a % util based on any reporting done by the CA.  You dont have an account with a CA.

% util is based on the balance on the OC account. The OC may or may not still be reporting a balance owed on thier account, depending on whether they assigned collection authority to the CA, or actually sold the debt to them.  If you pay the CA, then if the OC still owns the underlying debt, the CA would then notify the OC of its payment, and then the OC would have to update their debt balance to %0.  Then, being a closed OC account with no balance, it would be gone from your % util calculation.

 

As for deletion of any prior reporting done by the OC based on whatever payment agreement you reach with the CA, the answer is no.  A CA cant agree to CR deletion of anything other than thier own prior reporting.  The OC reporting was not theirs, and thus would have to be separately addressed via GW requests to the OC.

Message 6 of 10
AdamNYC
Established Member

Re: Settlement offers

 


You never have a % util based on any reporting done by the CA

 

RobertEG... this statement does not seem to be true.  All the OCs are alreday reporting zero balances, and therefore there is no utilization on those.  The ONLY revolving account on my CR is this CA.  Utilization is calculated as 145%, which is the balance the CA is reporting divided by the credit limit (2313/1600). 

 

The reason for the DV is because the settlement offer from Northland Group was their first notice to me and stated that I have 30 days to DV. 

 

I wasn't asking about the CA deleting the OC entry.  I was asking about PFD with the CA and as I said I would pursue GW with the OCs. 

 

Thanks for your help though! 

Message 7 of 10
AndySoCal
Valued Contributor

Re: Settlement offers

Be careful with what the settlement deal it could end up hurting your score Even if it is a PFD. Both of your accounts are chargeoff accounts that are not recent (4 to 5 years ago)  Once the CA gets the settlement payment(s) the OC will update the trade line also. Most likely to something like paid charge off with a comment account legally paid for less than full balance. Due these account(s) re-reporting FICO may see this as a recent derog reporting and your score will go down. Have you talked to the OC(s) if they still own debt or have sold it? 

FICO Scores XPN v8 802 V2 831 (SDFCU) TUC 803 v8 EFX 807 (10/2023)
Discover 09/90 19,000, JCPenney 10/2008 4,700 US Bank Cash+ 12,000 Citibank Custom Cash 5/2015 11,100 C State Dept. FCU 15,000 06/2023 , 02/2024 Redstone FCU Signature VISA 10,000 Banking: Ally Bank Credit Unions: Lafayette FCU Quorum FCU State Department FCU State Department FCU Pelican State CU Redstone FCU

Message 8 of 10
AdamNYC
Established Member

Re: Settlement offers

I talked with Capital one and about PFD and they said "we've already been paid...we sold the account so you don't owe us anything anymore."  I have not talked to HSBC. 

Message 9 of 10
RobertEG
Legendary Contributor

Re: Settlement offers

Interesting that you are still getting a % util of revolving credit in your CR on a revolving account that is reporting no balance due.

I certainly dont contest that you are seeing this, and am trying to figure out why this is happening.

Here is my best guess.  Maybe others will have an answer.

 

I can say, definitively, that you DONT have any revolving account with a debt collector.  You dont have an accout agreement with them.

CA "accounts" are strictly credit reporting accounts solely between the debt collector and the CRA as to the currrent status of thier collection activities. Debt collectors are not creditors.  See FDCPA 803(4).   CAs dont report, and in fact have no reporting codes that enable them to report, such creditor items as monthly delinquences, or credit limits.  Their account type status is limited to being a collection, and does not permit them to report a collection account as a revolving line of credit.

 

Having said all of that, here is what I think is happening.  I think the FICO scoring algorithm is a bit more sophisticated than I presumed.

I think what is happening is that FICO, even though the OC is no longer reporting a balance on the debt, knows, by reporting of the CA, that the debt is not paid, and thus does not exclude the unpaid balance from its % util calculation.  What then makes sense to me is that FICO is calculating a % by extracting the CL from the closed OC account, and then dividing that into the balance owed under the CA account.  That is sophisticated cross-linking of information from the different OC and CA segments of your credit file, but is the only way I can explain what you are seeing.

Consumer credit reports are notorious for listing items on the collections section of their reports that were never, and could not have  been, reported by the debt collector.

Dont assume that lates and credit limits were reported by the debt collector in your CA segment of your credit file.

Message 10 of 10
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