Should I settle?

[bobvette]

First off I want to thank everyone for the great information you provide on this site, it is amazing.  I have a situation that I would like some feedback from the experts on.  I have a Barclay’s card that had an $8,500.00 credit line that was closed by them after I sent them a letter to only contact me through the mail, and it currently has a balance of $5,500.00.  We opened the account in 2006, and had perfect payment history until April, May, and June of 2011, where we had 3 straight 30 days report.  When that happened, two things took place, first, the late’s were due to my wife’s job loss, and after explaining to them the situation, they enrolled us into the hardship program for 12 months and reduced our interest rate down to 5.3%, which means much lower payments! We have the payments taken out each month automatically and haven’t been one day late!  The second thing that happened was the account was somehow transferred to West Asset Management.  Now, I have had multiple conversations with WAM about the account, and have never paid them a dime.  Currently Barclay’s reports my account as paid as agreed, closed by grantor. 

So here is the situation, WAM sends me a letter last week offering me an opportunity to settle the account for 50%, $2,600.00, I counter and say $1,750.00 and they accept!  Here is where I need your expert advice, our credit scores are not horrible, mine is around 675 and hers is around 640, if we settle, will this hurt our scores?  They tell me it will report as paid as agreed, settled in full?    I want to counter and say that I will pay the money if the report paid as agreed, 0 balance, and ask them to remove the 3 30 days from last year.  What do you all think?  Thanks so much!

[Anonymous]

West Asset can't agree to report anything on the account.  It sounds as though Barclays is the one reporting and Barclays is the only one who can change how it's reporting.  Have you talk to Barclays about why the account was transferred in the first place when you were in their hardship program? 

IF you settle with West Asset, who is most likely collecting for Barclays, Barclays will then propbably update the once postiive account (minus the late payments) to a now settled account.  And that will bring your scores down.  If Barclays owns the account still, try talking to them.  You would be better off paying it off and then letting the late payments fall off, or even gw'ing them than having a "settled" account.