Student Loans, Pay for Delete, and 1099-C - Need clarification (Nevada)

[Anonymous]

I have $66k in student debt from Navient in nonfederal student loans. I printed a credit report Nov, 2016. It showed all my nonfederal loans with "Estimated month and year that this item will be removed: 12/2016". The credit bureaus are reporting the loans as removed 1/25/2011 and seem to no longer be effecting my credit score (730ish) as of 3/18.

I have received a letter from a collection agency stating that they will accept a smaller amount (~$10k) "to resolve the above account(s) for less than the total balance". I've received similar letters before but never in an amount I could entertain - even this is high for me.

Just a few questions.

I understand I still owe the debt but are the loans no longer effecting my credit in any way? My fiancee and I are looking to get a house in the next couple years. She can probably qualify without me, but it would be nice to have us both on the mortgage.

I am thinking of contacting the collection agency to further reduce the amount they will take and request a pay for delete in writing. If I do not get the debt removed (pfd) and still pay to resolve the debt, it will hurt my credit again for the next seven years, correct? In which case it would be better to just leave it be for a bit longer?

If the agency does agree to a PFD, would it result in a 1099-C?

I am sorely in need of some advice and look forward to hearing back from you all.

[rmduhon]

What was the DoFD on the loans? The 7.5 year credit reporting exclusion date is based on that and cannot be reset.

[Anonymous]

My Experian Credit Report does not list any of the loans (printed it yesterday). The TransUnion report was printed last November and still shows the loans on there. Where can I find the DoFD on those or how can I determine it with the information it holds?

[rmduhon]

The actual TU report will show an estimated date of removal (or similar), EQ will show the DoFD (Date of First Delinquency). Monitoring sites don't show these, it has to be reports pulled from the bureaus.

[Anonymous]

The TU report has "Estimated month and year that this item will be removed: 12/2016". This is listed on all the loans.

I cannot receive my EQ CR online as it is a thin file.

Ex report does not list the items (printed yesterday).

The two reports I pulled were from annualcreditreport.com.

[rmduhon]

Then the DoFD would be in 2009. Since it isn't a federally backed student loan (which have different laws) it can't be pUT back on your reports so you don't have to worry about a PFD.

[Anonymous]

Then at this point, my best bet is to simply get the repayment offer as low as possible and get it paid off and gone from my records?

But this will result in a 1099-C correct?

[rmduhon]

It could. Is it out of SOL for your state?

[Anonymous]

SoL for Nevada is 6 years for a written contract. Yes, out of SoL.

[RobertEG]

If the OC account derogs are no longer reporting and more than 7 years plus 180 days has expired since the DOFD on the OC account, then both the OC account derogs and any collections are excluded from your credit report, and thus from scoring.

However, the broader question is whether the unpaid debt is still affecting your credit.

When applying for future credit, particularly if the principal amount is high, such as a mortgage loan, the creditor may request disclosure of all unpaid, delinquent debt, in which case, you would still be obligated to disclose the debt.  Depending upon its type and/or amount, the underwriting process may or may not require you to discharge that debt as a condition for approval of new credit.

A PFD per se does not result in a 1099c unless the agreed payment is for less than the full amount of the debt, and the difference is $600 or more.

A 1099c is issued when a creditor agrees to a settlement for less than the full amount of the debt, at which point they are cancelling repayment obligation for the difference.

It is only when debt is no longer required to be repaid that the IRS considers it to become "income" to the consumer.