Time to deal with Charge off accounts

[Red1Blue]

It is time for me to payment settelemnt deal with the charge off acconnts and get them removed or reduce the negative effect.

Here are some questions for experts. The creditor is willing to settle for less than full amount.

If the total amout is $25,000 in 5 charged off accounts. They would agree for 1/3 amount say $8000 for the settlement.

Once the agreeed amount is paid will the final balance on the account report as $0 or some thing different.

If they report it as $0 will it help with the Utilization ?

Will it help me in boosting my scores?

What are the cautions I should take before I pay them the amount. I appreciate your help and suggestions.

[medicgrrl]

Yes, if they agree to settle for a reduced amount your credit report will reflect a $0 balance.  Make sure you get it in writing what the settlement amount is and that it will be considered settled in full.  Having those show a $0 balance should definitely help your scores but I can't guarantee it.  Are they updating the CRA's every month still?  Are you dealing with the OC or have they been sold to collection agencies?  If they've been sold and the OC is already reporting a $0 balance then it's not going to affect utilization.  You can try for PFD but it's less likely with settled accounts than it is with PIF.  If you want to list the creditors or CA then I'm sure there are people on here that can give you more specific information on their dealings with those companies.

[A1Credit]

When I settled my charge-off accounts, I initially received a score boost because the remaining balance was lower but when they finally zero-ed out the account I took a credit score hit.  Hope this helps although your situation maybe entirely different from mine.

[RobertEG]

Ideal win-win is for the creditor to agree both to a settlement for less, and a deletion of their reporting.

If you have already negotiated a settlement for less, try tacking on the condition that they also agree to delete any reported derogs, such as the charge-off.

If they wont also agree to a PFD, you can include a condition that they agree not to report paid/settled for less.

They must update the balance to $0, but are permitted to also report the fact that they settled for less.  That special comment informs others that lending to you resulted in a loss, and that if you repeat that pattern, then they may also take a loss.  A very unfavorable lending determination.

If they consent not to make any reference to settled for less, your credit report  will then read the same as if you had paid in full.

While not a direct scoring factor, it nonetheless could be a significant lending factor in any manual review.

Update of the balance to $0 is not something you need to negotiate.

It is an explicit updating requirement under FCRA 623(a)(2).

[Anonymous]

I recently settled a BB&T Charge-off from 2011. The account is scheduled to be removed from my report due to age in January 2018. 

Account Type: Auto Repossession

Balance: $1,411

Charge-off Amount: $826

Settlement Amount: $705.94

I called yesterday because I had not received a payment confirmation letter from them. The money was taken out of my account though. The rep told me they have to do a 10 day monitoring and I can expect my letter to be mailed on April 11th. I then asked for confirmation that the account would be reported to have a $0 balance, to which I was told "No. You settled the account for $705.94, so you still have a balance of $705.94. We will report the account as settled with a balance of $705.94". 

If the account is settled, which basically means we've reached a dollar amount to cease collection, then can they do this? The SOL in my area is 4 years, which is long gone, but I'm sure it was killing my credit because they report every month. 

[A1Credit]

Others can and I'm sure will chime in, but I do not think they can legally do this.  If both of you agreed on an amount to settle the account then the account balance should be zero once payment has been received.  They can enter comments stating that the account was legally settled less than the full balance but they cannot keep you on the hook for the difference.