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DH has a charged off account with US Bank in the amount of $4700. The account was charged off in September 2014. We didn't find out about it until earlier this year and really wanted to get it paid before it went to collections, but life got in the way. Truck needed new transmission, CC debt with high interest rate, and now I'm unexpectedly expecting (right after I purchased a new car of course.) Taking care of the CC debt first was the strategy I suggested and I think it was best since he was paying quite a bit of interest and had high UTIL. He got that down to zero. Transmission was paid off last month. Now, unfortunately, he doesn't have enough to pay the charge off in full w/o making payments. Our plan was offer to pay the whole thing if they'd delete the charge off. Any experience with US Bank being this ameniable?
So this week US Bank sent a settlement offer of $700. The letter seems to say they will not delete the charge off notation and will note it wasn't paid in full.
Upon successful completion of your settlement agreement, we will no longer attempt to collect on this debt. In addition the status of your account and the amount of the cancelled balance that will rmain chargd off will be reported to the credit bureaus. The amount cancelled will be reported to the IRS and issue you a form 1099C.
With a baby coming in a couple months the $700 gives relief. We're not out a lot of cash and the debt doesn't go to collections. The serious negative is already there and only time is going to heal it. (They've been updating the status monthly for over two years with FP Failed to Pay.) However, the mortgage loan is his name alone and we were trying for a LOC for home repairs when we found this charge off. The charge off is preventing us from doing this anyway. How bad is it really if we settle and then try for the LOC in another year or two? How long do the banks hold it against you?
In a perfect world we would like this charge off removed from his credit report. Is this a realistic option? He is a current US Bank customer with a checking/savings account, CC, and LOC. I'm wondering if that will give him some slack. What would be the second best scenario?
Hey thank you.
Agreed the settlement amount is way less than we would have offered had we tried to negotiate so it's extremely tempting. The long term ramifications make us nervous. We plan to buy a new house in 4 years or so when little one starts school. My scores are in the 780s right now, but who knows what life will bring. I keep reading that this settlement will look really bad in a manual review which I'm pretty much thinking revolves around mortgage things. Like I said we want to do an equity loan or LOC to upgrade the house so we can sell it which I'm assuming would be a manual review. I'm trying to assess how much settling will count against us and if it will completely prevent us from getting access to our equity.
@Anonymous wrote:
US Bank does not do Pay for Delete and even if they did it would be the full $4,700 not a dollar less.
A settlement isn't necessarily "held against you", also if they do update the account to paid there's no guarantee they're actually entering in the comment "settled for less than full amount". It will remain on the report the 7 years or 6.5 with EE and available for manual review if that comes up.
But say you decline their settlement it goes to a Collection Agency which is a 2nd derogatory mark and they definitely aren't settling the account for 15% of the value.
Personally, I would take a 15% settlement on a two year old account that size without a second thought.