settlement offer

[Anonymous]

Hello everyone. I recieved a settlemrnt offer in writing today to the amount i agreed to.However i'm a little nervous as to how they worded a couple of things.

"will report as account paid in full for less than the full balance".   "Please be advised that due to processing time, interest and fees will continue to accrue pursuant to the terms and conditions of your cardmember agreement up to 45 days after the final payment has been recieved." "Any remaining principal balance of $600.00 or greater on the account will be reported to the INTERNAL REVENUE SERVICE as a discharged debt." "In order to validate this agreement you must send the settlement to be paid by the specified date as follows...09/18/2010."

0K when I spoke to them on the phone she said  it had been charged off  and we agreed on a dollar amount. Will the balance that they wrote off come back to me come tax time? I'm so confused. I already know it's not going to be a good thing as far as score but what else can I ask of them before sending any check? Sorry for this being so long...thank you

[Carbusys]

The only thing good for you in this settlement is they will no longer be harrassing you anymore for money. All the derogs on your credit reports now from this account will remain on your credit reports except in the remarks section will be the comment, "paid in full for less than the full balance." Interest, penalties, and fees will continue to accrue like they said for up to 45 days. This amount will then be added to the amount written off and if the total is greater than $600, it will be reported to the IRS who consider this as income to you and you will receive a tax bill soon thereafter.

A charge-off on your credit reports are considered the same by the CRAs whether they are paid in full, not paid, or paid for less than the full balance. It is a ding. Your best option if it is possible is to offer a PFD, pay for delete, where you pay the full amount owed for them deleting any negative information on your CRs. That is if you had the money to pay in full. The other option, IMO, is to continue with your settlement agreement as is, then later on sending them a GW letter asking them to delete the derog.

Good luck!

[Anonymous]

Thank you for your reply I appreciate it. Will the balance reported be the remaining of what I didn't pay in the settlement? How can they chargr it off their end and then collect again fromme? Maybe i;m misunderstanding this whole process.

[Anonymous]

If you are seeking advice, I would NOT do this settlement offer.  I made the mistake of doing a settlement that was offered on a student loan 7 years ago and it's just now coming off my report- a huge ding on my credit.  What you need is a PFD, and you need it in writing.  I know that right now you just want to be over and done with it, but it will haunt you for years to come.  I wish I was smarter and did the research on settlements oh those many years ago- I though that paying what they wanted me to pay was the answer! Little did I know.

[Anonymous]

Thanks noelb I wish I had the full amount of 4000.00 + but I don"t. I had other accounts to handle as well. It has not gone to a ca only  an internal lawfirm they seem to all use. I don't wish to be sued so I thought I would take the seetlement offer. I cannot afford a ding on my report either but I have tried everything else. This offer comes from pretty high up I would say so I'm thinking I don't have any other option.

[jdxprs1]

what about a payment plan for the full balance and a delete?

[Anonymous]

Thanks jdxprs1 I didn"t think of that. I'm grateful for all the input.

[Anonymous]

Would anyone know how it affects your score having a settled for less than...as opposed to a payment plan? I hope to make the right decision with as much input as i can. Thanks for everyones help on this.

[Anonymous]

Of course, the "number" that it will impact your credit score is a mystery, but my settlement ( which was for $4898, settled for $2800) is listed as a negative on my CR.  My settlement is going to be removed in Sept, so I'm hoping to see a good jump up, but who knows!?!   I would go with the previous suggestion.  I don't remember seeing if your settlement is with the OC or a CA, but you should go back to the OC, ask for a payment plan with a written agreement that the item will be removed from the report as soon as it is paid off.  Go ahead and use the money you have now that you planned on using for the settlement as a "lure" for them to make a payment plan with you ( For example " I have $2k I can pay you now, and I can pay you $200 every month until it is paid in full IF you agree to delete the item once paid in full").  Do not do this with the CA- work directly with the OC, you are likely to get better results this way.  If you were to settle with a CA, both the CA and the OC could remain on your CR for the next 7 years- that's TWO dings.