Student Loan Paid Charge Off?

[Anonymous]

I made an offer of a lump sum payment to my creditor below the total owed amount.  They are stating that they will mail out a letter that the loan is a paid charge off. 

I just want to verify:

1. that a paid charge off loan is no longer collectable and can not be pursued.

2. this will be removed from my credit rating in 7 years.

I am just trying to make sure that I am not giving this creditor all the money I have + borrowed money only to have them capable of sending the loan to collections.

[IOBA]

Wow.

I.  I would verify that they can legally collect on your loan.  If at all possible, go back to the original loan holder (Sallie Mae, or whomever) and offer them the settlement.

2.  Ask for 2 things -- a) that the loan will be considered paid in full and b) they remove it from your credit reports completely.

They do not have to do either one, but it doesn't hurt to ask.

When you and the creditor (original creditor or the person who can prove that they legally own the debt <and get proof of this>) agree to settle, and you pay per the agreed terms, then they can no longer collect on the debt.  

Get the DETAILED settlement offer in writing FIRST before paying!!!

Please be aware that if you settle for less than the original amount, the creditor has the legal right to send you a 1099 C at the end of the year.  You will have to pay the IRS approximately 50% of the money that was forgiven.

I don't know how much money you are talking about or whom you are working with.

Collections should fall off the credit report 7 yrs from the date of the first delinquency.

Hope this helps. 

[guiness56]

Just because an OC agrees to a settlement does not mean they can not collect the remainder of the debt.

It happens all of the time and is one way they get you to pay.

The OC would need to state that you no longer are financially responsibe for the debt.  And yes, a 1099-C can be issued.  Any amont of $600 or more is considered income for the year the 1099-C was issued.

[IOBA]

If the settlement offer is in writing that they agreed to settle for xx amount, and you pay it per the settlement terms, can they still go after you for the balance??

I didn't think so, since there is a written record of an agreement.

What terminology should be looked for, that ensures that no one will try and collect on the portion of the forgiven debt?  

If  a 1099 C is issued, can they still go after THAT balance?