Capital One Drama - Pay in Full or Settle?

[Anonymous]

Doctort,

How old is this Cap1 Charge-off? When was the DofD? Is it beyond SOL?

[doctort]

I appreciate you taking the time to respond to this because it is  a great concern. I've pondered this ordeal about

20 hours a day for for the last 5 days.  I did not realize no revolving account would play such a big role in my

score.  At this point I believe paying cap 1 is the best route.  For my own peace of mind, I believe i'm going to

tackle both.  I'm kinda obsessed with getting rid of the 8 collections but I'm sick of cap 1 also.  This is my plan

as of now, especially since effect of pif will be cancelled by no revolving accounts:

I received a letter from Cap 1 offering to reduce APR to 0% if I agree to settlement plan making monthly

payments until the account is paid off.  My plan is to accept that settlement.  Agree to pay $183.33 for 12 months

thereby ending the compounding charges.  In the FICO simulator I gain 10 pts the first month of making that payment of $183.33.  Continuing to pay the $183.33 for 12 months would net me another 70 points from simulator.

2)  Take the money I was going to use to PIF cap 1 and  pay off the 8 collections.

3)  Hope that removing 8 collections put me in a little better standing to get a secured card. 

4)  After receiving secured card, double up monthly payments and pay off cap 1.

Btw I am currently in negative score bucket #2 because of medical judgment.  Today I'm at 573, not great, but I was at 418 when I came to this site.  I have a signed court order to dismiss the judgment.  Papers mailed to CRAs, I had one

other chargeoff that I had PFD success last week with.  Waiting on those 2 actions to hit report.  I was hoping to hit

620 by paying off cap 1 for the sake of my morale.  But oh well.  Thanks again for your advice.  Little disappointed, but I did learn something in the process.

[doctort]

DOFD was 10/2008, it reported as bad debt/collection until 2/12/10 when I got an alert that it was now being reported as chargeoff.  Yes it is still in SOL

[RobertEG]

I am kinda confused, as usual!

Here is the situation, as I understand it:

You have a Cap1 OC account that you had prior derogs with , and they then reported a CO of the debt.  A CA has also contacted you regarding their collection as an agent of the unpaid debt on behalf of the OC.  But the CA has not yet posted this to your CR. Correct?

You also have other derogs in your CR in the form of CAs,

You have the funds to pay to someone an amount that is about equal to what you now owe on the Cap! account, and want advice on whether to pay it all to them, or to offer them a settlement for less, and then pay the difference to help remove some of the existing CAs.

Is all of that correct?

If so, then my observations.

The Cap 1 account has not made you a firm PFD offer.  If you want to just do a PIF with them, they will almost surely lap it up.  But, as you know,this will not remove any of the prior derogatory reporting now in your CR.  They will simply update the CO status to paid. What it wll do is to forstall any further CA reporting or legal action on the debt.

If, however, you want to hold out for a prior PFD agreement from them, you are gambling in order to try to get prior credit reporting addionally deleted from your CR.  While the benefits are apparent, so are the risks.  First, a PFD is only a condtional offer that they can simply laugh off, as you have seen, or even ignore totally.   Any legal penalties continue to accrue.  CA reporting can follow, along with legal action.

A PFD offer, even in the best of cases, is tenuous.  If you make a PFD offer for less than the full amount, by way of a settlement offer, that diminishes your chances of PFD acceptance. 

If you received, and even were able to secure, a firm PFD agreement from this submarine CA,  who is apparently willing to "settle" with you on the CA reporting, that wont remove the CO or any prior reporting by the OC. CA deletion does not require OC deletion of their pior reporting of derogs, only their update of the CO status to paid.  That does not help your credit score dings based on the prior OC derogs.

You offer as a reason for offering a settlemment to Cap! for less than the full amount, the abillity to then apply this difference to "completely eliminate" other CAs in your CR.  Do you have prior PFD offers in hand from each of these?

Payment of the "other" CAs simlarly wont eliminate them from your CR unless they have previously also committed to a firm PFD agreement.

I guess I am confused at what firm PFDs you actually have in hand, for your strategy for score improvement seems to depend upon CR deletion, and I dont see that as of yet.

[doctort]

All 8 CA are medical.  OC is local hospital that will PFD.  When OC is paid, collection agency no longer has a business interest.  When the 8 collections are paid and deleted, remaining derogs reporting will be:

1) Cap 1 chargeoff $2200

2)  Three accounts that were paid in full and closed that show 60+ days late.

3)  No other revolving accounts beside Cap 1 Chargeoff.

[RobertEG]

If you pay the OC, even with a PFD agreement from them, that wont require the CAs to delete their prior reporting to the CRAs, and thus wont erase both.  The OC cant commit to deletion by a CA,  Sure, the CA can no longer collect if they are notified by the OC that they have received payment of the debt, but that alone does not require CA deletion from your CR.

[MarineVietVet]

---

@RobertEG wrote:

If you pay the OC, even with a PFD agreement from them, that wont require the CAs to delete their prior reporting to the CRAs, and thus wont erase both.  The OC cant commit to deletion by a CA,  Sure, the CA can no longer collect if they are notified by the OC that they have received payment of the debt, but that alone does not require CA deletion from your CR.

---

You are right about that Robert but in my experience that's exactly what happened. When I paid the OC the CA and it's entry faded away into the darkness. Of course that's no guarantee that any other CA will do the same thing.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work

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[doctort]

When the 8 collections are paid and deleted, remaining derogs reporting will be Serious Delinquency and recent chargeoff:

1) Three accounts that were paid in full and closed that show 60+ days late (Serious Delinquency).

2) Cap 1 chargeoff $2200.

3) No other revolving accounts beside Cap 1 Chargeoff.

How would the above action impact scoring?  How many points possible by simply having the 8 collections deleted.

I fully understand PFD, HIPAA, OC/CA requirements, etc. just want an educated guess based on experience if the 8 collections were deleted and all that remained as far as derogs were 1 and 2 above.

[doctort]

Can someone please answer the following?

When the 8 collections are paid and deleted, remaining derogs reporting will be Serious Delinquency and recent chargeoff:

1) Three accounts that were paid in full and closed that show 60+ days late (Serious Delinquency).

2) Cap 1 chargeoff $2200.

3) No other revolving accounts beside Cap 1 Chargeoff.

How would the above action impact scoring?  How many points possible by simply having the 8 collections deleted.

I fully understand PFD, HIPAA, OC/CA requirements, etc. just want an educated guess based on experience if the 8 collections were deleted and all that remained as far as derogs were 1 and 2 above.