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Regular Contributor
AutumnC74
Posts: 132
Registered: ‎03-28-2012
0

Impact of settled in full?

13 months ago in had no idea what I was doing and under threat of an imaginary lawsuit, I settled a charged off account with a collection agency. I recently paid the settled amount which was $1296 less than the charged off amount. When this updates to the CRA the remarks will be, "settled in full" and the balances will be zero and show as closed. Currently I have the charged off account and the collections accounts reporting. Both will show a zero balance. What are the likely implications re credit scores???

Starting Score: March 29, 2012 EX: 592, EQ: 549; TU: 557 - LENDER PULL
Current Score: June 2 2012 TU08 (walmart) 689, EX: ?, EQ: 649 (SW) TU: 679 (SW)
Goal Score: 720


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Mega Contributor
RobertEG
Posts: 17,456
Registered: ‎03-19-2007
0

Re: Impact of settled in full?

The codes work like this...

When the debt is satisfied, the current status in your credit file reads one word.  Paid.  It is the same, regardless of the amount the creditor accepted as satisfaction of the debt.

There is no code that reads "Paid in full."  And of course, current balance will read $0.

 

If the consumer settles for less than the full amount of the debt, a separate Special Comment can, and usually is, reported that reflects the debt was paid/satisfied for less than the full amount due.  So paid in full is inferred by absence of the special comment "paid/settled for less."

 

If a debt is settled for less, it is always a good idea to try to obtain agreement that the special comment wont be reported.  If not reported, the account will read to all reviewing your CR the same as if the debt was settled for the full amount.

 

Some feel that the special comment is actually scored by FICO.  Regardless, it is definately not a special comment that is helpful upon a manual review of your CR.

 

Regular Contributor
AutumnC74
Posts: 132
Registered: ‎03-28-2012
0

Re: Impact of settled in full?

When this updated info hits, will it lower my score?

Starting Score: March 29, 2012 EX: 592, EQ: 549; TU: 557 - LENDER PULL
Current Score: June 2 2012 TU08 (walmart) 689, EX: ?, EQ: 649 (SW) TU: 679 (SW)
Goal Score: 720


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Moderator Emeritus
llecs
Posts: 32,881
Registered: ‎08-04-2007
0

Re: Impact of settled in full?

FICO scores a settled comment on par as a CO. If the CO continually updated, then one day updated with a settled comment, then you wouldn't see any FICO change on the comment alone. However, there's always a chance to see a small bump as another account hits $0 as the number of TLs not reporting a balance increase and you stand to see a nice gain if the TL was a CC, assuming that CC negatively impacted util.

Regular Contributor
AutumnC74
Posts: 132
Registered: ‎03-28-2012
0

Re: Impact of settled in full?

It was citifinancial... The collection account doesn't show up as a collection account but It two accounts showing Up with different amounts being owed. Maybe with both showing up as zero it will help?

Starting Score: March 29, 2012 EX: 592, EQ: 549; TU: 557 - LENDER PULL
Current Score: June 2 2012 TU08 (walmart) 689, EX: ?, EQ: 649 (SW) TU: 679 (SW)
Goal Score: 720


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Regular Contributor
AutumnC74
Posts: 132
Registered: ‎03-28-2012
0

Re: Impact of settled in full?

[ Edited ]
I am so confused and so upset that this person called me out of the blue and threatened legal action. I settled under duress and the threat of lawsuit and being told I had to agree to settle right then and there or get sued. It is a horrible and sad situation.

Starting Score: March 29, 2012 EX: 592, EQ: 549; TU: 557 - LENDER PULL
Current Score: June 2 2012 TU08 (walmart) 689, EX: ?, EQ: 649 (SW) TU: 679 (SW)
Goal Score: 720


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Established Member
Tikon
Posts: 37
Registered: ‎04-23-2012
0

Re: Impact of settled in full?


AutumnC74 wrote:
I am so confused and so upset that this person called me out of the blue and threatened legal action. I settled under duress and the threat of lawsuit and being told I had to agree to settle right then and there or get sued. It is a horrible and sad situation.


How is it a horrible and sad situation? They have a right to inform you of the consequences (lawsuit) of not paying and they have a right to attempt to collect a debt that you did in fact owe.

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Senior Contributor
drkaje
Posts: 3,492
Registered: ‎07-25-2008
0

Re: Impact of settled in full?

@ Tikon,

 

I think most people are under the impression that paying or setteling will give them a clean start.


Starting Score: 675
Current Score: EX 754 FICO, EQ 737FICO, TU 738
Goal Score: 776 FICO


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Moderator Emeritus
llecs
Posts: 32,881
Registered: ‎08-04-2007
0

Re: Impact of settled in full?

Also, by law, if a collector says they are going to sue, then they have to sue. They aren't allowed to make empty threats. I didn't look at the balance paid (if posted) and money is always relative, but If I owed $15,000 as an example, and they offered to settle for $5000, then I'd rush and jump at the offer, duress or no duress.

Regular Contributor
AutumnC74
Posts: 132
Registered: ‎03-28-2012
0

Re: Impact of settled in full?

I was informed that I was going to be sued if I did not give them an answer before I got off the phone by a COLLECTION AGENT WHO HAD NO RIGHT TO DO SO, I was not given anything in writing, I was lied to and told this was the best thing for me at the time and if I did not agree to the terms (NONE OF WHICH WERE PAYING THE FULL AMOUNT OWED - ONLY SETTLING - WHICH HAS TAX IMPLICATIONS as well as the ability to totally devastate your credit) I would suffer horrible consequences.

 

I had been working with their settlement people and had made a payment the DAY BEFORE I received this call and was basically THREATENED into settling a debt I was ACTIVELY paying on.. This was a 3rd department within this organization so obviously a case of the left hand not knowing what the right hand was doing.

 

I was also told that it would not longer report on my credit as a collection account and a charge off account, have recently been made aware that the debt will not be marked as PAID IN FULL but SETTLED IN FULL and will suffer for the next 7.5 years.

 

That is about all I can think of...


Starting Score: March 29, 2012 EX: 592, EQ: 549; TU: 557 - LENDER PULL
Current Score: June 2 2012 TU08 (walmart) 689, EX: ?, EQ: 649 (SW) TU: 679 (SW)
Goal Score: 720


Take the FICO Fitness Challenge


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