topic Re: Settlement with or without? in General Credit Topics

Settlement with or without?

IOBA — Tue, 08 Sep 2009 18:38:18 GMT

If an account is settled, without any "lates", does it affect the credit score differently than if there were lates before settlements?

Re: Settlement with or without?

Anonymous — Tue, 08 Sep 2009 18:45:37 GMT

What type of an account and did you voluntarily settle?

Since you say no lates, I am going to assume it is still with the OC. Is the account still showing a balance due?

Re: Settlement with or without?

IOBA — Tue, 08 Sep 2009 19:48:34 GMT

The debt was with a credit card. There were no lates with cc. The settlement was initiated by me. The cc company agreed to it, sent a confirmation letter with the terms of payment (one lump sum for xx amount by x date to settle the debt.)

I just pulled credit and was shocked to learn that they lied. I know, I shouldn't be shocked that they "misreported". How do I get this creditor to be honest and report accurately??? Talking to them is not likely to get me anywhere...argh! Btw, the account was NOT late! It was paid off in full, for the agreed upon settlement amount, in 06/2009.

Account Number: XXXX

Current Status: CHARGE-OFF

Account Owner: Individual Account.

High Credit: $25,976

Type of Account : Open

Open Credit Limit: $0

Term Duration:

Terms Frequency: Monthly (due every month)

Date Opened: 02/2005

Balance: $0

Date Reported: 07/2009

Amount Past Due: $0

Date of Last Payment: 05/2009

Actual Payment Amount: $0

Scheduled Payment Amount: $11,358

Date of Last Activity: N/A

Date Major Delinquency First Reported: 07/2009

Months Reviewed: 52 Creditor Classification:

Activity Description: Paid and Closed

Charge Off Amount: $0

Deferred Payment Start Date:

Balloon Payment Amount: $0

Balloon Payment Date:

Date Closed:

Type of Loan: Credit Card

Date of First Delinquency: 06/2009

Comments: Account closed at consumers request,
Settlement accepted on this account

Message Edited by IOBA on 09-08-2009 12:48 PM

Re: Settlement with or without?

Anonymous — Tue, 08 Sep 2009 20:34:07 GMT

How exactly did they lie? How is this misreported?

Re: Settlement with or without?

IOBA — Wed, 09 Sep 2009 02:42:21 GMT

Account Number: XXXX

Current Status: CHARGE-OFF <------- the account was NOT charged off, it was PAID off.

Account Owner: Individual Account.

High Credit: $25,976

Type of Account : Open <-------- the account is closed, it was revolving.

Open Credit Limit: $0

Term Duration:

Terms Frequency: Monthly (due every month) <-------- it was a revolving account. The balance was NOT due every month.

Date Opened: 02/2005

Balance: $0

Date Reported: 07/2009

Amount Past Due: $0

Date of Last Payment: 05/2009

Actual Payment Amount: $0 <--------- the amount paid in May 2009, which paid it off, was $6,200.

Scheduled Payment Amount: $11,358 <--------- where did this number come from?? My balance was $6,200.

Date of Last Activity: N/A

Date Major Delinquency First Reported: 07/2009 <-------- the card was paid, in full, May 2009. It had no balance in June or July 2009. There is NO way it could be late with a zero balance!

Months Reviewed: 52 Creditor Classification:

Activity Description: Paid and Closed

Charge Off Amount: $0 <-------- contradicts saying it was a charge off.

Deferred Payment Start Date:

Balloon Payment Amount: $0

Balloon Payment Date:

Date Closed:

Type of Loan: Credit Card

Date of First Delinquency: 06/2009 <-------- Again, card was paid off in full in May 2009. The balance was zero in June 2009.

Comments: Account closed at consumers request,
Settlement accepted on this account

The information is wrong. There was no charge off. There were no delinquencies.

I called the cc company. After being transferred to several different departments, I finally reached "Recovery". The lady argued that it was rightly classified as a charge off. When she finally looked at the history, she saw that it was paid off -- zero balance -- in May 2009. The card had not been used since then.

The rep resisted the request for a credit bureau update with correct information and a letter mailed to confirm the "error was being fixed".

The rep said I had to wait up to 90 days to have the information updated on the credit bureaus.

I hope this clears up the mud. *sigh* Makes it easier to see where I think they misreported?

Re: Settlement with or without?

Anonymous — Wed, 09 Sep 2009 02:56:05 GMT

Hi, IOBA -

Thanks so much for your post

You are 2-3 months ahead of me and I am looking at the same situation, I'm looking to find out if the settling before it starts to report 30 days late makes any difference as well.

Also trying to see if the amount settled is stated. When working with smaller creditors If its stated I might be able to explain the situation and reason for dispute.

So far it looks like there is no way of telling, is that right? Whan they mark it as a charge off it seems you get the same treatement as if you paid 10% or 90%

My other concern is triggering universal default on other cards (if that happens, It's over, can't dig myself out of 30% interest rates.) Trying to figure out if settling fast makes any difference.

Message Edited by WarOnChase on 09-08-2009 07:56 PM

Re: Settlement with or without?

Anonymous — Wed, 09 Sep 2009 03:06:24 GMT

You seem to be of the impression that paying off a settled account is the same as paying off an account. It is not. You paid off a portion of the account balance - the remainder was charged off the OC's books. The account was properly categorized. Yes, there are other factual errors. Setting a DOFD was not one of them. Looks like they set it at the date when they wrote the balance off their books. Not that it is going to make a lot of difference, you may have moved the fall off date up by a month by having it removed (if it is removed). For your information a "Settled" account is just as serious a derog as a "Charged Off" account, so the whole matter is actually fairly academic.

The good news is the matter was taken care of with the OC and didn't become a CA, which is a whole other kettle of fish.

Message Edited by creditwherecreditisdue on 09-08-2009 11:06 PM

Re: Settlement with or without?

AndySoCal — Wed, 09 Sep 2009 04:40:47 GMT

The Charge off status reflects what happened to portion of the balance that was not paid. IE if the balance was 5000 and settlement was for you to pay 3000 the charge off is for 2000. The settlement accepted on the account reflects the creditor accepted less than full payment on the account. Theopen account is the account type not referring to wether or not the oped or closed. Some Amex accounts are Open accounts because the balnce is due in full each month. As long as there is balance on the acount there is payment due each month. Settled account no matter how it is reported is considered a serious derogatory account.

Message Edited by AndySoCal on 09-08-2009 09:39 PM

Message Edited by AndySoCal on 09-08-2009 09:40 PM

Re: Settlement with or without?

IOBA — Wed, 09 Sep 2009 11:45:06 GMT

The way it was understood, if we settled, it would be considered paid in full. Huge difference between paid in full and seriously delinquent/charged off/collections.

If the balance was charged off, then the cc company can not send a 1099 C saying they "forgave" the debt. The other debt that was settled reflects settled/paid as agreed.

WarOnChase -- I settled with the Original creditor for 30%. I kept offering, every 30 days. They finally accepted. The other cc that was settled and reports as settled. No lates related to the settlement. You want to settle with Chase? Whomever you do agree to settle with, get a letter FIRST before you pay them. Sneaky companies can "forget" even though the call is recorded, the terms agreed upon.

Re: Settlement with or without?

Anonymous — Wed, 09 Sep 2009 12:26:31 GMT

So far its my understanding that it does not matter as to how much the settlement was for and the only factor is if they mark it as "paid in full," or "settled for less". It also appears from what I can tell the actual amount settled for or the % paid off does not even appear on the credit report.

If anyone has a different finding please correct the above statement.

As far as the impact of settling without or before there are notations of late payments from what I can tell that's like a scratch (being late) compared to having the front of your car caved in (a settlement). In the scope of things a settlement is major compared to being 30 days late.

So in conclusion the amount settled for and the speed of settlement has little or no impact and in the scope of things is not nearly as important as the fact that the account ended with a settlement.

It would seem to me that everyone would be better served if the amount or % settled for was stated and was a factor since it would encourage people to settle sooner and for more, but that's not the way it is.

Instead we have to fight over the wording used on the report.

I guess when a creditor sees the words "settled for less" they don't know if it was for 90% or 10% so they assume the worst and it's considered almost as bad as a total charge off.

Message Edited by WarOnChase on 09-09-2009 05:26 AM

Re: Settlement with or without?

Jazzzy — Wed, 09 Sep 2009 12:23:22 GMT

@IOBA wrote:
The way it was understood, if we settled, it would be considered paid in full. Huge difference between paid in full and seriously delinquent/charged off/collections.

If the balance was charged off, then the cc company can not send a 1099 C saying they "forgave" the debt. The other debt that was settled reflects settled/paid as agreed.

WarOnChase -- I settled with the Original creditor for 30%. I kept offering, every 30 days. They finally accepted. The other cc that was settled and reports as settled. No lates related to the settlement. You want to settle with Chase? Whomever you do agree to settle with, get a letter FIRST before you pay them. Sneaky companies can "forget" even though the call is recorded, the terms agreed upon.

I believe that considering the account "paid in full" does not affect how the cc company handles the remaining balance. For them to be able to accurately report their loss, they charge it off. The lost amount can't remain on their books, and it can't show that it was ALL paid...thus the charge off status. It is accurate.

When the lost amount is charged off by the cc company, a 1099C is exactly what can and usually does happen at that point. It was a loss to them. It is a gain to you, and you owe taxes on the amount. IRS regulations come into play. Even though many think the cc companies are evil empires, they don't make the IRS reporting rules.

Re: Settlement with or without?

Anonymous — Wed, 09 Sep 2009 12:23:50 GMT

IOBA - A settlement is where a lot of companies get you. You need to be very careful how the letter is written. If it did not say something to the affect of "your payment settles this debt and you will no longer be held financially responsible for the remainder" then they can come after you for the rest.

It is not illegal for them to do that

Yes, they can send you a 1099-C if the balance was charged off. It is an accouting term only and you did not pay them all of the money owed. Since you did not pay them the balance, it is considered income for the year the 1099-C is issued. Forgiving the debt is not exactly what you may think it is. You still owe the money.

Always get a letter before any money exchanges hands.

Re: Settlement with or without?

IOBA — Wed, 09 Sep 2009 13:45:24 GMT

This hasbeen a great conversation. I don’tfeel that I have an answer to the original question.

If anaccount is settled, without any "lates", does it affect the creditscore differently than if there were lates before settlements?

Since Iposted that question, I have seen the credit report. It appears that if there are no lates, it does not look asbad. It reports as settled.

Logically,the more lates on a credit report, the lower the FICO score.

Logically,the fewer lates on the a credit report, the better.

Logically, asettled account is going to hurt the FICO score.

Logically, asettled account with lates is going to hurt the FICO score more.

Anyone knowfor sure? LOL – anyone have thatdarn FICO formula!

Re: Settlement with or without?

Anonymous — Wed, 09 Sep 2009 13:47:36 GMT

No, it does not matter that their were no lates. Settled is settled and that is bad.

Re: Settlement with or without?

IOBA — Wed, 09 Sep 2009 14:09:50 GMT

The cccompany acknowledged that it should NOT have been reported as a charge offsince it was settled.

The cccompany acknowledged that it should NOT have been reported as a delinquentsince it was never delinquent.

The cccompany acknowledged that I do NOT owe them any more money, as the accountsettled.

Guiness56 –is there a recommended letter or form for offering a settlement to a companyand that would cover all the bases? You have mentioned that the companies can come after you for the balanceeven though things were “settled”.

In the caseI am referring to, it was done over the phone. The rep took the information and said they would get back tome. I followed up and they hadaccepted. I insisted on a letterconfirming the terms before I would pay them. I don’t have access to the letter right now, but I want tosay that it said it would accept the settlement amount as paid in full. I fully expect a 1099 C for this –because they “forgave” part of the debt. I objected to them saying it was a charge off and delinquent after itwas “settled”. They certainly havethe right to report it as settled, cuz it was. They also should report is “paid as agreed” because it was –the last agreement we had.

Totallyirreverent as far as settling goes, this cc continued to allow things to becharged each month, for nearly two years after the card was closed. And at $800-1100 a pop, each month,plus interest, that adds up to a hefty amount. Even more than what they wrote off. They refused disputes. And they acknowledged that no chargesshould have gone on the card after it was closed. But since the cc was paying the money to themselves(different department) they weren’t about to stop. Both departments pointed fingers at the other department anddenied accountability. The amountpaid in the settlement was the original charges PLUS a boatload of interest onan inflated balance that shouldn’t have been. As far as I know, there’s no help when a cc allows chargesor refuses to dispute charges.

Re: Settlement with or without?

Anonymous — Wed, 09 Sep 2009 15:48:37 GMT

Sounds like you have everything squared away. Best of luck getting it to report the way you want!

Re: Settlement with or without?

AndySoCal — Thu, 10 Sep 2009 03:46:17 GMT

A settled account is considered a serious derogatory account. A settled account will lower your score I will not even try to estimate by how much.