topic Re: Capital One Summons...should I settle? in General Credit Topics

Capital One Summons...should I settle?

Anonymous — Tue, 27 Nov 2007 21:15:23 GMT

Hello!

My husband has a $2000.00 capital One charge off from Feb of 2003. He received a summons from capital one. I called the lawyer for Capital One, and she said the settlement amount would be $1,700 ish. I believe the SOL is 6 years (we are having a lawyer check into this). We can make this lump settlement, but I was wondering, how this would look on his credit report, and would this have an additional impact on his credit?

Re: Capital One Summons...should I settle?

Anonymous — Tue, 27 Nov 2007 21:19:19 GMT

Would look much better than a judgment, that's for sure, a judgment is going to tank your scores let alone leaving your bank accounts and pay and other assests vunerable to seizure. If it's within the SOL, take the settlement, the amount you owe after the Judgment is going to increase dramatically. You'll have to pay court cost, attorney fee's on top of the continued interest and over the limit fee's.

Message Edited by Boswd on 11-27-2007 01:19 PM

Re: Capital One Summons...should I settle?

Ausfarm — Tue, 27 Nov 2007 21:20:49 GMT

I would think you could negotiate that in your settlement. That is, you agree to pay in full and they agree, among other things, not to report to the CRAs. If you settle, then there'll be no judgment to worry about creeping onto you credit reports. The suit will be what is called nonsuited in the clerks records.

I don't know what you're state is, but seven years is pretty long for a SOL. In many states it's 4 years. Search the forums for "SOL." I believe there's a thread that links you to a website which lists the SOL for each state.

Re: Capital One Summons...should I settle?

Anonymous — Tue, 27 Nov 2007 21:48:30 GMT

Okay. Would it be better to Pay in full or to settle then?

Re: Capital One Summons...should I settle?

Anonymous — Tue, 27 Nov 2007 21:53:39 GMT

Depends. Is having a paid instead of a settled worth the $300.? If you settle you won't have to worry about a 1099 I think and if you did it would be nothing really. $300 is $300 but I can definitly see why you would want a paid in full. Overall I like it better too

Re: Capital One Summons...should I settle?

Ausfarm — Tue, 27 Nov 2007 21:58:22 GMT

You said your attorney was looking in to the SOL. If the SOL has passed, then you're attorney will likely file an answer and/or a motion to dismiss the case based on the expiration of the SOL.

IF, the SOL hasn't run, then your attorney can arrange the settlement for you. If you don't want to pay an attorney to settle on your behalf and you're comfortable doing it, I imagine you can send an appropriately edited PFD letter to Cap1 legal department. If they say yes, then you're set.

Message Edited by Ausfarm on 11-27-2007 01:57 PM

Message Edited by Ausfarm on 11-27-2007 01:58 PM

Re: Capital One Summons...should I settle?

Anonymous — Mon, 03 Dec 2007 22:35:53 GMT

crazineko wrote:
My husband has a $2000.00 capital One charge off from Feb of 2003. He received a summons from capital one.

When was your husband served?

Did the summons state how soon he needs to respond?

Have you heard back from your lawyer on the SOL?

Re: Capital One Summons...should I settle?

Anonymous — Mon, 03 Dec 2007 22:39:05 GMT

More than likely he SOL has not yet passed because Cap is infamous for getting judgement just beore the SOL expires. How much is you lawyer costing for this? I would add up all the costs bfore making a decision. Settled will report assuchbut it will reflect a 0 bal. No worse than PIF'ing. It isstill a collection. However a judgement is another thing.

Re: Capital One Summons...should I settle?

Anonymous — Mon, 03 Dec 2007 22:44:50 GMT

Boswd wrote:

Depends. Is having a paid instead of a settled worth the $300.? If you settle you won't have to worry about a 1099 I think and if you did it would be nothing really. $300 is $300 but I can definitly see why you would want a paid in full. Overall I like it better too

Creditors are required to file a 1099 if they write off more than $600 of your debt. It's considered taxable income for the debtor (you) because it's a "forgiveness of debt." This means you *may* be liable to pay income tax on the amount forgiven, although my understanding is that this does not happen often.

Re: Capital One Summons...should I settle?

Anonymous — Mon, 03 Dec 2007 22:50:14 GMT

masdeocho wrote:

Creditors are required to file a 1099 if they write off more than $600 of your debt. It's considered taxable income for the debtor (you) because it's a "forgiveness of debt." This means you *may* be liable to pay income tax on the amount forgiven, although my understanding is that this does not happen often.

You are right about the $600 limit, but I don't believe they have any leeway. IRS can be rather, ah, insistent.

In 2004, I settled one and they 1099ed me.

Re: Capital One Summons...should I settle?

Anonymous — Mon, 03 Dec 2007 22:55:51 GMT

Actually, to be strictly technical ... you are required to report *any* amount of forgiven debt, regardless of whether or not it exceeds $600 and regardless of whether or not the creditor files the 1099 ...

Re: Capital One Summons...should I settle?

SmartCookie — Mon, 03 Dec 2007 22:59:01 GMT

Do what you can to see if they will PFD and remove this from your reports, even if it turns out it is set to drop in a year or two. All derog will be wiped. Cap1 is just about impossible to GW negative info off of the TL after you've paid it off.

If not though Cap1 usually notes the account as 'settled legally for less than full' which will show a 0 balance. Has the same impact as if he paid the entire amount. Doesn't look quite as good on a manual review.

Re: Capital One Summons...should I settle?

Anonymous — Mon, 03 Dec 2007 22:59:56 GMT

yeah that's what I wondering since the settlement is for only $300 less.

masdeocho wrote:

Boswd wrote:
Depends. Is having a paid instead of a settled worth the $300.? If you settle you won't have to worry about a 1099 I think and if you did it would be nothing really. $300 is $300 but I can definitly see why you would want a paid in full. Overall I like it better too

Creditors are required to file a 1099 if they write off more than $600 of your debt. It's considered taxable income for the debtor (you) because it's a "forgiveness of debt." This means you *may* be liable to pay income tax on the amount forgiven, although my understanding is that this does not happen often.

Re: Capital One Summons...should I settle?

BBYGRL — Mon, 03 Dec 2007 23:31:07 GMT

Noah_Bodie wrote:

masdeocho wrote:

Creditors are required to file a 1099 if they write off more than $600 of your debt. It's considered taxable income for the debtor (you) because it's a "forgiveness of debt." This means you *may* be liable to pay income tax on the amount forgiven, although my understanding is that this does not happen often.

You are right about the $600 limit, but I don't believe they have any leeway. IRS can be rather, ah, insistent.

In 2004, I settled one and they 1099ed me.

I settled with a ca in 2005 and they 1099ed me as well. I had to include it in my taxes last year. Uncle Sam considers any forgiven debt "income."

Re: Capital One Summons...should I settle?

Anonymous — Tue, 04 Dec 2007 00:26:04 GMT

They have to 1099 you to move it from one column to another in their 'accounting' - either that or it remains as 'bad debt/uncollected debt' and affects their 'bottom line'.

Re: Capital One Summons...should I settle?

Anonymous — Tue, 04 Dec 2007 15:23:29 GMT

masdeocho wrote:
Actually, to be strictly technical ... you are required to report *any* amount of forgiven debt, regardless of whether or not it exceeds $600 and regardless of whether or not the creditor files the 1099 ...

True, but I was only talking about the OC's responsibility to 1099 anything over $600.