topic Re: AMEX help: Settle or reinstate? in Rebuilding Your Credit

AMEX help: Settle or reinstate?

Anonymous — Wed, 09 Nov 2011 20:35:24 GMT

I have a CO with AMEX for over $10K. They have offered reinstatement with payment if full or settlement for about $3,300. My credit score is important to me, but I'm not sure that the benefit of reinstatement is worth the extra $7K.

Will settling raise my credit score or is it still going to be viewed very negatively?

Does reinstatement really mean that everything goes back to normal or will creditors still be able to see that it was a CO at one point and/or delinquent?

Any advice is appreciated.

Re: AMEX help: Settle or reinstate?

GoodCredBen — Wed, 09 Nov 2011 20:38:30 GMT

I would reinstate if i could....

I would wait for others to comment though...

Re: AMEX help: Settle or reinstate?

Anonymous — Wed, 09 Nov 2011 20:48:55 GMT

I know reinstatement would be best for my credit score ultimately. But I just don't know if it's worth $7K additional. I'm not sure to what extent each of these options will affect my credit score. If I knew my score would go up to really high with reinstatement or stay low with settlement then I'd probably go with reinstatement. But if the difference between the two is minimal then I might just settle.

Re: AMEX help: Settle or reinstate?

pizzadude — Wed, 09 Nov 2011 22:01:39 GMT

Is the account reporting as a CO from AMEX only ? Or is there a collection agency also reporting ?

If this is the only negative on your report, then having the derogs removed would likely give you a significant boost.

If you do agree to pay in full with reinstatement, make sure that they ( AMEX and/or CA ) agree to remove all negative reporting.

AMEX has a very long memory, you will be blacklisted unless you pay them in full.

Re: AMEX help: Settle or reinstate?

Anonymous — Wed, 09 Nov 2011 22:27:53 GMT

CA hasn't reported anything and I wasn't aware that they could.

I don't think they will agree to remove all negative reporting, but they are saying the account will show as open and current. The chargeoff part is removed, but unsure about all the past-due months being reported.

If I settle with the CA, what will happen to my score?

Re: AMEX help: Settle or reinstate?

GoodCredBen — Wed, 09 Nov 2011 22:52:40 GMT

settlements are never good....

once agian YMMV though....

Re: AMEX help: Settle or reinstate?

MarineVietVet — Wed, 09 Nov 2011 23:14:54 GMT

@Anonymous wrote:
CA hasn't reported anything and I wasn't aware that they could.

I don't think they will agree to remove all negative reporting, but they are saying the account will show as open and current. The chargeoff part is removed, but unsure about all the past-due months being reported.

If I settle with the CA, what will happen to my score?

Hello and welcome to the forums.

Any notation of "settled" is scored the same as a CO (Charge Off) so you want to avoid that if possible.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: AMEX help: Settle or reinstate?

Anonymous — Wed, 09 Nov 2011 23:35:23 GMT

I think you've answered your own question by stating that your credit score is important to you. Personally, I would evaluate the decision more strategically. For example, how old is your CO and/or DoFD of debt? This is SOOO important to know because let's assume it's 6.5 years old. The fact that you have a year or less of reporting would change the decision you make. If you pay the 10k for reinstatement, the value is a positive tradeline and starting over with AMEX. Of course this assumes you'll demand that all prior negatives, lates, and CO be removed. If I was shopping for a mortgage today and couldn't wait for the one year for my tradeline to fall off in my example, this would be the route I take.

Settlement sounds attractive but it's a two-headed monster. First, the 7k write-off is considered taxable income. Yes, AMEX will send a 1099 to uncle sam. Failure to report it may result in an audit. The tax consequences are real. That 7k may put you in another tax bracket. Second, another poster said AMEX does not forget....so true. You will lose the priveledge of AMEX for a very long time. On the other hand, the settlement will help your utilization big time as it will report 00.00 balance. The CO and lates will still be listed on report and will remain and hurt your score up to 7.5 years. In my example above, the negative tradeline will remain for 1 year until it falls off.

The 3rd option is to do nothing and let it fall off. In my example, if you have a short time remaining for DoFD, by doing nothing, you get dinged now but you keep 3k and 10k. This assumes you're past SOL for your state and no immediate credit is needed. This also means you would not be able to go back to AMEX.

DISCLAIMER - my advice to you is simply an analysis and evaluation of your concern and in no way should be construed to mean not pay your debt if owed.

Re: AMEX help: Settle or reinstate?

Anonymous — Thu, 10 Nov 2011 01:08:06 GMT

I appreciate the advice. Does anyone have first hand experience with AMEX and having a CO reinstated? The CA isn't willing to negotiate anything and basically says AMEX has 2 options; settle for less or reinstate with full payment. Everywhere I've read, including here, says to demand everything negative be removed. The CA acts like that will automatically happen with reinstatement. Are they just saying that or do I need to be doing something more?

Re: AMEX help: Settle or reinstate?

Anonymous — Thu, 10 Nov 2011 01:36:35 GMT

@Anonymous wrote:
I appreciate the advice. Does anyone have first hand experience with AMEX and having a CO reinstated? The CA isn't willing to negotiate anything and basically says AMEX has 2 options; settle for less or reinstate with full payment. Everywhere I've read, including here, says to demand everything negative be removed. The CA acts like that will automatically happen with reinstatement. Are they just saying that or do I need to be doing something more?

Definitely get EVERYTHING in writing.

Re: AMEX help: Settle or reinstate?

pizzadude — Thu, 10 Nov 2011 02:30:10 GMT

-----> Definitely get EVERYTHING in writing.

+1,000

Since you are dealing with a CA be aware that they could post a collection on your report, even if they haven't already done so.

Make sure that you get in writing that they will agree to not report. EVER.

Re: AMEX help: Settle or reinstate?

beb86 — Thu, 10 Nov 2011 02:31:19 GMT

if its a CO with a 10k balance this is hurting your UTL so paying in full would first help UTL which in turn should help your score, second if you settle that 7k would get reported to the irs and third if you PIF and the are willing to reinstate your account good chance the could wipe out your baddies and your TL would be positive. of course these are best case scenarios and YMMV but the first thing I would do before I pay anything is get EVERYTHING in writing.

Good Luck

Re: AMEX help: Settle or reinstate?

MarineVietVet — Thu, 10 Nov 2011 04:16:55 GMT

@beb86 wrote:
if its a CO with a 10k balance this is hurting your UTL so paying in full would first help UTL which in turn should help your score, second if you settle that 7k would get reported to the irs and third if you PIF and the are willing to reinstate your account good chance the could wipe out your baddies and your TL would be positive. of course these are best case scenarios and YMMV but the first thing I would do before I pay anything is get EVERYTHING in writing.

Good Luck

Only if both a balance and the CL are reporting will utilization be affected. If either the balance or the CL is not reported then the account is not counted in calculating utilization.