topic Re: CapOne settlement question in Rebuilding Your Credit

CapOne settlement question

scmami — Mon, 11 Jun 2012 23:07:52 GMT

I have set up a settlement with Capital One to pay 70% of a $2000 balance. The rep told me they would still report what I owe in the balance column. Why is she saying this? CapOne still owns the debt after being charged off 4+ years ago. They had no way of contacting me before I contacted them because I have moved a few times. Anyway, shouldn't they update to "settled for less than full balance and $0 owed? This is very important to me, as CapOne is affecting my utilization as they still report a revolving balance. What can I do to get them to report zero? Is this rep misinformed? I have not given them NY info, waiting on the efax with the settlement info. Please advise...I really want to take care of this.

Re: CapOne settlement question

scmami — Tue, 12 Jun 2012 01:30:12 GMT

Anybody?? I know someone/(everyone)has dealt with CapOne before right?

Re: CapOne settlement question

pipeguy — Tue, 12 Jun 2012 01:54:51 GMT

@scmami wrote:
I have set up a settlement with Capital One to pay 70% of a $2000 balance. The rep told me they would still report what I owe in the balance column. Why is she saying this? CapOne still owns the debt after being charged off 4+ years ago. They had no way of contacting me before I contacted them because I have moved a few times. Anyway, shouldn't they update to "settled for less than full balance and $0 owed? This is very important to me, as CapOne is affecting my utilization as they still report a revolving balance. What can I do to get them to report zero? Is this rep misinformed? I have not given them NY info, waiting on the efax with the settlement info. Please advise...I really want to take care of this.

Most major lenders, especially OC's will accept less than the full amount of a charge off as "full settlement" and when I mean most major lenders, this includes AmEx. Most will also report the account as settled with a note PAID, settled or paid for less than full amount. The account is paid and settled and will report AS PAID. One thing you should be very aware of is that if the amount forgiven is greater than $599 (in other words $600 or more) you can expect a 1099-C at the end of the year which means you'll have to declare the $600 (or whatever amount) as misc income AND pay taxes on the "income".

In your case, settle for $1405, NOT $1400 and you'll avoid owing income taxes on $600.

Re: CapOne settlement question

scmami — Tue, 12 Jun 2012 02:33:27 GMT

This was the reason she said she wouldn't take under 70%...using the actual numbers (above numbers are estimates) I'm going to pay exactly $599 under the balance. I am mostly concerned about the reporting. I as under the impression I'd get a ZERO balance if I settled...but of course a note saying settled for less than full balance. Is that only a CA rule? I have been reading the last few hours and it seems to be a common CapOne practice ....thoughts?

Re: CapOne settlement question

suebee123 — Tue, 12 Jun 2012 02:54:26 GMT

Cap 1 mailed me a settlement offer on a credit card that was current at the time. It was in 2009 during the credit crunch and I really don't know why they did it. I accepted the settlement, and they wrote the account off at 480.00. It shows as "settled -for less than the full balance". No balance owing, and no lates at all. Just that pesky little comment...I have never had a collection, so I don't know how that works.

Re: CapOne settlement question

pipeguy — Tue, 12 Jun 2012 03:09:54 GMT

@scmami wrote:
This was the reason she said she wouldn't take under 70%...using the actual numbers (above numbers are estimates) I'm going to pay exactly $599 under the balance. I am mostly concerned about the reporting. I as under the impression I'd get a ZERO balance if I settled...but of course a note saying settled for less than full balance. Is that only a CA rule? I have been reading the last few hours and it seems to be a common CapOne practice ....thoughts?

It's not an exclusive CapOne thing, I've seen NCO (Collection Agency) and AmEx use it (OC). A "paid collection" is better in the eyes of lenders than an Open collection, the comment settled for less really doesn't mean much (anything) as far as scoring. As far as a mortgage it would be considered a paid collection, still an account gone bad, but not still bad.

You can GW a paid account with a better chance of success, rather than a still open account, however there is no guarantee that an OC will accept a GW. Case in point, I've had an account with PenFed for 35+ years, in 2009 I was late on one payment (30 days) and this is after having many many loans throughout the last 3+ decades, none ever late for 33 years - I even paid the loan off within the next 6 months (it was a $25k unsecured personal loan). I gw'd, they told me to go pound sand.... That loan shows as paid in full, with 1x 30 day late as a derog on my CRA report, nothing I can do about it but wait 7 years.

Re: CapOne settlement question

scmami — Tue, 12 Jun 2012 03:19:17 GMT

OK, thank you both...I will go ahead with the settlement, see how they report, and start with the GWs. I've actually had success with GWs, so can't hurt to give it a shot! I'll update when they report....I'm on here everyday and all the advice is 100% appreciated!