topic Re: Merrick settle for less/ charge off? in Rebuilding Your Credit

Merrick settle for less/ charge off?

kiea — Fri, 24 Sep 2021 10:33:02 GMT

I am in the process of paying my credit card debt down. I have a total of 7 open cards and 6 closed cards (I have paying these monthly to keep the accounts current). In July, I had a total of $14k in credit card debt. Now, I am happy to say I have paid the total balance down to $7.2k.

Currently, Merrick ($1,621) and PayPal ($2,288) are my biggest balances. Both accounts are closed but I feel like once I pay these two balances down I will be in a good place and I should be able to pay the remaining balances off without any issues. Thankfully, Merrick has lowered my interest rate to 6% and PayPal lowered it to 0% so my payments are going straight to the principal and I'm not paying a lot of interest.

I called Merrick Bank and ask the rep if I can settle the balance. I was told I can do it if I pay 80% of the balance but they will report it as settle for less/CO. It seems to me the CO will count as a negative and my score will take a hit again. I am waiting for my reports to update now but I'm expecting a decent score jump after my payoffs. I don't want to accept Merrick's offer if my score will end up decreasing again.

Has anyone ever experienced this type of account status on their reports after a settlement? This is my first time hearing of this. At this point, I'm thinking I will be better off paying the entire balance but I'm not sure.

Re: Merrick settle for less/ charge off?

FireMedic1 — Fri, 24 Sep 2021 10:51:09 GMT

If they agreed for you to pay off the balance without putting the charge off tag on them. Pay them off in full. You dont want any CO placed on your reports at all. That will kill you. A CO is 1 step below a BK. Keep paying them until they are $0 balance. And your score will go up more as you pay it down to the end. Closed by Creditor is much better than CO on your reports. Dont go there. Good Luck!

Re: Merrick settle for less/ charge off?

kiea — Fri, 24 Sep 2021 11:04:21 GMT

That's what I was thinking but I just wanted an second opinion before doing anything. Thanks for your advice

Re: Merrick settle for less/ charge off?

FireMedic1 — Fri, 24 Sep 2021 11:37:02 GMT

No problem. Your very lucky they agreed to work with you. Consider it a blessing. Good luck on your payoff. Keep us updated on how much your score went up after payoff. It will help others in the same boat.

Re: Merrick settle for less/ charge off?

SoonerSoldier33 — Fri, 24 Sep 2021 11:54:28 GMT

Completely agree with @FireMedic1 here. Do not accept a settlement if it will result in a CO. COs are a major derogatory just one step short of a BK, and will stay on your reports for 7 years. For a measly 20% discount of the balance...no way. Keep up your payment arrangements, and pay in full.

Re: Merrick settle for less/ charge off?

kiea — Fri, 24 Sep 2021 13:30:20 GMT

I am extremely thankful for the interest reduction. That is a blessing. I will update my post after my payoff. Thanks

Re: Merrick settle for less/ charge off?

kiea — Fri, 24 Sep 2021 13:36:00 GMT

Thank you. I should be able to pay it off the entire balance by early November. If I take the settlement I may be able pay it off in two weeks that is why I asked. I just wanted to be done with this account that is why I was considering the settlement but you made a good point 20% is not worth the CO status.