Pay charged off debt in full or settle for less?

[icloud987]

Happy 4th of July. I have a few questions hopefully someone can share their valuable insights.

1 If I want to pay off a debt that has been sold from the original creditor to the debt collector, is the only option left is to work directly with the debt collector?

2 If I contact the original creditor and tell them I want to pay off debt, will the original credit be able to get the debt back from the collector?

3 How do I protect myself and get proof after I pay it off? Will the copy of the check I will be sent to the collection agency suffice as proof if, in the future, I become haunted by this debt after I pay?

4 If I can afford to pay off this debt, is it better to pay it off in full than settle for less? It has been over 180 days past due and it is a "charge off "the credit report.

Thanks a lot.

[dragontears]

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@icloud987 wrote:

Happy 4th of July. I have a few questions hopefully someone can share their valuable insights.

1 If I want to pay off a debt that has been sold from the original creditor to the debt collector, is the only option left is to work directly with the debt collector?

2 If I contact the original creditor and tell them I want to pay off debt, will the original credit be able to get the debt back from the collector?

3 How do I protect myself and get proof after I pay it off? Will the copy of the check I will be sent to the collection agency suffice as proof if, in the future, I become haunted by this debt after I pay?

4 If I can afford to pay off this debt, is it better to pay it off in full than settle for less? It has been over 180 days past due and it is a "charge off "the credit report.

Thanks a lot.

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1. If the OC sold the debt to a CA, yes your only option is dealing with the CA 

2. If the OC sold the debt they can't recall it, if they only assigned collection authority then you might be able to recall it.

3. The CA should be able to provide a written settlement agreement for you 

4. It depends on what you mean by "better"

[SoCalGardener]

I probably shouldn't even try to reply, because my memory about this is fuzzy. I was hospitalized for six months, and during that time medical bills came pouring in--but sat unopened. After I was discharged, my daughter and my live-in helper started going through the mail. Several bills had gone to collections already. We contacted each company, explained what had happened and that I have stellar credit, and said we'd pay the bill immediately, in full, but wanted a promise in writing that they would remove the ding on my credit reports upon receipt of payment. They all agreed to do that, and they all kept their word!

But do note that I'm fuzzy on the details, for example, I can't say with certainty whether these agencies BOUGHT the debt, or what. All I know is they put in writing what they'd do upon receipt of full payment, and then they did it. I hope that's somewhat helpful!

[icloud987]

hank you so much. Your reply is constructive.
To confirm, you meant I could ask the CA to send me the agreement in writing first and then pay them after receiving the deal?
Did you pay them through check? I hear check a safer way to protect ourselves?

Regarding "better"
I saw some of my original creditors offering me: 1) pay in full or 2) pay less. However, the debt has been listed as" over 180 days late and charged off."

I don't know which one would be better in the long run? I plan to buy a house in the next 24-27 months, so I guess what I meant better is which option would be better to rebuild credit and buy a home in the future?

[icloud987]

Thanks for your valuable input.

Regarding "better"
I saw some of my original creditors offering me: 1) pay in full or 2) pay less. However, the debt has been listed as" over 180 days late and charged off."

I don't know which one would be better in the long run? I plan to buy a house in the next 24-27 months, so I guess what I meant better is which option would be better to rebuild credit and buy a home in the future?

[Anonymous]

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@icloud987 wrote:

Thanks for your valuable input.

Regarding "better"
I saw some of my original creditors offering me: 1) pay in full or 2) pay less. However, the debt has been listed as" over 180 days late and charged off."

I don't know which one would be better in the long run? I plan to buy a house in the next 24-27 months, so I guess what I meant better is which option would be better to rebuild credit and buy a home in the future?

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@icloud987Just make sure you get a PFD (pay 4 delete). Settled or full affects your pocket

[dragontears]

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@icloud987 wrote:

Thanks for your valuable input.

Regarding "better"
I saw some of my original creditors offering me: 1) pay in full or 2) pay less. However, the debt has been listed as" over 180 days late and charged off."

I don't know which one would be better in the long run? I plan to buy a house in the next 24-27 months, so I guess what I meant better is which option would be better to rebuild credit and buy a home in the future?

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Since this is an OC the odds of getting a PFD is small (very few lenders will, PFD has much better odds with CA) it is going to remain for the 7 years from DOFD. From a scoring perspective there is no difference between a CO that was settled vs. PIF.

To the best of my knowledge, no mortgage underwriter will care about a debt that was paid years ago if you stick to your timeline of 2 years and even if you bought before 2 years they still don't care about settled vs paid in full (you may have to write a LOE for some underwriters about the CO part).

[Anonymous]

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@icloud987 wrote:

hank you so much. Your reply is constructive.
To confirm, you meant I could ask the CA to send me the agreement in writing first and then pay them after receiving the deal?

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@dragontears I apologize, you're absolutely correct if it's a chargeoff. I just skimmed above where they said CA, so I was thinking it was a collection. Wait a minute he said it was sold to a debt collector?

if I'm wrong I apologize. 

[icloud987]

Thank you. I heard of the pay to delete, do you know if I can ask OC to do that too? Or probably only the collectors? I heard OC won't do that even if I pay in full? Do you mean to get it in writing before I pay? I also heard they don't give anything in writing. Very concerned about falling into traps. 

[icloud987]

Thank you so much. The reason I was thinking about paying in full is my score is slightly below 500 now, when I use the Fico simulator, it shows if I pay all debt off in full ( charged-off accounts ) My score will be about 620 in 24 months which would be barely enough to get a home loan.

So I assumed if I settle for less, my score would be even lower and maybe too low to get a home loan after 24 months?

If there is no score difference in 2 years whether I paid in full or settled, I don't see any point in paying in full then? 

Can you share when it is good to pay in full? Is it only good before my debt charged off and before my score dropped?

I am new to all this.