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Pay charged off debt in full or settle for less?

MichaelMyers
Regular Contributor

Re: Pay charged off debt in full or settle for less?

I would settle, if you can. I just settled a charge-off that was still with the original creditor. My FICO score went up 19 points once the zero balance posted to my reports. 

Message 21 of 27
icloud987
New Contributor

Re: Pay charged off debt in full or settle for less?

Thank you. Would you please share the process of settling? Did you get the agreement in writing first? Did you talk to them on the phone and ask them to send you the agreement in writing? Then you send out payments after you received the agreement letter? Did you use cashier checks? I am very anxious about doing it wrong and lose money, still owe the debt.

You meant settlement is better than bankruptcy ,right?

Message 22 of 27
MichaelMyers
Regular Contributor

Re: Pay charged off debt in full or settle for less?


@icloud987 wrote:

Thank you. Would you please share the process of settling? Did you get the agreement in writing first? Did you talk to them on the phone and ask them to send you the agreement in writing? Then you send out payments after you received the agreement letter? Did you use cashier checks? I am very anxious about doing it wrong and lose money, still owe the debt.

You meant settlement is better than bankruptcy ,right?


My debt was with Comenity bank. I called them and asked if there was an amount I could pay to settle the debt. They said yes and gave me the amount. I paid over the phone with a debit card and he immediately emailed me a letter stating the debt was paid and settled. The next month they reported a zero balance to the bureaus. 

 

It's a good idea to get it in writing beforehand but each company has their own policy on how they handle it. Ask first if the payment settles the debt completely and will report as paid, settled with a zero balance. Also, I wouldn't use my debit card with collection agencies. Use a check for them. Keep in mind the original creditor may not give you a pay for delete but some collection agencies do, such as Portfolio Associates. 

 

If you can't pay your debts and need to file bankruptcy, then there's no point in settling ANY of the debts. The sooner you file, the sooner you can begin to put it behind you and recover. Your score will rebound. 🙂

Message 23 of 27
icloud987
New Contributor

Re: Pay charged off debt in full or settle for less?


@MichaelMyers wrote:

@icloud987 wrote:

Thank you. Would you please share the process of settling? Did you get the agreement in writing first? Did you talk to them on the phone and ask them to send you the agreement in writing? Then you send out payments after you received the agreement letter? Did you use cashier checks? I am very anxious about doing it wrong and lose money, still owe the debt.

You meant settlement is better than bankruptcy ,right?


My debt was with Comenity bank. I called them and asked if there was an amount I could pay to settle the debt. They said yes and gave me the amount. I paid over the phone with a debit card and he immediately emailed me a letter stating the debt was paid and settled. The next month they reported a zero balance to the bureaus. 

 

It's a good idea to get it in writing beforehand but each company has their own policy on how they handle it. Ask first if the payment settles the debt completely and will report as paid, settled with a zero balance. Also, I wouldn't use my debit card with collection agencies. Use a check for them. Keep in mind the original creditor may not give you a pay for delete but some collection agencies do, such as Portfolio Associates. 

 

If you can't pay your debts and need to file bankruptcy, then there's no point in settling ANY of the debts. The sooner you file, the sooner you can begin to put it behind you and recover. Your score will rebound. 🙂


Sorry for my late response. I truly appreciate you sharing this with me. I was hoping I could find a credit card collection department email and discuss it with them in writing,I don't feel comfortable talking about it over the phone. 

Thanks for your insight. 

 

Message 24 of 27
WannaBcreditNerd
Frequent Contributor

Re: Pay charged off debt in full or settle for less?


@MichaelMyers wrote:

I would settle, if you can. I just settled a charge-off that was still with the original creditor. My FICO score went up 19 points once the zero balance posted to my reports. 


That is awesome, did they say you settled for less?

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

Message 25 of 27
MichaelMyers
Regular Contributor

Re: Pay charged off debt in full or settle for less?

Yes. My report says settled for less and the balance is zero.
Message 26 of 27
WannaBcreditNerd
Frequent Contributor

Re: Pay charged off debt in full or settle for less?


@MichaelMyers wrote:
Yes. My report says settled for less and the balance is zero.

Well I settle a large charge off for less.

they changed it from a charge off to a collection on the comment section of the account.

The comments also state paid in full/settled for less than full balance and then listed what the original balance was that was owed. Then they reported what my last payment was.

My score dropped 15 points.

That is ok the lingering laters are now gone and in about 1.5 years the account will age off.

 

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

Message 27 of 27
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