Paying Off Accounts in Charge Off (Update 6.29)

[satio]

I am an older fellow with 30+ years of credit history however 2012-2013 was a very rough period personally and financially.

I have recovered from that now and am working to rebuild my credit worthiness.

May 2019 Fico8 Scores

EQ 589

EX 589

TU 610

I have (2) active CC accounts (USAA and Discover) with a total of 7200 CL which I have been able to pay to zero balance. I let a couple of things post to the USAA account each month that I have been paying off in total each month.

I settled and paid off a Cap1 account that was owned by Portfolio Recovery and that has been removed within the last 30 days.

The remaining ugly marks are three CCs from Cap1 that were charged off in 2014.

CAP1 $6831 (appears on EQ TU) (Appears to not be placed with CA and still with Cap1)
CAP1 $4739 (appears on EX EQ TU) (Judgement from Moss Law with offer letter dated Jan 2019 good till May 31)
CAP1 $2051 (appears on EX EQ TU) (Judgement from Moss Law with offer letter dated Jan 2019 good till May 31)

All (3) of these are still being reported to by Cap1 as deliquent each month.

The accounts with Judgements from Moss Law acting on behalf of Cap1 I have received settlement letters for basically 50% of the balance owed. I have not yet contacted Cap1 regarding the account balance of $6831.

I have the financial means to settle all of these accounts (preferably of course with the lowest dollar amount possible). I realize that the trade lines will not be deleted but would want them to at least be reported as paid in full with 0 balance.

I have not contacted Moss Law or Cap1 as of this writing but I am ready to take action.

One concern is the settlement offers from Moss Law (with payee to be Cap1 for amount to be paid) includes a release with a clause that by my reading does not assure me that *anything* will be reported to the 3 credit bureaus.

I am hoping I could settle the $6831 for a similar 50% amount but as stated I have not yet contacted Capital One.

If I can settle all of this for 50% balance, I am ready to do it but I hate to fork over 7k and not end up with these at least being reported as paid to EX EQ and TU.

What do others that have been down this road before me have to suggest as the best course of action to take to have assurance that at least the accounts will be shown as paid in full and end the perpetual derogatory late payment reporting?

Of course, any other advice regarding the process of recovery is welcomed.

[RobertEG]

Once information has been reported to a CRA, then FCRA 623(a)(2) imposes a statutory requirement that the furnisher must promptly update that information so as to reflect its current accuracy.

That means that if a creditor accepts a payment as settlement of the debt, they MUST promptly update their reporting to show a new and current non-delinquency status of paid or paid/settled for less, and update the debt balance to $0.

There is no express need for written confirmation that they make such update, as it is a requirement of statute.

Their only alternative is to delete their reporting, and thus obviate any need to correct its accuracy.

If you settle for less than the full amount of the debt, they have the right to add the designation of paid/settled for less than the full amount.

You can, as part of your negotiation, ask for agreement not to report settled for less, which will then result in a status showing only that the debt was paid,thus making it appear in your credit report the same as if it had been paid in full.

However, absent such a clear and explicit agreement prior to settling, they have the right to include the statement that it was settled for less.

[Anonymous]

satio, great question and I hope you don't mind me asking a related question in your thread.

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@RobertEG wrote:

Once information has been reported to a CRA, then FCRA 623(a)(2) imposes a statutory requirement that the furnisher must promptly update that information so as to reflect its current accuracy.

That means that if a creditor accepts a payment as settlement of the debt, they MUST promptly update their reporting to show a new and current non-delinquency status of paid or paid/settled for less, and update the debt balance to $0.

There is no express need for written confirmation that they make such update, as it is a requirement of statute.

Their only alternative is to delete their reporting, and thus obviate any need to correct its accuracy.

If you settle for less than the full amount of the debt, they have the right to add the designation of paid/settled for less than the full amount.

You can, as part of your negotiation, ask for agreement not to report settled for less, which will then result in a status showing only that the debt was paid,thus making it appear in your credit report the same as if it had been paid in full.

However, absent such a clear and explicit agreement prior to settling, they have the right to include the statement that it was settled for less.

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RobertEG, can a person also, as part of the negotiation, ask that the tradeline be deleted from the credit report after settled in full or settled for less? Isn't this a more favorable action as opposed to the tradeline remaining on the CR with a paid notation?

[satio]

Thank you Robert.

This was the sort of confirmation I was hoping to receive in response to my inquiry.

My  belief and understanding is these (3) accounts are of course the major factor in what is holding scores down with their delinquent status continuing to be reported each month. If they are marked paid or even paid/settled for less they will at least be "closed" like other accounts and the deliquency can age.

As far as the other members question at least from my reading on the topic, requesting complete deletion of the tradeline (Pay For Delete) is something one can certainly ask for but very unlikely in the case of a CC account charge off as it is in respect a violation of the CRA rules, re: to act like something that was previously reported by an OC to be changed as though it never existed.

[RobertEG]

Yes, you can make an offer that is contingent upon their deletion of the entire account.

You can include any provision in a proposed contract offer as long as it does not violate some provision of law/regulation.

The issue is not that such an agreement would be prohibited as being an illegal provision, but rather that it is contrary to the established business practice established by the CRAs, who include in their credit reporting manual and incorparate into their credit reporting agreements the policy that furnishers should not delete accurate information based on payment of the debt.

A furnisher is not required to report anything to a CRA, and has the right to delete their entire account, so CRA policy does not legally bar deletion.

[Anonymous]

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@RobertEG wrote:

Yes, you can make an offer that is contingent upon their deletion of the entire account.

You can include any provision in a proposed contract offer as long as it does not violate some provision of law/regulation.

The issue is not that such an agreement would be prohibited as being an illegal provision, but rather that it is contrary to the established business practice established by the CRAs, who include in their credit reporting manual and incorparate into their credit reporting agreements the policy that furnishers should not delete accurate information based on payment of the debt.

A furnisher is not required to report anything to a CRA, and has the right to delete their entire account, so CRA policy does not legally bar deletion.

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What is the specific document section one should refer to when negotiating this type of settlement for deletion? In my experience, when I have asked that they delete the tradeline after them receiving my payment, the creditor/colllection agency will reply that doing such thing would be illegal and therefore not possible (and they will state something along the lines that they can't remove accurate information). Since it would not be illegal for creditors to delete tradelines after settlement, it would just be a matter of the creditor understanding this. However, understandably they also can't just take someone's word for it. Giving the creditors a reference to a legal provision where they can verify themselves that it's not illegal to remove the tradeline would be useful I believe.

[RobertEG]

There is no specific section of statute or regulation that states that a party who has reported adverse information to a CRA is permitted to thereafter report deletion of that adverse information upon payment/settlement of the debt.

There is also no specific section of statute or regulation that states that a party cannot.

The statutory requirements are set forth under FCRA 623(a)(1), which states that it is a violation to report information that is knowingly inaccurate, and FCRA 623(a)(2), which requires that after a party has reported information to a CRA, they are then obligated to update that reporting if it later becomes inaccurate.

Neither of those sections of statute state that it is a violation to delete previously reported information, even if it is accurate.

Deletion is generally not considered to be reporting of knowingly inaccurate information, as absence of reporting is not willful reporting of an inaccuracy.  Similarly, deletion once paid is not a lack of update that fails to correct previously reported information.

Thus, the statement that it is "illegal" to delete can be argued to be an incorrect statement of the law, but a creditor or debt collector does not need to provide any supporting reason for denial of a discretionary deletion.  All they need do is deny.

While not illegal, it is not in compliance with their business agreement that accepts CRA reporting policy as a condition of reporting to the CRAs, so they have clear basis for denying any pay for deletion request.

Showing them that they are wrong in asserting that it is illegal to grant a pay for deletion request does not then equate to an obligation on their part to grant such a deletion.  It may, in fact, harden their position.....

[satio]

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@RobertEG wrote:

Once information has been reported to a CRA, then FCRA 623(a)(2) imposes a statutory requirement that the furnisher must promptly update that information so as to reflect its current accuracy.

That means that if a creditor accepts a payment as settlement of the debt, they MUST promptly update their reporting to show a new and current non-delinquency status of paid or paid/settled for less, and update the debt balance to $0.

There is no express need for written confirmation that they make such update, as it is a requirement of statute.

Their only alternative is to delete their reporting, and thus obviate any need to correct its accuracy.

If you settle for less than the full amount of the debt, they have the right to add the designation of paid/settled for less than the full amount.

You can, as part of your negotiation, ask for agreement not to report settled for less, which will then result in a status showing only that the debt was paid,thus making it appear in your credit report the same as if it had been paid in full.

However, absent such a clear and explicit agreement prior to settling, they have the right to include the statement that it was settled for less.

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I settled (2) Cap1 accounts for 50% of the balance in May. The accounts finally have updated as of 6/28/2019 (normally they were reporting on the 5th of each month as FP).

For June, they have reported them as FP again  (on EX so far) with the balance being reduced by 50% not paid to 0. I realize that Cap1 may add a designation for Settled for Less but was expecting these to now show paid in full and certainly not another month of FP.

I have seen a 37 point increase as a result but this is still not accurate.

Cap1 still owns these debts but they were settled via Moss Law who acts as an attorney agent for Cap1.

If you were in my shoes, what would you do next? I guess I will contact Moss Law first and then depending on the results of that should initiate a dispute?

[BallBounces]

If Iwere in your shoes, and I have been, I would contact both Cap1 and the attorney, but I would also give it an additional month before disputing anything or putting it in writing.

Your mileage may vary.

[Anonymous]

What was your utilization on that account before you settled it.