Settlement Offer for Repossession

Anonymous · ‎03-25-2015

Good Morning all!

I need your expertise. I had a car repossed in 2010, the remaining balance is about 9,700. Until earlier this month it was just reported as a CO with the auto company. Well now I received a notify us in 30 days letter with a settlement offer of 2,300. They will report it "settled in full". The verbage at the end says basically: the debt is too old to be sued for due to SOL in your state, SOL can be renewed if you make a payment on this debt or sign something admitting to the debt. I want to buy a house the end of the year so this debt has to be taken care of. My questions:

1. How do I go about contacting them? I don't want to restart my SOL.

2. Would it be better to my score if I paid in full or settle?

3. If I attempted a PFD (in this case pay so it doesn't appear since this company isn't on my report), will that possibly restart the clock?

4. If I settled the debt, will that be counted as making a payment and the SOL will renew?

5 This debt already appears on my report, but when the new company reports, will my score take a hit?

6. What would you do?

Anonymous · ‎03-25-2015

@Anonymous wrote:
Good Morning all!

I need your expertise. I had a car repossed in 2010, the remaining balance is about 9,700. Until earlier this month it was just reported as a CO with the auto company. Well now I received a notify us in 30 days letter with a settlement offer of 2,300. They will report it "settled in full". The verbage at the end says basically: the debt is too old to be sued for due to SOL in your state, SOL can be renewed if you make a payment on this debt or sign something admitting to the debt. I want to buy a house the end of the year so this debt has to be taken care of. My questions:

1. How do I go about contacting them? I don't want to restart my SOL.
2. Would it be better to my score if I paid in full or settle?
3. If I attempted a PFD (in this case pay so it doesn't appear since this company isn't on my report), will that possibly restart the clock?
4. If I settled the debt, will that be counted as making a payment and the SOL will renew?
5 This debt already appears on my report, but when the new company reports, will my score take a hit?
6. What would you do?

First off, lets be clear that SOL bears no relation at all on the Credit Reporting Time (CRTP). That is based solely on the original default date (DoFD) and nothing ever lawfully changes that. SOL only determines how long a creditor has to use the court system to ask for legal redress for the default.

OK, here's the thing that people misunderstand or don't know concerning "SOL" and "SOL Renewal" (or reset). SOL is ALWAYS based on a "Cause of Action", which is just legal speak for harming another person (or legal entity like a business) in some way. So for an SOL (on a debt) to be renewed, there must be a new 'harm' done to the business entity holding the debt. Making payments, or signing something 'admitting to the debt' are not in themselves, harmful actions that create a new SOL. The 'cause of action' occurs when one makes payment arrangements on an old debt but FAILS to make all of the arranged payments. In some states a verbal agreement to make payments and then not making payments at all is sufficient to establish a new cause of action. In about a dozen states, their statutes specifically require a written and signed repayment agreement to be in place before a second cause of action can occur.

Settling in no way establishes a second cause of action. As long as you have sufficient proof of a settlement agreement, either in writing, or a recording of a verbal agreement, the creditor would not have a legal leg to stand on.

So - the question remains...Has a collector already reported this on your reports as a collection? Or is this offer coming from the Original Creditor?

Anonymous · ‎03-25-2015

I'm trying to determine what to do with my auto charge off as well. I figure settling is best because right now the 13 grand showing is killing his score because it's figured in debt ratio. As well as the fact they are reporting it charged off monthly with updated balance because I have a payment arrangement for 100 bucks a month with the collection agency they have hired to help collect. It's making it hard for me to get a PFD or any kind of deal on reporting though because collection agency says we don't know how ally will report all we can do is offer settlement and collect your money....

Anonymous · ‎03-25-2015

@Anonymous wrote:
@Anonymous wrote:
Good Morning all!

I need your expertise. I had a car repossed in 2010, the remaining balance is about 9,700. Until earlier this month it was just reported as a CO with the auto company. Well now I received a notify us in 30 days letter with a settlement offer of 2,300. They will report it "settled in full". The verbage at the end says basically: the debt is too old to be sued for due to SOL in your state, SOL can be renewed if you make a payment on this debt or sign something admitting to the debt. I want to buy a house the end of the year so this debt has to be taken care of. My questions:

1. How do I go about contacting them? I don't want to restart my SOL.
2. Would it be better to my score if I paid in full or settle?
3. If I attempted a PFD (in this case pay so it doesn't appear since this company isn't on my report), will that possibly restart the clock?
4. If I settled the debt, will that be counted as making a payment and the SOL will renew?
5 This debt already appears on my report, but when the new company reports, will my score take a hit?
6. What would you do?
First off, lets be clear that SOL bears no relation at all on the Credit Reporting Time (CRTP). That is based solely on the original default date (DoFD) and nothing ever lawfully changes that. SOL only determines how long a creditor has to use the court system to ask for legal redress for the default.

OK, here's the thing that people misunderstand or don't know concerning "SOL" and "SOL Renewal" (or reset). SOL is ALWAYS based on a "Cause of Action", which is just legal speak for harming another person (or legal entity like a business) in some way. So for an SOL (on a debt) to be renewed, there must be a new 'harm' done to the business entity holding the debt. Making payments, or signing something 'admitting to the debt' are not in themselves, harmful actions that create a new SOL. The 'cause of action' occurs when one makes payment arrangements on an old debt but FAILS to make all of the arranged payments. In some states a verbal agreement to make payments and then not making payments at all is sufficient to establish a new cause of action. In about a dozen states, their statutes specifically require a written and signed repayment agreement to be in place before a second cause of action can occur.

Settling in no way establishes a second cause of action. As long as you have sufficient proof of a settlement agreement, either in writing, or a recording of a verbal agreement, the creditor would not have a legal leg to stand on.

So - the question remains...Has a collector already reported this on your reports as a collection? Or is this offer coming from the Original Creditor?

The Original Creditor is still reporting this debt with the balance owed. I assume they haven't reported the 0 balance to the CRAs since selling it to the collection agency. The Collection Agency hasn't reported it to the CRA yet, they just sent me the dunning notice. Should I DV it before settling? Why would they say it would renew the SOL then?

Anyway, would it be better towards my credit file to settle or pay in full?

Anonymous · ‎03-25-2015

Since it's out of SOL, you're in the driver's seat. Personally, I'd say not pay it; let it ride. But that's your call.

Be aware, if you settle for $2300, they could send you a 1099-C for debt foregiveness of the difference (not necessarily $9700 - $2300, but rather could be some lower value, if the debt was inflated since charge-off, depending on the OC's records), which could result in tax being owed to both the IRS, and possibly, your state. Not talking a huge amount of money in your situation, but something to be aware of.

Do not make payments. Paying the $2300 all at once will settle the matter, and there won't be any new SOL to worry about.

Paying won't help your credit score much, if at all, unless they delete. They may not offer to do that. Pull up your credit report (I'd suggest Experian or Equifax; TransUnion doesn't show DOFD, instead shows estimated date of removal) from AnnualCreditReport.com and see what the DOFD is. If it's, for example, July-2010, the TL could be removed early as Jan-2017; less than two years from now. TLs tend to be removed between 6.5 years and 7.5 years. Requesting early exclusion would be a viable option soon as late 2016.

Is the TL updating? If no, do not send a DV or even talk with the debt collector unless you intend to settle. Any contact with them could encourage them to start updating, which will likely hurt your scores even more.

Again, if it was me, I'd wait it out ... $2300 is a lot of money to pay an old, out of SOL debt to a "zombie" debt collector.

Anonymous · ‎03-25-2015

Unless you need to settle this to qualify for a home loan or some other reason you may not be inclined to settle this debt. As the debt holder admits it is beyond the SOL, for that matter you could pay them 1 cent and it is still profit for them. I assume this debt will fall off your credit report soon so perhaps waiting till then is best. Having said that I just settled a credit card debt for a small fraction of what was owed because I needed it to stop reporting as it was continuing to drag down my scores and keeping me from getting premium credit cards, I now have one more collection to negotatiate and then I will have no active collections. I suspect you could offer them less and still get the same result. I negotiated 900 down to 300 and and I sure I could have got it down lower but didn't want to waste time over a few bucks.

Anonymous · ‎03-25-2015

While ronpa makes a good argument for just letting it sit, there is the certain risk that doing so will make it be reported as a collection, on top of already being reported as a CO/Repo.

I would write them and CLEARLY tell them that you consider it to be 'old, time barred debt' that you are no longer legally responsible for paying but you are willing to explore the possibility of settling it 'only' to clear it from your reports or keep it from being reported. Offer them 10% of the original 9600 and see if they bite. I wouldn't settle for less than it being marked "paid in full".