Settling Capital One Charge Offs - Negotiating a Deal

[Anonymous]

Hi all,

I have two charged off Capital One card accounts and both were charged off December 2019. One is about $652 and the other $664. They are currently with Capital One in their recovery department. I feel like if I wait until December 2020, things will hit the fan since it'll be a year. Plus I heard Capital One is good for suing. I called to see my options and they said that they can settle for 70% of the payment of each and I could make a payment plan to pay them. Not too bad but I'd rather pay 50% and if possible in a lump sum to get them out the way. However, I thought about tax time and having that remaining balance be counted as income. I have been saving up to pay them off and I for sure can't pay the full balance which is good they offered just the 70%. Should I just pursue their offer or go forward with another plan? TIA!

[Anonymous]

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@Anonymous wrote:

Hi all,

I have two charged off Capital One card accounts and both were charged off December 2019. One is about $652 and the other $664. They are currently with Capital One in their recovery department. I feel like if I wait until December 2020, things will hit the fan since it'll be a year. Plus I heard Capital One is good for suing. I called to see my options and they said that they can settle for 70% of the payment of each and I could make a payment plan to pay them. Not too bad but I'd rather pay 50% and if possible in a lump sum to get them out the way. However, I thought about tax time and having that remaining balance be counted as income. I have been saving up to pay them off and I for sure can't pay the full balance which is good they offered just the 70%. Should I just pursue their offer or go forward with another plan? TIA!

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IME, the big discounts aren't usually through the creditor and when they are fairly new. Deep discounts are usually through debt buyers thst pick up these debts for pennies on the dollar and outside the SOL.

I personally think 70% (or 30% off) is a good deal for such a new debt. 

Did you ask if they would take 50% in a lump sum?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Hi all,

I have two charged off Capital One card accounts and both were charged off December 2019. One is about $652 and the other $664. They are currently with Capital One in their recovery department. I feel like if I wait until December 2020, things will hit the fan since it'll be a year. Plus I heard Capital One is good for suing. I called to see my options and they said that they can settle for 70% of the payment of each and I could make a payment plan to pay them. Not too bad but I'd rather pay 50% and if possible in a lump sum to get them out the way. However, I thought about tax time and having that remaining balance be counted as income. I have been saving up to pay them off and I for sure can't pay the full balance which is good they offered just the 70%. Should I just pursue their offer or go forward with another plan? TIA!

---

IME, the big discounts aren't usually through the creditor and when they are fairly new. Deep discounts are usually through debt buyers thst pick up these debts for pennies on the dollar and outside the SOL.

I personally think 70% (or 30% off) is a good deal for such a new debt. 

Did you ask if they would take 50% in a lump sum?

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Thanks for your input! I didn't call yet, but I wasn't sure if I was jumping the gun if I ask for 50% or stick with 70%.

[Anonymous]

I'm going to try calling and see what happens! I'll keep you all posted.

[blindambition]

You can try for 50% in lump sum, but 70% is a good deal. Settle with their Recovery dept. Less headache than dealing with CA or civil suit. Although, lawsuit most unlikely with those balances.

Once paid and reporting 0, start GW campaign to remove lates from reports. They have been granting some recently, but most are older than 24 months.

[Anonymous]

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@blindambition wrote:

You can try for 50% in lump sum, but 70% is a good deal. Settle with their Recovery dept. Less headache than dealing with CA or civil suit. Although, lawsuit most unlikely with those balances.

Once paid and reporting 0, start GW campaign to remove lates from reports. They have been granting some recently, but most are older than 24 months.

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Thanks I will try that GW letter!

So I did call and lo and behold, it was successful! I asked what would happen if I paid 50% with a lump sum and the guy put me on hold to speak with his supervisor. When he returned, he said he will accept the 50% offer for both accounts. I’m so excited and even though the remaining balance would probably be considered income during tax time, I’m just happy to get this out of the way while I have it. 

I’m trying to think of factors of why it may have worked in my favor:

• My payments were on time for a long time before things went south.
• I do have a long record with Capital One as a customer since the ING days. Maybe a factor but unsure.
• I asked the right questions and was polite about everything.
• It was a win/win deal! 

All of these factors are assumptions and YMMV so be aware lol

[OmarGB9]

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@Anonymous wrote:

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@blindambition wrote:

You can try for 50% in lump sum, but 70% is a good deal. Settle with their Recovery dept. Less headache than dealing with CA or civil suit. Although, lawsuit most unlikely with those balances.

Once paid and reporting 0, start GW campaign to remove lates from reports. They have been granting some recently, but most are older than 24 months.

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Thanks I will try that GW letter!

So I did call and lo and behold, it was successful! I asked what would happen if I paid 50% with a lump sum and the guy put me on hold to speak with his supervisor. When he returned, he said he will accept the 50% offer for both accounts. I’m so excited and even though the remaining balance would probably be considered income during tax time, I’m just happy to get this out of the way while I have it. 

I’m trying to think of factors of why it may have worked in my favor:

• My payments were on time for a long time before things went south.
• I do have a long record with Capital One as a customer since the ING days. Maybe a factor but unsure.
• I asked the right questions and was polite about everything.
• It was a win/win deal! 

All of these factors are assumptions and YMMV so be aware lol

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Congrats on taking care of it! It does feel good to rid one's self of bad debt. And yes, if they forgive $600+ of debt, that will count as income for next year and you'll be taxed on it.

[RobertEG]

If you reach a settlement for less than the full amount of a debt, then yes, the IRS normally considers the difference to be taxable "income" in the year it was settled.

However, that is not without exception.

Under the tax code, if you submit the required showing to the IRS that you were "insolvent" at the time of settlement, then there is no tax obligation.  Insolvent means you must submit documention showing that your total debts exceeded your total assets.

You should consult an accountant before simply accepting a form 1099c as a taxable obligation and paying tax on the settlement difference.......