Sold mom's house.......paying off years of debt, best practice for BAD debt?

[Anonymous]

I'm new to having this kind of money to be able to pay off my debt.....so I want to be practical about it.  I've already paid off the current credit that I used and won't use after this.  When it comes to the bad debtors, who show up as chargeoffs with a 0 balance who have been bought by debt collectors, who do I pay?  I would prefer to work it out with the original company, and I want both the original company to be removed from my credit report plus the debt collector, so how does that work.

Any help would be appreciated, I've lived with bad debt for so long, this is a huge sigh of relief, but I'm also panicked at the fact that I'm paying this all off and the amounts are so high.

[HRZ780]

No matter what the report shows as the collection agency, I would suggest that you always contact the original lender first to find out they can be paid directly.  If you find they will accept payment directly, great.  You have a good chance that you can get them to remove all the derogatory listing(s) in exchange for a payment.  It's also sometimes easier to negotiate a lesser amount with them after a C/O, as well.  Then again, some aren't so easy and will stick to the original amount.  If they refer you to the collection agency or whomever now holds the debt, move onto them and attempt to negotiate payment less than full amount owed and ask for PFD (pay for delete), etc.  Always, if you can pay less AND get it removed, go that route!

[RobertEG]

Start with determining who can accept payment rather than simply deciding who you would prefer to make the payment to.

That will provide you with your legal options, after which you can then decide which route to take.

Legally, a creditor can continue to accept payment provided they still own the debt.  If they have an assigned debt collector who is acting as their agent, but the creditor still owns the debt, they have the option of either accepting payment directly from you, or requiring that you use their assigned debt collector for any negotiations and/or payments.

However, once the creditor has sold the debt to another party, they can no longer legally accept payment from you, as there is no longer any debt owed to them.  In that event, you can only deal with and pay the new owner (or their agent).

If a creditor updates their reporting with a CRA to show $0 balance, that is effectively their statement that they have sold, and thus no longer own, the debt.  In that event, they are out of the payment picture, and can no longer accept payment. 

A second indication of sale of the debt can be found in any dunning notice sent by the debt collector.  One requirement in a dunning notice is that they identify who collection is being carried out for (i.e., who is the current owner).  See FDCPA 809(a).

However, if in doubt, you can always contact the creditor to confirm that they have actually sold the debt.

[Shooting-For-800]

I would pay them in order of lowest negotiated ratio to original balance.

Tell them you might be able to borrow some money from family but not enough to pay off all debt.

Open a separate checking account and write one check at a time and only deposit the amount you are paying at that time (plus $100)

Old debt should be able to be settled for 30-60% of original balance.