Target Red Card settlement charges the account off.

[Cleaningitup2016]

I am literally at the point of tears as I type this.

I keep doing everything to fix my credit and it seems like every action I take makes it even worse. It is no wonder why people get so depressed because the cards are never in your favor.

Two months ago I called Target to see what kind of payment plan I could set up because I was getting behind.

They informed me I could settle the account for about 50% of what is owed.

NOTE: My account was only a month late..and nowhere near the point of charging off.

So I enterered into the settlement and noticed all was good. They never took a payment out and I called to ask why.

They made a typo on my bank account number.

The rep read a disclosure to me and stated that in order for the settlement to process...the account would need to charge off.

The previous rep never mentioned this to me.

I've never heard of an account needing to charge off to reach a settlement. I am not sure what to do.

[RobertEG]

If the debt was only a month late, it was well below the federal regulation guidelines, which generally impose a CO on installment loans at 120-late,  and revolving deny ay 180-late.  While being below those levels does not preclude a CO, some other mitigating factor would normally be required, such as a prior major delinquency chain, or multiple prior chains of delinquency.

Was this you only chain of delinquency?

I would speculate that since the rep tied the grant of a settlement for less as triggering the taking of a CO, that the rep misunderstands what a chareg-off is.

Paying a debt cannot serve as an indicator that a consumrt is unlikely to pay a debt, which is what a charge-off is predicated upon.

Clearly, a negotiation to pay is just the opposite.

Further, it is likely that the rep confused the cancellation of a portion of the debt by accepting a settlement for less, with the need to report the settlement difference to the IRS as cancelled debt if $600 or more by sending a form 1099c, as somehow being a charge-off based on the debt then being determined as unlikely to be paid..

A CO does not cancel any debt obligation, and is totally unrelated to agreement to settle for less.

Finally, federal charge-off regs make NO reference to a settlement for less mandating the taking of an accounting charge-off.

I would call the creditor and speak with a management official versed in the regs and  request review of the incorrect interpretation made by the rep.

I would place a call to their exec office, which will put you in contact with someone who knows the regs and procedures.

[Remedios]

Seeing how Robert addressed your main question, I'll just touch on another issue here 

It's very important that you pay equal attention to creating emergency fund, not just cleaning up your credit. 

Rebuilding is extremely hard if you cannot keep up with minimum payments on existing open accounts. 

Rebuilding starts with budgeting and making commitment to sound financial decisions. If you fell behind, that's a sign you may need to work on budget and spending. The idea is to avoid getting in any kind of additional debt. Using cards for items you cannot afford, especially on store cards with huge APRs is never a good idea. 

I'm assuming you're diverting cash to pay for existing collections and that's great, but not if comes at the expense of creating new delinquencies. 

If this was me, I'd go back to the drawing board and work on budget. Move slowly, pay old accounts when you can afford to do so. 

Good luck 

[BallBounces]

It sounds to me, at a minimum, there is a misunderstanding of terms and possibly worse.

You were not offering a payment arrangement, you were offering a settlement arrangement.

In general, if you have cancellation of debt because your debt is forgiven, or discharged for less than the amount you must pay, then the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.  The lender may be required to send you a 1099-C.

We can look it up, but it is very unlikely that arrangement requires (or even allows?) a CO.

Edit: Robert may have explained it better.....

By the way, I am concerned that you were late more than 2 months ago, and a payment has not been paid since then.  Is it possible the delinquency has now reached CO time  frames?

[Cleaningitup2016]

Not sure..the department that handles that type of stuff is rude and act like they read off a script.

I'm not even 30 and have noticed how terrible customer service has become with major companies in the past 10 years.

I had them remove the settlement...I'll just pay it normally off so it doesn't trigger a CO.

Easy answer is to just improve my income..but easier said than done.

I'm paying around $400/mo in cards plus $800 for rent...$250 for a car..$110 for insurance for it..$115 for electric..$25 for gas..$75 for internet. So yes it's not easy to try to pay everything. My main focus is keeping all current accounts paid and slowly paying off collections and closed/charged off accounts.

[Remedios]

It will happen in time. Take it slow.
You dont want this stuff causing you that much stress and anxiety.

Keep reminding yourself you're only 30. You have time on your side.

[Cleaningitup2016]

Update: On Friday June 6th I called and spoke to someone at Target RC who agreed with me that the way Target was handling this account "Was a mess" and promised "to have someone above me look into it".

I also made sure she put into notes on my account that she was doing this.

Today I call them and had a rep transfer the call to a supervisor.

I asked them why this was never done and they stated "I was not privy to the call you placed".

I asked him to have the call reviewed and heard him stiffle a laugh and said "I can't do that".

When I called him out for laughing at me, he lied and said "I didn't laugh!".

Knowing from previous experience with Target RC, I specifically asked him to review the notes from June 6th.

He BUSTED OUT LAUGHING and said "not gonna happen".

So it is apparent that something in those notes admits wrong doing hence why he did not wish to read them to me.

I'm getting a little sick and tired of these "too big too fail" companies treating people like dirt and not being held accountable for it.