>I received a letter from Revco Solutions offering to settle for 50%, which terrifies me because I assume that this will
now be reported as a collection. It does not show as a CA account on any of my CRs so far, but I just got the letter. I heard on this forum that USAA no longer sells debt and just uses the collection agencies as a tool, but I'm not sure. And I'm very fearful that this will show as a collection in the near future.
I attempted to pay the amount to USAA, but they informed me over the phone that Revco is handling the debt and I would need to work with them. Seems strange if they haven't actually sold the debt, which I am assuming they did.
An original creditor doesn't have to sell the debt to involve a CA. USAA has probably hired Revco to collect the debt on their behalf. When this happens, the CA may or may not report the debt in collections to the CRAs. They can, but they don't always. If the original CO acct still shows a balance, USAA has most likely not sold the debt, but has given collection authority to Revco.
>Should I work with the company to settle at 50% and hope for the best, knowing that my SOL timeline might be reset? Will USAA report as settled, or can I negotiate with Revco to state PIF and put in writing that they will not report the CA to the bureaus?
If you're financially able, I would take the 50% settlement. Revco is just collecting on USAA's behalf, and will turn the money (minus their fees) to USAA. If Revco will send you an email/letter stating they will accept 50% of the balance to consider the account 'settled in full', there's no possible SOL implications. You pay, the account is closed, end of story. USAA will then report the charged off account with a $0 balance and a remark 'legally settled for less than the full amount' or something similar. They're not going to mark it PIF if you settle it, and they're not going to PFD. Score wise, there is no difference whatsoever between PIF or settled for less. Settling this account will stop the balance from affecting your installment utilization %, and will allow it to begin to age until it dies a slow death 7 1/2 years from DoFD. You can attempt a sort of 'preemptive' PFD with Revco to make sure they don't report a paid collection tradeline on your reports in addition to the original charged off account. Not sure if Revco has any intention of ever reporting as a CA or not.
For the utility collection, call the electric company, and ask them to recall the debt in exchange for your payment. If they agree, the CA will disappear from your reports entirely. Don't put too much focus on VantageScore 3.0 scores. They're all but irrelevant to lenders. Track FICO scores through the various sites/apps available (myFICO.com, credit.com, experian.com, Discover Credit Scorecard, etc.).
@AmericanSkin wrote:Thank you for the detailed response, much appreciated.
Since TU is the only CRB reporting an "open" status on this CO and the only bureau that is currently including the balance in my utilization score, I imagine that the settled CO will update last activity for the other two CRBs and cause a fairly significant drop in score?
It depends. When was the last time the CO acct was updated with the other 2?
>Both EQ and EXP have the account updating monthly as "closed" rather than open, with the most recent status of AUG 21 as "CO" on payment history.
Since the CO acct is being updated monthly by all 3 CRAs, there should be no score decrease by paying/settling the account. If anything, you could see an increase when the balance is reported to $0 as it will stop affecting utilization metrics. 3rd party apps do a poor job of showing your actual utilization %. If this CO is being reported monthly with a balance to all 3 CRAs, (open or closed doesn't matter) it's definitely affecting your utilization % on all 3.
>Regardless, it looks like the only issue I might have in the future is mortgage lending based on the "Settled" as opposed to PIF.
I've read the various statements about settled looking worse to potential lenders than PIF, and it makes sense that it would. I'll just say this...I feel like its impact is greatly exaggerated. FICO scoring models make no distinction score wise between PIF or settled for less, and most mortgage lenders simply require that all CO/CA accounts are paid, and that the middle score of your FICO 2,4,5 scores is in their approval range. I think you're fine to settle this account. The verbiage you need to see from the CA is that the account will be considered 'settled in full' for the amount you agree to pay. Then, they have no recourse to attempt to collect the unpaid difference from the original balance. Once you have that in an email/letter, I think you're safe to pay them. Good luck!