Settling Old Debt with Northland Group and LVNV Funding
My financial troubles started in '06 at which point i could no longer pay my debts, including a personal loan and a couple cards. I won't bore you with details but I still haven't made any headway towards paying off this debt. No payments have been made and no contact has been made between myself and these creditors. At this point I have over 30, 000 in debt, most of which is student loans. As i understand it, the statute of limitations on my credit cards and personal loan has come and gone, so I don't have to worry about being sued. I think much of this debt should come off my credit report in the next year or two if I just sit tight. Please correct me if any of my assumptions are incorrect. Recently I received a letter from Northland Group Inc. informing me that I owe lvnv funding llc 1, 015.00, (citibank being the original creditor). The letter goes on to say that if I were to pay them 152.28 they would send me a letter confirming that the debt has been resolved.
I was wondering if it would be in my best interest to take this offer at this point?
Northland Group regularly collects debt on behalf of LVNV. Both companies can be considered debt collectors in their own right, but LVNV Funding is often viewed as more of a debt buyer.
Resolving debts with a collection agency like Northland Group or LVNV Funding
I am responding to your question about settling with LVNV Funding, through their collection agency Northland Group, while considering others will be reading this page later. As a result, some of what I am sharing will be general information that is mixed in with feedback specific to your offer to settle from Northland Group.
Citibank (and many other credit card issuers) regularly sell off debts that go unpaid more than 6 months. Your Citibank credit card sounds like it has gone unpaid for 5 or more years. If you are only now hearing from Northland Group with an offer to settle the Citibank account (on behalf of its owner LVNV Funding), I really doubt that LVNV bought the debt from Citibank. It is more likely that your Citibank credit card was sold to a different debt buyer originally, and maybe even exchanged hands several times, before landing with LVNV Funding. This is not uncommon. It also means, if my assumption is accurate, that LVNV will have paid bargain basement pricing to purchase the right and ownership of your Citibank account.
Settling a collection debt with Northland Group (LVNV Funding) at this stage can make sense, but it can also depend on your personal credit goals. Here are some questions I have:
- What are your future credit and financing needs for the next 1 to 2 years while you are waiting for the Citibank charge off entry on your credit report to fall off from age?
- Is LVNV reporting this collection account on your credit report too?
If you do have immediate or near term future credit goals, and with as much debt you mentioned having that has not been paid for years, settling with Northland Group, even if LVNV is reporting a collection item on your credit report, will have little to no value to your credit report. However, if you take a more broad approach to the outstanding debts, like settling other revolving consumer debts (credit cards and personal loans) with other collection agencies and debt buyers, than settling the old Citibank credit card with Northland Group would make sense.
If you do have other credit goals, and are interested in what it would take to start to improve your credit report, and get your debt to income ratio on your credit report in line with what lenders look for, post your other debts, balances owed, and who is collecting on them, in the comment section below (this goes for anyone reading this page too). I will give some targeted feedback to help you.
What is a normal settlement offer from a collection agency like Northland Group?
The settlement offer letter you received is not all that normal. I am pointing this out for later readers. The amounts you shared mean Northland Group is offering to settle with you for about 15% of what they say is now owed to LVNV. That likely has more to do with them recognizing the debt is past the statute of limitations in your state to legitimately sue you in order to collect. T
his also means you could just tell them to pound sand (figuratively).
A typical target for settling a collection account with a debt buyer like LVNV, or with a collection agency like Northland Group, is going to be multiples of that percentage when there is still room to sue and get you to pay.
Is it a great settlement offer? You bet it is. Should you take them up on it? Maybe not.
Settling with one collection agency can wake up other debt collectors.
With someone in your situation who has many debts outstanding, and in the hands of debt collectors, settling one account may breathe new life in to the collection efforts on your other old debts. This is not always the case, and certainly less so if your other collection accounts are past the SOL to sue, but this is a legitimate concern.
If a collection agency like Northland Group, or a debt buyer like LVNV Funding, is showing up on your credit report now; and you settle with them; and that settlement is updated and reflected on your credit report; other collection agencies paying attention may come out of the wood work. For you, that could lead to receiving more debt collector phone calls, and receiving debt collection letters, where all of that had mostly died down to this point. For someone who is not past the SOL with some of their collection debts, it can mean breathing life into debts that reach the point of aggressive collection actions, where that may have not been the case otherwise. If you’re going to potentially call attention to yourself by settling one debt, it is best to have a plan in place to resolve other debts that are not yet past the SOL to sue you.
Based on the little information I have to go on, if I were in your shoes, unless I had some specific credit goals I wanted or needed to accomplish in the next 2 years, I would not take Northland Group up on the offer. If I did have some goals in mind, like qualifying for a mortgage, I would first want to have a strategy for all other debts in place, and not just settle the LVNV account because it is a great offer.
For readers who are not past the SOL to be sued for collection, settling with Northland Group, LVNV Funding, or any collection accounts for that matter – when set beside credit goals like qualifying for a home loan, refinancing a mortgage, accessing new student loans – settling these types of collection debts for less, and getting a zero balance owed reflected on your credit report – makes a ton of sense.
You shared that much of the 30k in total debt outstanding is from student loans. Part of any strategy would be to look at bringing the student loans out of default if they are government backed student debt. Those are not going to go away regardless of whether they are on the credit report or not. Ignoring them for now if you cannot get them out of default can make sense from a pure monthly budget, and being light on cash flow perspective. But long term avoidance on government backed student loans is not a good idea. You could end up having tax refunds held back and other surprises later on.
If you can answer my question in the comments below, I can offer additional feedback. Anyone reading this page can post questions and specific details about dealing with Northland Group or LVNV Funding for feedback.
If you would like to talk over your situation on the phone you can reach me at 800-939-8357, choose option 2, or submit my consult request form.