Settling Credit Card Accounts with a Collection Agency After Charge Off
Credit card accounts have not been paid for a while and now collection companies are calling. I settled one late bill with my bank and I am now tapped out. Can I settle with collectors after charge off?
How to deal with a debt collector after accounts charge off?
—Pay collections
Short answer
Yes. Settling a credit card debt after charge off, once a collection agency is contacting you, is always an option. Sending the account to a collection agency is the most common thing a creditor does with a newly charged off balance, and that agency can negotiate within the limits your original creditor sets.
Key points on this page
- Charge off comes after the first stage of collection calls from your original creditor, which can last six months.
- Creditors have 3 options when they charge off a defaulted account. Placing it with a collection agency is the most popular one.
- Most of this work is done on contingency, so the agency only gets paid if you pay. Your account may sit with one agency for a limited window.
- The agency can only agree to what your original creditor allows, or to what it can go back and get approved.
- You cannot re-age a charged off account. The credit reporting damage was done by your bank, and the collector has no control over it, whatever they suggest on the phone.
- You will have to pick up the telephone to learn your real options. A debt validation request at this stage is often counterproductive to a settlement goal.
Yes, settling a credit card debt after it has been charged off and a debt collection agency is contacting you for payment is always an option. Below is an edited version of an article we published that explains “Charge Off” and what typically happens with your unpaid accounts after they are considered seriously delinquent and the unpaid balance is assigned to an outside debt collector. Settling the debt may be just the opportunity you need to move on with your finances and restore your credit.
For your unpaid credit card to reach charge off, you will have already been through many collection calls from your original creditor. The first stage of collection calls can last six months.
Creditors have 3 options available when they charge off defaulted credit card debt. The most popular option with newly charged off accounts is to send the debt to a collection agency.
Credit Card Debt Sent to Collection Agencies are Mostly Done on Contingency
The amount of time your account remains with an assignee debt collection agency will vary. Let’s assume that the agency that has your unpaid credit card bill will only have the ability to collect from you for 90 days.
The typical debt collector working for your creditor has two ways they attempt to get you to pay; your phone and your mailbox. There are other ways to collect, such as:
- Collection calls to your job,
- Debt collector calls to family members and friends (this does happen – it sucks and is embarrassing).
Lets focus on the most general efforts used by the debt collector who is collecting on your account just after charge off. When a debt collector gets assigned your account, you will often start getting collection calls (at a high volume). You should also get a collection notice in the mail within a week of the agency having contacted you by phone.
You do not have to pick up the collection calls if you are not ready to negotiate a settlement with the agency. My suggestions for speaking to a third party debt collector are not the same as picking up, or making calls out, to your original credit card lender. And you do not necessarily need to send a debt validation request in response to the collection notices you receive in the mail. That is often counter productive to your settlement goals.
Settling an Account with a Collection Agency
Some important details to consider:
- You will have to pick up the telephone in order to learn about your options with the account. I typically recommend that you not limit yourself to written communications with collection agencies.
- You will be speaking to someone who has been trained to push your buttons using the most effective and proven methods for collecting unpaid debt.
- The agency can only work out arrangements for payments that your original creditor allows them to, or where the debt collector can go back to your creditor and get approval.
- You will not be able to re-age the account when settling charged off accounts with debt collectors (the credit report damage is done by your credit card bank, the debt collector will have no control over that).
- Avoid some of the nut job advice on the internet about handling this stage of collection.
- In some ways, you have more payment term options you can negotiate with a collection agency than you would be able to with your bank.
- The collection agency only gets paid if they can get you to pay them (that may not always be the case, but contingency debt collection is the most common model currently).
Charged Off Debt Get Reported to the Credit Reporting Agencies
When this derogatory credit reporting happens the damage to your credit is done. You do not get to re-age charged off accounts. The credit damage from not paying a charge off account can then only get worse if you are sued, followed by getting a judgment against you. The judgment then shows up in the public record section of your credit report. Also, another debt collection trade line may later show up on your credit reports, and this would be considered additional damage.
A debt collector may comment how you should be concerned with your credit report and credit score after the account they are collecting on gets charged off, but this is just a collection tactic. Collection agencies will have no ability to change how the original credit card issuer reports to Equifax, TransUnion or Experian that your account was charged off.
There are tactics and timing I share on this site, and when you want to work with me one on one, that will better prepare you for dealing with outside debt collectors. You can optimize your results by knowing:
- How to negotiate a settlement deal that is timed with internal goals the collection agency has, and even that an individual debt collector may have.
- When to pass on an offer to settle that is too high without being concerned your particular debt collection agency will sue.
- What your bank will allow the collector to do (how low a settlement can get and what payment terms are common).
- The tricks and tactics that will be used to get you to pay more than you may have needed to.
- Collection abuse tactics.
If you are struggling with several credit card debts that are past the charge off stage, you should learn about your options and identify resources for handling the accounts before they end up in more advanced stages of collection which can include being sued.
It is important that your next step to deal with your now charged off debt be the step you take to put the debt to rest before the situation can deteriorate further. If you are serious about resolving unpaid debts and want to develop a workable plan, getting started is easy. Just post more about your situation in the comments below, and lets go from there.
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About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi
My query relates to demographics and discriminatory debt collection practices.
BTW, I’m reading your blog from far away in Australia. Despite the obvious statutory and regulatory differences here, it seems that the principles are broadly the same. So, thanks for providing such a great public service and making it available for the whole world to see!
Anyway, I was wondering if you were aware of any anecdotal, statistical or other evidence, which supports the gist of contentions to the effect that:
a) Female debtors tend to get less favourable settlement outcomes from debt collection processes; and
b) That this is because of imbalances in power and morality, arising in part from aggressive conduct on the part of debt collectors, who treat different demographic categories of debtors differently and act on their assumption that females can be bullied into less fair outcomes because they ‘care’ more about settling debts and maintaining a good credit history.
I would also be curious to hear about any evidence which suggests that other vulnerable and/or disadvantaged ‘minorities’ also fare worse than white anglo males.
Thanks,
Kyle
Kyle – What I have to offer in response to your comment is mostly empirical. I have worked with thousands of people over many years, and that experience would not support what you posit.
I see female debtors able to negotiate better deals for themselves than their male counterpart. This is perhaps more the case when the situation warrants debt collectors make exceptions to the floor limits their agency or client may set.
I do not see a bully aspect in my file work, at least, none that would reach to any remarkable level.
I should point out that my perspective, while certainly influenced by hands on negotiations, is more from one on one coaching consumers to communicate and settle with debt collectors on their own. Most consumers I have worked with are well informed and prepared to target and negotiate each of their debts. Collection tactics are, at least from my view, less effective when used against someone who is prepared.
I cannot offer much in the way of minorities being disadvantaged in the debt negotiation and settlement process. Here again this is likely due to the results favoring the prepared. I would say, however, that there is a marked disadvantage when there is a language barrier that cannot easily be overcome.
Interestingly, my professional experience suggests that female debt collectors are more aggressive in collection efforts, and also possessing of a more abrupt communication style.
Hi Michael, Please pardon my bad spelling. This will take me a moment to explain my situation but it is the only way I know how to let you see the full picture. I have became disabled. My Social Security attorney has informed me that it could take 2 up to 6 years before S.S. payments would begin. Lots of ifs on the social security front for me. Any help or sugestions would be great. This is the deal. I am a self employed auctioneer and have run my own auction service for the past 30 years. Approx. a year and a 1/2 ago I was diagnosed with spine-a-bifida which most people know when they are born. In my case it was discovered 50 years into my life. I cannot do the things that I need to do in my business anymore. Most of the time if I don’t do it. It don’t get done. Loss of most of my income. I live in Kansas. I am in financial trouble with 3 credit card companies that I have started talking with negotiations in hopes to get out of this pit I am in. I am approx. 3 months behind in payments with the c.c. companies. I have not agreed to anything other than I had to with Discover. (Or so I was told that was my only option at this time.) I have been doing business with these credit card companys for the last 20+ years. When I became ill I begin putting Hospital, Doctor visits & Meds on all three of my credit cards because I had no money. I really need some help or opions on what to do. In my talking with them I am afraid that I will make a bad choice or say the wrong thing to them. Making things worse instead of better.
The first card is an At&t Universal Master Card with a balance of approx. $9,000. About two weeks ago I called them AGAIN and told them that I had become disabled and that I could not make the monthly minimum payments. which were $166.79 with 11.90% interest before I got behind. Times it by 3 plus late fees. When I told them of my situation for the 3rd time they offered me the following deal. Make a monthly payment of $142.00 for 60 months with no interest and no penalties for early pay off. But if I miss one payment or do not follow threw with it. It will revert back to the way it was plus all of the late fees. In other words everything would be lost. I called them back today and told them that i could only afford $82 a month for 60 months. They said that was not an option. I have not took thier offer yet. Should I? So that’s the way it stands.
The next card is a Discover with a $11,423 balance at 12.24% interest and minimum payment do of $455.00 which includes $226.00 past due amount. I called them today and told them that I could only afford a monthly payment of $98.00. They then told me my only option is to enroll in a 6 month temporary hardship program with them. That makes my payments $172.00 a month with a 9.99% interest rate for the next 6 months. Same deal if I default my account will go back to square one plus all the back charges. I have enrolled in this program because they made it sound like my only option. I tried getting them to lower or drop the interest rate but they said no. I told the agent that all I had was $98.00 to put on the account. She would not take the $98 because she said that would make my account in default already. She then moved the payment due date up to March 11th, 2014 and she told me to call her the 1st of March to let her know how things were going and if I had the full amount they are requesting. That’s the way that stands of now.
The 3rd credit card is a Capital one visa business card that is in my business name. I have called them twice and told them what was going on with my health. They just told me to do the best I can for now. Which has been nothing. I have not called them for the 3rd time yet. The balance on this card is $2,546.05 at a whopping 29.40% interest and a $174.00 minimum payment due as of January 04, 2014. What should I do from here on all 3 cards? I’m at witts end and sick of each one of thier 10 to 15 computor generated debt collection calls a day. I’m on the do not call list but it seems like all that done was give more of the telemarketers my number to call. I’m sorry this has taken so long to describe. Thank You very much for your time and response. A.J. My Phone: (removed by admin). Everyone else has my phone number so you just as well have it too. The big difference is I hope you can help me.
Best Wishes.
A.J. – Thanks for all of the details in your comment. It helps me get right to it in my feedback.
Citibank is offering you the best deal they can with the 60 month no interest payments. They are required to not allow payment plans like this not exceed 60 months in their design. There are no exceptions in these type of situations. 82 dollars a month payment would require a forgiveness of some of the balance, and then amortize that over a long payment term, and Citibank (like virtually all credit card lenders) does not offer that directly to their card members in this stage of collection (or at any stage right now). There are some flexibilities of payments and amounts after the account charges off, but you will be exploring those options with debt collection agencies.
The person at Discover did not do you any favors unless you can afford to make that payment for 6 months and have a light at the end of the tunnel you can see that soon. From what you shared, that is not the case. Discover, like other banks, will generally only extend some form of payment/billing flexibility once, or twice, if keeping the account open and current, or in order to reage, or pay the balance off on good terms. I would prefer you call and cancel any payment if possible. More on this below.
Is the Capital One business card in only the business name, or did you personally guarantee the card too?
Bottom line: Can you afford about 400 dollars a month to pay these credit cards off over the course of 4 to 5 years? If you are confident that you will have this amount every month starting now, than a nonprofit credit counseling service is what I suggest. Call 888-317-8770 for a free consult and exact quote of what you monthly payments can be if you qualify.
If you cannot afford those monthly payments with confidence, you should be looking at filing bankruptcy, or settling these debts as an alternative to that. Have you looked into bankruptcy? Have you read through any of the debt settlement guides I have on the site?
Putting your phone number up there for the world to see is:
A small sign of defeatism. And there is no need for that, as you will resolve this stuff.
Could lead to scammers calling you under the guise of helping, and some of um are pretty good at fooling people.
I deleted the number, but thank you for trust in posting it.
Hi Michael,
Thank you for all this helpful information.
I am in the process of making initial contact with 5 creditors to settle my debts. My last payments to all my creditors were on time in December of 2012. I unexpectedly lost my job January 2013 and was not receiving enough from Unemployment to continue to pay my debts, which at the time totaled $19,600. I managed to save $4K for the purpose of negotiating settlements. Unemployment was not extended for my Tier in California as of December 28th, 2013, but I recently found part time minimum-wage work, which is bringing in about a third of what I received on Unemployment. I’d like to settle as soon as possible since I don’t foresee being able to hold onto my savings with my limited income and I’m getting more threatening letters re lawsuits. I am single, have no assets and I am continuing to look for more work. (Prior to losing my job, I had a great credit history.)
I realize this now this may be too detailed for a comment, so please edit or advise as necessary!
Here is a list of current balances (and balance when I stopped paying), original creditors, agencies now handling the debts, offers I’ve made and they’ve countered.
$4609 ($4110)
Chase: MRS Associates – Haven’t contacted Chase yet.
$4081 ($3545)
MBNA: Portfolio Recovery Systems bought the debt and made sure to let me know my account is in Litigation Department and the clock is ticking for it to go to court until I make a formal settlement agreement- Offered $700; they counter $2637 (64%); I offered another $100; she said her boss offered $2285 (55.9%) but can’t receive a counter for less than 50% ($2040), I said I might be able to come up with another $400 (Total of $1400 [34.5%]), but realistically I don’t know where that will come from. She convinced me to make a good faith payment of $100 to help in my negotiations (I’m kicking myself for giving her my savings acct#). She is calling me back tomorrow to let me know if the Vice President accepted her proposal (I didn’t agree to it as a counter, she was just going to test the waters, so to speak) which would be $2040 settlement to be paid with the $1400 down and $640 for 6 months (also unrealistic on my current income, esp considering the other debts I’m trying to negotiate)
$7183 ($6639)
Discover: Krista L White & Associates – Offered $1000. Her mgr countered with $3600 (50%), first payment of $1000 then $2600 over 6 payments which I won’t be able to do with my current income. I was planning to counter with $1436 (20%)
$4845.25 ($3907)
Discover: Van Ru Credit Corporation – Offered $700 + $250 paycheck coming this week. She said they never settle for this low, but due to the circumstances she would submit my offer of $970 (20%) to Discover and I’ll hear back from them in 24-72 hrs.
$1,735 ($1400)
Citibank: United Recovery Systems – haven’t spoken with Citi yet
I’d really like to avoid bankruptcy, if possible.
Thanks for any suggestions you can offer!
J
Joanna – I understand the desire to avoid bankruptcy, and perhaps you can, but do you mind sharing why you prefer settling over chapter 7?
You are doing a pretty good job on your negotiations with the debt collectors.
You have Discover in range with where they tend to settle, but they do go lower. I reviewed a Discover settlement for 25% earlier this week. But those lower offers do tend to be for accounts older than yours (have been in collection longer).
United Recovery Systems may be able to settle for as low as 30%, but holding out for that low can often also mean missing out on a deal not much more than that. You can call URS (or Citibank for that matter), and ask for how much longer they will have the account placed. URS may be at its most negotiable in the week to two prior to the account getting yanked.
As you have already kicked yourself for giving Portfolio Recovery the 100 dollar “good faith negotiation” payment, I wont do it too… well, maybe a little. PRA probably got you to reage the SOL to collect through the courts with that move. That and they wanted the hundred bucks. They do go lower than what is on the table when their data suggests they should. From what you shared, they would have your collect-ability score as not good. Try to hold out for 30%, or even lower. And lay on the hardship/cannot afford groceries angle more.
MRS Associates collecting for Chase is something I have targeted at between 30 and 40%.
I have more feedback to offer, but want to wait to read your response to my first question above.
Thank you Michael!
Your first question is a good one because it made me realize I don’t really understand the ins and outs of why it would be worse. Most of my debt is from Medical Bills and living expenses when I was underemployed. I would like to try and come up with something to try to honor my agreements and pay my creditors., if it’s not all for nothing. I understand once my accounts charged-off my credit score went in the can, but I’m not concerned with having good credit at the moment. Do you have a cc settlement vs. Chapter 7 page? The only thing I can think of is that I never finished my BA and would like to go back to school at some point. Eliminating this debt is a big factor in when that could be possible. If I have a public record of Bankruptcy, does that affect Financial Aid that you know of?
I actually haven’t made the payment to PR yet, its due to go through Monday–should I cancel it? And I will do what you suggested–there is really no way I could come up with what she’s supposedly asking the VP to accept. And thanks for all the other info!
J
Joanna – I should write a better, and more specific, chapter 7 bankruptcy vs debt settlement comparison, but this piece will do the trick for our discussion. The focus is credit reporting and credit scores, but fair access to new credit products is covered too.
My experience is that the first priority (in the decision making process about which debt relief option is the right choice) should be based on income and expenses today and that can be projected in the next 6, then 12, and finally 24 months. You are well into that time period, and had you filed chapter 7 this time last year, would be about half way through most of the recovery period for access to new loans.
The exception to the 24 months recovery time happens to be the only major concern you raised – student loans. There are SOP for some student aid that would prevent qualification if bankruptcy were filed in the prior 3 years. Do you think you would go back to finish your BA in the next 3 years?
The roughly 23k math is pretty straight forward based on what you have shared.
Chapter 7 cost roughly 1500 start to finish (maybe a couple hundred more depending on where you live). You have some cash in reserve. All debts referenced in out comment exchange are the type discharged in a chapter 7. You could be debt free (relative) in 90 days or so. All collection efforts will cease (or directed to your attorney) once you file.
Debt settlement will require more than the 4k you have in reserve today. Probably twice as much, at least in my experience, and that is with exceptions from some of the creditors and debt collectors you are dealing with. How long would it take to raise another 4k? The answer will be the measure you use for completion of a settlement plan for the debts.
Thoughts?
This is all very interesting! After reading through your response and the comparison article you linked, Chapter 7 seems like the obvious move. I wanted to do due diligence with the creditors and see what I could realistically settle for, and now I think I’m in a bigger mess than I was two days ago. Haggling is not a strong point of mine!
PR (very pushy and impatient) laughed when I expressed my desire to avoid filing chapter 7. I couldn’t afford what they offered, so I said I wanted to cancel my $100 “good faith” payment and a manager came on and offered $1750 (42.9%) and is “giving me” until Monday to decide if I want to go ahead with the $700 down and $105/month for 10 months or call them back with the bankruptcy lawyer’s information because they’re not ever going to give me that good of an offer again. They have by far been the least pleasant to deal with and while their tactics got me locked into hastily agreeing to something, it’s going to backfire because now I’m locked into something I can’t renegotiate and I can’t fulfill…
MRS offered to settle for $1843 (40%) and said if I decide on Ch 7 to call them.
UR negotiated a settlement with them for $613.96 (35%) first payment of $500 to go through this Monday.
Still waiting to hear back from Van Ru if Disc accepted my 20% offer ($969.05)
And couldn’t get a hold of the lady at KLW to up my offer to 20% ($1436)
After looking over everything and considering the difficulty I’ve had finding full time employment, I am going to go ahead and use the money I’ve saved for filing for Chapter 7 and living expenses. I have a friend who went through Bankruptcy and specifically said it didn’t have a negative impact on her schooling and financial aide, so if it ends up delaying my schooling for a bit, that’s ok. If I had more stable income, I would keep trying to settle, but you helped me to see it’s not realistic under the current circumstances.
Thank you so much for helping me think through this. It has been so stressful, confusing and overwhelming!
Do you recommend any particular Bankruptcy lawyers in Los Angeles? Maybe I’ll give you a call tomorrow!
Joanna
Joanne – It is interesting that you had the worst experience, out of all collection agencies, with Portfolio Recovery Assoc. Let me know when you pull the trigger on the bankruptcy – I can send them a link to this comment exchange – they do not return my calls 🙂 but they do care about feedback like that.
You can connect with a bankruptcy attorney in the Los Angeles area at 877-278-8117.
Thanks again for all your help Michael.
I decided to go ahead with the Chapter 7 bankruptcy, hearing scheduled for 1 month from now!
Just to clarify, the initial woman I spoke with at PRA was very pleasant, patient, compassionate and helpful, her manager was the impatient pushy one.
J
Thanks for posting the update about your decision Joanna. And thanks also for offering all of your debt collector specific feedback. Other readers will benefit from your comments.
Best of success to you!
Hello, I have 3200$ in medical bills that went to collections from 2008. It is from an emergency room visit when I was unemployed. This is the only thing I have in collection. I have not attempted contacting them, as I do not have that amount of money to pay it off. I was curious to know what my options are, or the best route to go to take care of this. Would a settlement be possible and if so what is the average percentage I should pay for this type of collection? I would appreciate any help or advice. Thank you in advance.
Jamie – What amounts to target when settling debts can vary depending on a host of things. I can better reply to you if I knew the answers to the follow questions:
What state you live in?
Were all of these debt incurred in 2008 and/or the last time anything was paid toward the bills in 2008 (no payments to hospital or collection agency since)?
What are the names of the debt collection companies?
I live in Iowa and that is where the emergency room visit was. The visit may have been December 2007 or January 2008 I do not remember for sure. I made small payments for about 6 months, but as I stated I was unemployed because of health issues for awhile. There were three other bills one for $700 and two for a little over $500 a piece that went to collection and I paid them off in full a few months after they went to collection. I did not have the large sum of money for $3200. The last payment on this account would have been before it was sent to collection in mid 2008. The name that shows on my credit statement is General Service Bureau, Inc in Omaha, Ne. Money is pretty tight for me and I do not foresee that changing any time soon. I would really like any information or tools to help me take care of this and clear my credit without paying more than I can afford. Thank you for your time.
Jamie – Setting up a monthly payment plan with debt collectors is not difficult. You may have to convince them that the amount you say you can afford cannot be increased, but that is typically not too difficult. Settling is another story if you cannot offer a lump sum. You can negotiate a payoff amount and split that amount into monthly payments, but the more months you need to pay, the less likely a collection agency is going to be to give the reduction. There are frequent exceptions to this, but it is a foundational element of dealing with debt collectors.
Having said that, what can you afford to offer as a settlement, and if not settling, what can you budget for monthly?
I have an account in collection with best buys the collection agency made an agreement with me to pay 180.00 a month. best buy wants me to pay late payments of 345.00 so that my balance will be what the collection agency inital said it was. am i suppose to pay at two places i very confused and doesn’t seem that is going to my outstanding total. the collection agency is ars national security.
Lisa – Is Best Buy contacting you directly to collect the late payments, or is it another debt collector (not ARS)? If another debt collection agency, who, and have they made only phone calls, or sent written collection notices?
Hello! I just found this blog/chat.
I can’t seem to find out any info on my issue. We’re applying for a mortgage and I have one collection I need to pay off. I contacted the collection agent listed on my credit report (only one report) and she was wonderful to deal with. However, she told me that the account had been transferred (sold I’m assuming) to a different collection agency, S&K Financial. She gave me a phone number for them. When I tried calling, it does a half ring and goes straight to voice mail. The voice mail message says the name of the business, a very quickly spoken name that I cannot understand and to leave a message. I did not leave a message being that this felt very ‘fishy’. I attempted looking up the phone number I was given, the business name, etc., and could not find any information. I want an address for this place so I don’t have the only option of phone communication!
I need to get this collection taken care of asap (I have the funds) but I don’t know how to proceed!
I am going to talk to my financial adviser this afternoon, but any tips would be wonderful.
Thank you
Tina – S&K Financial debt collections offers their address as 610 West Lovers Lane, Arlington TX 76010. They publish khair@skfllc.com as their contact email. Settling with really small collection agencies or debt buyers is generally the same as any other negotiation. This new collection agency is not showing on your credit report? Which debt collectors are reporting?
National Account Services out of MN is reporting on the credit report, last report date was sometime in 2010. When I called them to resolve the issue (they were very nice to talk to) they informed me that the account had been sold to this S&K Financial. I talked to our mortgage lender yesterday and we agreed to do an email correspondence with this company, with the lender CC’d in everything. I have not heard back from S&K yet. Thank you for the address- If I do not hear back via email by tomorrow I will be mailing a certified letter. I just don’t know what to do if I cannot contact this collector to pay off this debt! I would think they’d be jumping all over the chance to get some money… And I don’t want to lose the opportunity we have with this house!
And no; this S&K is not showing up on any of my credit reports- at all. So I’m also worried that if I pay this off that it will be reported and then I’ll have even more collection reports on my records. Or it’ll never show as being paid, since NAS is still the listing agency- no transfer or closed listed next to it in the record.
If National Account Services is not owed any money, and they are not because they told you they sold the debt, than NAS should not be reporting a collection account due to them.
It sounds like S and K Financial is an agency that buys up debts that are really old (often passed the SOL to sue in order to collect, or even to legitimately place on credit reports). What type of account was this originally, and who was the initial lender? When did you last make a payment on this account?
I would dispute the National Account Services balance owed off and talk to your mortgage lender/loan officer about this further. Is the NAS collection agency balance owed reporting skewing your DTI qualifications; or is it the fact there is an unresolved debt on your credit; or both, that is holding you back?
Right now we’re sitting at approved on the condition that collections are paid, so unresolved debt. It was a US Bank checking account originally, I believe 2009- slated to come off my report in 2016. I didn’t think it was beyond the time limit (MN is 6-7 years).
I submitted a dispute with Trans Union (only CR that has this on it) online, (yes I know paper would be better but since I didn’t have any documents/proof…) I’m just hoping it doesn’t take 30+ days to fix this.
Would it be a good idea to call up the NAS business again to ask that they send a verified letter saying they no longer have the account? I’m not sure what the bank will do if they saw the debt then poof, it’s gone from my report without any payment…
Thank you for what you’re doing, this has been very helpful.
Tina – Banks typically would not balk at changes to your credit reports like this. Errors are fairly common, and are often found when going through the home loan process. I would encourage you to write a dispute to National Account Service about the credit report accuracy. They can fix it on their end too.
It does not appear your debt is as old as I had thought, but that does not change the credit reporting aspects we are discussing. I would still encourage you to resolve the debt too.
Update: !!
I submitted the dispute online with Trans Union last wednesday/thursday (?) and it was resolved and deleted from my credit report by saturday morning. I still have not heard from S&K- but if I do, I’m going to make darn sure to verify that they can collect. After reading through the FDCPA and FCRA laws, it seems that they were in violation of a few of them… Mortgage lender is moving ahead, appraisal on the house will be done by the 12th. Wish us luck!
Thank you for your time and information 🙂 It’s been very helpful.
Thanks for posting the update Tina, and good luck with the home!
Just for clarity, nothing you shared suggests to me that S&K Financial has violated anything. They are not furnishing any information to the credit reporting bureaus, and have made no attempts to collect a debt from you. If you do have later questions or concerns, do not hesitate to post them.
Have you had any experience with COMENITY ? (it used to be called “World Financial”) It seems that they own half of my delinquent debt (even though there are several different cc’s) and I am wondering if I should (or could) negotiate one lump sum for ALL of the debt all at once, with Comenity? OR is this even possible? OR Do I have to negotiate each card separately, even though I am technically dealing with the same company for each cc?
Tracey – It is not only possible to negotiate discounts on multiple debts with the same debt collection agency, but is often the best approach to take. You will want to plan ahead and have realistic expectations depending on the situation.
How many different accounts does Comenity have?
What are the rough balances?
What types of debts are these?
How much are you prepared to pay to settle all of the collections?
We had a credit card through Chase with a balance of 19k that has been charged off. I have gotten multiple calls but have not answered any. This last year has been our worst financially. We are barely making it month to month. My husband works full time but I am in the process of looking for a job. We have som other medical bills in collections that amount to a few hundred dollars. I am in a payment agreement with Discover that we have so far stuck to. We have no retirement to pull money from and I am terrified my husband’s wages will be garnished. What do you think we might be able to offer the collection ageny?
Mary – Your wages cannot be garnished without you being sued and a judgment entered in the court first. That is not a good place to be, and you can nearly always resolve a debt for a better savings, or payments, prior to your collection reaching such a critical stage.
As far as what a collection agency will accept:
Who is the collection agency?
How long do you estimate this collection company has had the account?
How many months has it been since Chase was last paid?
LTD Financial Svcs has the debt now probably since Aug. We last paid in Jan of 2013. I attempted to make a $900 payment to Chase on their automated payment line in March but it was not accepted because it was less than the minimum due. A representative would not speak to me because the card is in my husband’s name. I was VERY frustrated and that money ended up going towards other bills.
Thanks. Can you raise roughly 40% of the balance owed? How long would it take to pool together that amount?
At this point that seems like an impossible amount. We are struggling to make our monthly payments with me not working. We are hoping to put our taxes towards it which is usually around $3k total.
Mary – 3k is not a realistic settlement amount on a 19k balance. Twice that would stand a good chance.
Settling credit card bills with collectors can sometimes be negotiated for a dramatic savings (fixed income, unemployed, medical hardships, etc). But just the fact you are making monthly payments to Discover on time, is going to cause your file to be viewed as more collectable, and not one that would typically qualify for settling for the best discount.
Can you add to the 3k tax refund you are expecting over the course of the next few months? How long will it take to come up with even 30% of the balance?
I have been sued for citibank debt around $10K. summons was not served properly and i filed motion to quash service. During that time, court issued judgment when bank attorney file MFSJ by mistake. After i spoke to other attorney, he got order vacated from court. But judgement stays in the public records of county on clerks site. It also gets recorded again with certification even after vacating.
I settled the case by paying 50%, bank filed voluntary dismiss without prejudice.
Question: Why the judgement was certified even after court ordered vacated. should i contact other attorney to get judgement vacat filed or i should do it myself in the court, i do not know much how?
2. Can it harm some way even if it stays there as it is.
3. When i settled the case should be dismissed with prejudice, how to get that done?
Michael – is there a reason my posts were deleted?
Thanks,
Jay
Jay – First time posters automatically have the first post held in moderation due to comment spam. Once you have your first post approved, as long as you use the same email address and IP, all later comments automatically publish.
Michael,
I’m pretty sure my post above covers all of my concerns and you will be able to address my actual questions, but in your response if you could make sure to list any and all potential negative consequences of letting my debt reach the “charge off” stage I’d really appreciate it.
Thanks again,
Jay
Let me know if you have additional questions. I know you are on a time crunch here, and I may not see any additional comments after 8pm eastern today.
Hi Michael,
Today is literally the 180th day on a AMEX credit card account that I’ve been unable to pay over the past 6 months. It’s currently with a collection agency not with AMEX directly. I’ve been able to get the collection agency down to a 25% settlement on a $32K balance but my uncle is only willing to help me if I get them down to 20% or lower (he went through this a few years back and thinks I can get it). My question is how important should it be for me to get this handled today? After it’s “charged off” at the 181st day (i.e. tomorrow – Friday) will that really hurt my credit that much more since I haven’t been able to make a payment in 6 months anyway? And after it hits the “charge off” stage would I be more likely to get sued? It doesn’t sound like credit card companies are really suing borrowers in this fashion due to time, cost, and lack of success in ultimately collecting via this route? I’ve also been unable to pay one other credit card that has about a $10k balance (Bank of America) so my credit is already pretty dinged. My other question is with respect to my future settlement attempts if I’m unable to settle today? Will I typically be able to negotiate my best settlement offer “pre” charge off or will I have more negotiating power “post” charge off? I’m up against a time crunch here so hopefully you’re able to get back to me relatively quickly. Thanks so much and hope to hear from you soon!
Best,
Jay
Jay – Getting an American Express account negotiated down to 25% of the balance this early is not common. You did a great job getting to this point. Holding out for another 5% savings is not a good idea in my opinion.
The main benefits to settling before charge off are:
Its predictable. Once accounts charge off credit card banks do one of three things – Assign to a debt collector, sell to a debt buyer, or place with an attorney for collection with or without authorization to sue. You cannot often know which of these 3 buckets your account will be dropped into. So settling at the early opportunity is preventative.AMEX is not known for selling debt, so settling now avoids multiple collection agency assignments, or attorney collections.
Settling with the creditor directly, depending on who it is, can often mean getting the best savings. Amex places accounts with contingency collectors like you are probably dealing with now, and settling with this type of collection agency may involve a higher deal than is on the table now. But AMEX also places accounts with legal collections and those settlements can be much more expensive.
Avoiding a charge off on your credit report is ideal if you can swing it, but the damage from being reported 1 to 5 months late is already done. But you would prevent an additional negative item from being reported by a collection agency later.
It would not be correct to say creditors are not suing people due to time, cost, and lack of success. Some accounts are collected through the courts that are less than 1k. There are creditors, like Chase, who stopped collection lawsuits due to regulatory and documentation concerns. But Amex can and does sue.
My opinion is that you have a great, and probably the best settlement on the table now, and should take advantage of it if possible.
HI Michael,
I have an unsecured business line of credit with Citibank that I owe 40K . I have had the loan for 12 years or so, have paid it off a couple of times when business was better, but have now ran it up again and unable to pay down. I have been paying only the interest for the last 4 years, but now fallen behind with that 3 months. I also have a personal credit card with Citibank that I owe 41K which I have also fallen behind and now 2 months late. My plan is to ask to settle on these two accts.
Both Citibank departments have been calling and leaving messages, I have not picked up the phone or returned any calls. I am terrified to do so.
I am getting very nervous and feeling guilty. I have always been an upstanding responsible person, I have just fallen into some bad financial times.
Should I call them at this point ? Is it too soon? What do I say?
We can pull about 20K out from my husbands mutual funds to make an offer to settle, but I don’t think that is enough for both anyway. Also, is it harder to settle on a unsecured BLOC than it is on a personal CC..?? At this point, I am not concerned about my credit report, I just want to get this behind me.
thank you so very much for your guidance!
Mary – 20k would not be enough to settle both accounts given trends with Citibank today. But there may be ways to navigate the negotiation process if you felt confident you could raise an additional 20k over the course of the next 6 to 12 months. You would likely be settling one account with Citi, and one with a collection company. What possibilities are there for raising the additional money?
I would not say LOC’s are harder to settle with Citi. But how you go about it, and the timing, can be different than negotiating credit cards. If the business is a going concern there are additional things to weigh.
Some questions:
Do you have any other accounts with Citibank (personal checking/savings or business accounts)?
What state do you live in?
Have you spent any time looking into bankruptcy yet – business or personal?
Michael,
Thank you for your quick reply…I am impressed! 🙂
I live in California, and yes, in addition to the 20k from my husbands mutual funds, I believe I could separately come up with close to 20K in 12 months. We are trying to sell our motor home (personal worth 10k) and have cut up our credit cards and only doing cash (so we don’t continue down the same debt road again).
I was originally considering hiring a debt consolidation company, but after realizing they would be taking my money before my debt was paid, I started doing my own homework (and then I found you!)
So my plan is to put $$ aside each month with a completely different bank (so I can’t get to it) and save it up for settling.
So how do you recommend I navigate the process?
Can you clarify what you mean by “given the trends with Citibank today”..?
Which do you suggest I contact/pay first?
(I would prefer the BLOC, since I am still in business with small projects and do not want to file bankruptcy)
How do you suggest I go about it and what are the additional things to weigh/consider?
I do have business accts with Citi that I will be closing and getting new accts at a different bank. ( Citi already took what I had left in my business acct, about $1,ooo, the first month I was late on the BLOC)
We have also closed our Citibank personal accts in fear they would do the same to those. Our 3 other credit cards are joint with husband (target, kohls, amex) low balances and current and I have cut them up.
I won’t have any of the mutual funds money to offer a settlement to either for about a month, but in the meantime, do you suggest I call one of them first? Now?
and let the other go behind a bit longer before calling them? ( but I won’t have that $$ for another 12/mo)
Thank you so much for answering my questions 🙂
By nature, I am a rule-follower, so I have been losing A LOT of sleep over this….
Mary – The business line of credit and the business checking likely have a crossover in the agreement. Citi having dipped into the account is not surprising. But another reason to switch banks is so that your balances in checking and savings cannot be viewed. If I can see you have 20k in my checking account, I am not going to be all that sympathetic when it comes to accepting half of a loan balance as a settlement on another account with me. I would not close the accounts necessarily, but would keep a minimal balance. You are headed in the right direction with setting up a dedicated account to pay your settlements. Here is some more information on that topic: https://consumerrecoverynetwork.com/paying-your-credit-card-debt-settlements/
You mentioned having other accounts you are paying on, but not using. This can create a concern when it comes to negotiating with Citibank. Read this article to raise your awareness about how creditors may view your file when negotiating their account, while you are paying others: https://consumerrecoverynetwork.com/keep-credit-card-open-when-settling-debt/
By trends I am referring to how Citibank handles settlements today, and what they are willing to accept and when. A realistic expectation would be settling for roughly 50% of the balance at the time you negotiate the deal. There are some nuances to this estimate, and some reasons why accounts with them will settle a tad lower, or higher, and even reasons Citibank would tag a file for aggressive collection (like filing a lawsuit). You can negotiate a payoff at any stage of collection, so no cause for alarm. But you do need to know the realities and how to navigate them while setting yourself up for success.
In order to prepare yourself for the process, I would encourage you to begin reading through the debt settlement sections of the debt relief guides on this site. Start here: https://consumerrecoverynetwork.com/credit-card-customer-service-turned-bill-collector/
I only have limited info to go off of, but I would also target the line of credit first. Rather than respond in this comment reply with how to proceed with that, and offer additional things to consider, read the links I have provided. Most the general information you want is contained in those articles. The how to’s and what to’s in your unique situation can be better addressed once you narrow your focus and questions after having read through the additional material. I welcome you to participate with questions in the comments on all of those pages. There is also a specific page about settling with Citibank.
I do indeed recommend you begin talking with Citi and conveying your hardship and inability to pay. But read through those links first. I have given you quite a bit of reading to do, but all of it is pertinent to your situation. Most of it is common sense once you understand how banks deal with delinquent accounts. You then apply what you learn to your situation based on your financial abilities now, and in the near future.
A little about following the rules: You are following the rules. Dealing with the inability to pay debts incurred is part of the debt and credit based economy we live in. That is even more part of the nature of things for small business owners. Banks follow a set of rules too. Once you understand those rules, and the risk/reward/timing elements, you should stop losing sleep over this. Well, at least not as much sleep.
I look forward to hearing more from you throughout the comments.
Whew…thank you for all this information! I will read and take it all in and reply back! Have a great Day Michael..!
Thank you so much for your response. We have currently set up payment arrangements with CBE and UCB collections agencies, thankfully with little to know money down. Kevin Z. Shine, which is the attorney handling this account, is requiring a 987.00 down payment before negotiating a monthly. We owe around $3,000. I explained to them that we are willing to pay additional payments aside from the monthly, but that we could a guarantee a sure $100 monthly. We don’t have excess cash to pay a lump down payment, (especially with one income), much less even dream of considering attorney fees.
Thanks for moving the discussion over to this page. Who are United Collection Bureau Inc and CBE Group collecting for? I want to determine if there is any wiggle room in the arrangements you have set up with them. And are you making payments on the full balances owed?
The quickest way to deal with the Cach (Square Two) debt with the debt collector attorney is to settle it in a lump sum. That would also eliminate the risk of being sued. If your back were up against a wall and you were being sued, what amount of money could you raise? If no shot at settling, you would press for the monthly payments. What if you got them to accept half of that amount down? Could you swing that?
We can afford $700 a month, perhaps more depending on cuts we can make. We have $1,200 in savings to put towards the 4k so we’re hoping continued conversation will lead to them accepting payment. I will speak to them again and let you know what they say.
My husband owed a local bank 3k on a credit card, and in february when he went to make a payment they told him they were sending the account to collections as he was not making full payment every month. They would not tell us what agency it was sent to and to wait to hear from the agency to be told what to do next. The agency sent us a letter today, which was postmarked two weeks ago. He called and was told the account is being sent to litigation this Friday unless paid in full and was told they would not accept scheduled payments. Is there any way to negotiate or explain that we had not been contacted until today?
Colette – Unfortunately, explaining how you were told by the bank to wait to hear from a debt collector will not have any affect. You certainly can negotiate a settlement, or some type of monthly payment term, but you may not be able to do that with the collection agency now. You would do that with the collection attorney instead.
What is the name of the collection agency?
The name is Benchmark Recovery llc, they told us they cannot make a pay plan or settlement. The account had been delinquent since February 26th 2013 and was sent to them at that time. What are positive steps to take based on the fact they said it is going to court? We are completely willing to pay in full but can’t come up with the full sum, or a credit card to pay it immediately.
Colette – Benchmark Recovery is both a collection agency, providing creditors contingency collection services, and also a debt buyer. It would be good to know which capacity of debt collector they are acting on. You can find out by calling the bank and asking if the account was sold or simply placed for collection. Knowing that can create a difference in how you proceed in your efforts from here.
Alright, they said they are merely collecting it. Thank you for your help so far.
Thanks. Small local and regional banks (especially credit unions) can be difficult to settle with, or get affordable payment arrangements from. You could continue to reach out to Benchmark Recovery this week and explain to them with all sincerity:
“I cannot pay this debt off all at once. If that were possible I would have never fallen behind. I understand you have to follow your own policies for collection, and that this could mean sending this to an attorney for collection. Whether I set up affordable payments with you now, or with court supervision, I can only afford xxx dollars a month. Nothing is going to change my limitations due to unfortunate financial setbacks.”
How much can you come up with to pay?
If you cannot offer a settlement and need payments to be arranged, but the collection agency is not going to work with you, it just is what it is. You can indeed set up payments later, but they may be through a consent or stipulation. Obviously something to avoid if you can, but not the end of the world if you don’t.
I’m here, I would give you all the names of the collection agency as soon as I got my copy of all my credit report from the 3 credit bureau .
If I pay all negotiated amount on all my bad debt how long would it take me to be free from bad debt.?
If I hire your company to negotiate on our behalf can you explain the process and steps that we should expect from you.
Thanks
Thanks for moving the discussion about settling with collection agencies over to this page Perliza. Please do post the debt collectors you are dealing with, the amounts owed on each of the accounts, and when the last payments were made on each account in a follow up comment. I can offer feedback about settlement targets, and how long this will take once you do that.
I can explain the process and the steps to take to settle these debts, and without the need to hire anyone. This way you save money on fees. If after that you do want to have someone else involved, I will connect you with a CRN specialist. Sound good?
Hi Michael, it showed in my credit report that I have 5 in the collections. 1)diversified $321.
2) NCO $277. 3) portfolio recovery $ 887. 4). Receivables management $155. 5) sentry inc. $343. Since the amount is really not big, I would really want to clear this. The problem is when I called them, they want me to pay already over the phone. I have asked them if they can send me the agreement letter first before I pay but they said I have to pay over the phone and they will send letter after they received my payment. My question is, is it safe for me to pay over the phone, with a debit card or my personal checking acct. thats the only mode of payment they want me to do. my husband had a bad experienced paying with his personal ck before. and how would I know they won’t sell my acct to another credit collections? Also i have noticed, these credits collections has been there for more than 5 years, how did they got these updated to 2012? Pls advices. Really appreciate all the help I can get. Thank a lot.
Perliza – Debt collection agencies like NCO and Sentry Credit regularly send out settlement letters. Portfolio Recovery Associates is a fairly decent debt collector to negotiate with, and they offer fair deals, but really are terrible about sending documentation. I suspect that will change as a result of the fair debt buyer practices act that will take effect in California at the beginning of 2014 (CA is huge population so systems that have to be met there makes sense to apply elsewhere). But to date, PRA documentation policies compared to other collection agencies are silly. There are a couple collection companies that get referred to as “Receivables Management”. One is easy to work with and regularly documents their agreements, while the other is not. Do you have an address for the one you are dealing with, or even a phone number?
I generally would recommend that you set up a different account to fund payments to collection agencies. My concerns that lead to this suggestion are not what they once were, as there are less reports of payment problems than several years back, but there is nothing wrong with exercising caution in this regard. See this report for more about paying a debt collector.
As far as how they are showing on your credit report, which report are you looking at? Is there a date listed for when each negative collection account will be removed or fall off of the report? Some reports are a little confusing for the date they show as last activity that is not the date of default.
Mike…we had a communication thread as recently as Sat. 9/21. However, I can’t find that thread anywhere…anymore on your site. I asked a question on 9/22 and was just trying to check the answer today 9/24 but…can’t find the thread?
Curt – That prior thread can be found here. That page is about settling accounts with stores and brands. This is a good page to continue the discussion, as you are dealing with debt collection agencies for the most part.
You can get all comment thread activity sent to you via email so that you can track them. Just check the box to receive emails before you submit your new comment on any specific page of the site.
Ah ha…thank you!
Hi Michael:
I have a question regarding a wholesale store called Directbuy who requires membership. The membership was financed and I was making monthly payments and due to financial difficulties, I stopped making payments and my account was charged off and ended with collection agency that keeps calling to get the outstanding balance $3200. Do you have any recommendation on how to deal with situation. Can I settle with them, what kind of strategy I should use and the lowest potential settlement that I can expect.
Thanks
Sal
Sal – You can settle with the collection agency. Without details of your full situation I would target under 50% for the settlement amount. Your settlement could be a good deal lower if you look noncollectable on paper (credit report in poor condition with no unsecured accounts being kept current), or somewhat higher if you do not have other debts in collection.
Call the agency and keep your conversation limited to what makes it tough to be you financially. Do not delve into anything other than that. Let them know you want to do something to resolve the debt, but have extremely limited funds. You may be able to pool together a lump sum of money (use a round dollar figure), if they would consider settling for that amount.
What is the name of the collection agency?
Thanks so much for your reply! Here’s more information regarding what/who I’m working with:
1) Brylane Home (original and current creditor) $740.00 owed (reported first in 2010)
2) Medical bills (hospital and current creditor) $1200 (but only $400 worth on my credit report to date
3) Chase Bank Credit Card (now with another company- Midland Funding) Credit limit was $500 but high balance is 1K
4) Comenity Bank/Brylane Home again for original balance of $150 but high balance is $527…I tried disputing this bc I didn’t have two accounts with them but I didn’t get anywhere
5) TXU Energy now with Convergent- they are working with TXU to relinquish the deposit they never returned or applied to my balance (for ending the contract early) Balance $530 to date
6) Firestone $1463.00
7) Walmart (now with Midland Funding) and listed on my report twice- orig balance was $500 but high balance is 996.
8) Target (now with Midland Funding) and listed on my report twice- orig balance was $500 and now high balance shows as “NA” on both entries
9) I have two others listed with Midland but it doesn’t show me the original creditor and the amounts show as “NA”
10) I have a small bank card fee I owe to Chase but I don’t see it on my reports (amount was $100.00)
As you can see, I have many different small problems that I should have managed a long time ago. Many of my accounts are with Midland. Do you think they might be willing to negotiate all of them at once?
Thanks for moving the discussion over here for collections accounts.
1. Store Credit will vary on what they will accept. If all collections are in house (never sending to a debt collector), 50% can be a realistic target, though the lower dollar balance can often mean settling at a higher amount.
2. Hospital and medical service providers can be one of the rare instances that you can negotiate a payment for removal on your credit. Not always, but it may be worth a shot. Also, in house billing (and sometimes outside collection agencies), are often pretty fair about monthly payments you can afford rather than settling. If savings through settlement is your ultimate motivation, target 50% to 80%. There are also opportunities to get them to write some or all of the bills down completely depending on the type of hospital, and the type of treatment, as well as their qualifications based on patient income.
3. See below.
4. You may just want to fold this account into your discussions. Sticking to your guns about it never existing, but folding it into the conversation. Ultimately, if they are just stubborn about it, you want to resolve the other and circle back and file a couple of meaningful complaints. But hold back on that for now until you see how things go on the other, and bringing this one into the discussion.
5. How much was the deposit? Power company may be another example where you can argue for deletion. Just depends on the scenario. Something like arguing you thought the deposit was going to cover the termination…. It was all just a misunderstanding…. You are willing to pay in full, but should not have the credit report penalty. Worth a shot because it works from time to time.
6. When did you get the tires/service? Did you make payments? When did you last pay?
7. See below.
8. See below
9. Call Midland and ask for clarity when discussing the other accounts. There may be some duplication in reporting, or they can tell you who the original debts were with and you can compare that with accounts you opened in the past and fell behind with.
10. I would pay the 100.00.
Midland will work with you on all of the accounts at once if they can. A realistic target to settle if you can afford to make a single payment will be between 40% and 50%. They, like many of the larger debt collection agencies, use some scoring methods for how collectable you are viewed, and what you tell them your financial situation is like. If your situation and their scoring suggest they accept less than that, they will. It can also suggest they hold a line at a higher percentage.
They did for me, I had a target and T-mobile bill. The settlement amounts were reasonable I guess.