A site reader recently wrote in to ask about dealing with a large debt collection agency by the name of Radius Global Solutions, who they are, and whether to settle a debt with them. The submitted questions are great, and as is the case with much of the site, I publish the exchange so others can learn from it.
I would like to ask you about settling a debt with Radius Global Solutions, LLC. Are they legitimate?
Radius Global collects on accounts from many different banks. I run in to them all the time. If you are curious about whether they are legitimately collecting on your account you can call your original lender and ask who they have your account out with for collection at this time. Your creditor is nearly always happy to provide the details.
What leverage do I have to get the agreement in writing or is the letter sent by the collector sufficient for an agreement and payment terms?
Your leverage to get your settlement agreements in writing is the money you are offering to pay off the account. Nearly all collection agencies have a policy for sending you the settlement in writing once you have negotiated a deal.
If Radius has already sent you a settlement offer in the mail that you like, and can afford to pay, just be sure you are acting on the letter by the expiration or due date. If you need a new date you can call Radius Global and negotiate a new date, and get a new letter.
In general, what cases does the “settled” portion of a debt greater than $600 get taxed and in what cases does it not? In the cases it is not taxed, what specific terminology is used in the agreement between the collector and the payee to ensure that it is not taxed?
Generally speaking, all settlements where you save in excess of $600, should result in a 1099c the following January. Having been at this for a while, I recall a time when no one got them. Nowadays few do not.
There is no effective language or negotiation tactic I can provide that results in a creditor or debt owner agreeing to ignore a known tax reporting obligation. There are some instances I have seen though, such as when there was active litigation, the settlement has resulted in an agreement not to report. Not sure the IRS would be cool with it.
Radius Global, as a contingency collection agency, collects on the debts of others. I highly doubt they are in a position to ever negotiate anything about tax reporting.
You do have the ability to submit IRS form 982 to show you were technically insolvent at the time of settling, and should not owe a tax.
Radius Global Not Known To Sue
The reader submission went on to ask more generalized questions. Some of my answers tie in to all debts, and some are specific to Radius Global, such as the fact that, as a contingency collection agency, they do not file collection lawsuits.
Finally, in general, is my following assessment of debt collection accurate?
It is best to settle with the credit card company. They will likely close the account for this.
Your accounts are typically closed after a few months of missed payments. By the time you are settling for the best savings you should already be dealing with a closed account. If you are not, yes, settling for less would close the account.
It is not necessarily always true to say that it is best to settle with the original creditor. There are some creditors that use Radius Global for collections where I would get a better settlement savings outcome from Radius than I would the creditor.
Getting more than 3 months to pay on a settlement is much more likely after an account gets charged off and placed with a collection agency like Radius.
If the account goes to collections, is it best to settle with the collector instead of being sued?
Nearly every time this would be true, but there are some limited exceptions to this. One would be when you do not have enough to settle an AMEX account that Radius may be collecting on, and you can use the formal collection process in the court to your advantage.
A charge off occurs from the credit card company when the debt is not paid for a period of time. This event damages the credit score.
Yes. Most of the damage is done leading up to the charge off, but that is the pinnacle of negative impact from an unpaid credit card.
Another hit to the credit score occurs when the debt is paid to a collector.
Not true. Many of us will only see a benefit immediately, and there after, from settling and paying a collection account.
There are many instances though, when settling an old and stale unpaid collection account, that paying can bring a certain level of freshness to the negative. I do see temporary dips to credit scores in some of these cases. And there are scenarios where peoples expectations are to see their credit scores jump after settling 1 out of 5 collections, which is not always going to be the case. Several other things could be holding back improvements.
Another hit occurs to the credit score if a lawsuit is settled regarding the debt.
This has not been true since July 2017 when most of us saw the removal of judgments showing on the major three credit bureaus.
It is best to pay a non profit debt management firm instead of a debt collector as the event will remain on the credit report for less time, like 3 years instead of 6. However, to do this, involves a total survey of your debts and ability to pay a monthly amount to resolve the debt through the third party. In some ways, it is similar to filing bankruptcy but it is not as extensive and involved.
This is not accurate. Debt management plans with credit counseling agencies last up to 5 years. If you enroll a collection account with Radius Global into a plan like this, none of those monthly payments are getting reported. If the plan goes the distance, your credit is going be much worse than if you settled with Radius for less and paid it off much quicker.
The similarities between a DMP and a chapter 13 bankruptcy start and end at:
- Creditors are getting paid (though in chapter 13 not necessarily in full).
- The plans tend to go 5 years.
Thank you and keep safe and healthy!
You too! I invite you, and all readers dealing with Radius Global to post in the comments below with experiences and for feedback.
If you miss a payment to Synchrony, they are likely going to charge a late fee. If your situation is such that you can get the payment and fee to them prior to your next billing cycle, you can avoid being reported as 30 days late on your credit reports.
