Short answer
A verbal agreement is not a settlement. Get the deal documented in a settlement letter, check that the letter contains the items that protect you, and only then send money. Paying off a settlement without a written agreement is a mistake you will regret if the account resurfaces later.
Key points on this page
- No deal is a real deal until it is documented and then paid in line with the terms in the letter.
- A settlement letter should show the creditor or collector name, the date, your name, your account number, the amount accepted as settlement, the payment terms and due dates, and wording that the account is settled or satisfied in full. If any of that is missing, ask for a new letter.
- Never release payment information to a debt buyer, or to a collector working for a debt buyer, without documentation in hand.
- Some large banks will not release a letter until payment arrangements are set up in their system. That is sometimes acceptable with an original creditor, and only in limited cases with a collector working for one.
- Schedule the first payment far enough out for the letter to reach you, 10 days or longer. If it has not arrived 72 hours before the payment processes, demand a fax, and be ready to walk away with the funds out of the account.
- Keep a copy of every settlement letter, including the deals a professional negotiated on your behalf.
We just discussed how to negotiate debts successfully on our own, but that doesn’t close the deal…yet. Negotiating debt and paying the new agreement requires a settlement letter. In the wacky world of debt collection, debt buying, and credit reporting, paying off a debt you settle without having a documented agreement, is a mistake. And one you will regret later on if the credit card you thought was settled (other types of debt too) resurfaces in a way where a written agreement to accept less could show the account was resolved, instead of the headaches you may go through without one.
NOTE: This post is part of our Debt Settlement Guide. If you’ve missed any of the previous content, or would like to start at the beginning, please see the links at the bottom of this page.
Reaching the point where you have a verbal agreement to settle and pay off a debt for an amount you can afford is exciting, and a relief at the same time. You must be careful not to lose sight of what are still critical concerns before celebrating your success. This information will help you focus on crossing the debt settlement finish line with confidence – when your success is documented.
A Verbal Agreement is Not Enough
When you’re negotiating directly with creditors, your settlements are generally going to be reached verbally first. The verbal agreement will be for a set amount of money either paid all at once, or paid by making several installments over a set period of time, until the settlement agreement is met. It’s important that you understand the deal is not done until it is documented and fully funded, consistent with the terms and payment timelines laid out in a debt settlement letter.
Verbal communication with creditors and debt collectors are a necessary part of the debt negotiation process. How and when to communicate with creditors and debt collectors to negotiate with them is covered extensively throughout this site. Ongoing communications over the phone with your original creditors and debt collectors can progress until you have the money you need to settle.
You should not attempt to negotiate an account, or offer a settlement amount, until you have the targeted dollar amount you need to fund an agreement. It makes little sense to start negotiating a settlement amount if you don’t have the money to pay. Just making calls to “feel out the situation” wastes everyone’s time and could hurt your efforts later.
Your targeted settlement amounts will be different from one account to the next. If you’re working with someone in the network, you’ll be able to set realistic settlement percentage targets, timelines, and goals using real-time data about your creditors and the debt collectors involved.
If you are a DIY reader, be sure to participate in the comment sections of relevant page topics in order to get feedback about timing and targeting for your debts you are looking to settle. The comment section at the bottom of this page is the perfect place to post questions about a settlement letter you have received, or what you could do if you’re having a hard time getting one sent to you.
Reviewing Your Debt Settlement Letters
Reaching a settlement agreement can take one phone call, or it may take several calls over a period of days, weeks, or even months. When a deal is struck, you know that no deal is a real deal until it is documented, and then paid in accordance with the agreement.
Debt settlement letters with original creditors and debt collectors are typically a standard form that will consist of the following:
- The creditor and/or debt collectors name.
- The date the letter was drafted.
- Your name.
- Your account number.
- Outstanding balance owed on the account (this is sometimes missing and is not a deal breaker).
- Amount that is being agreed to as settlement and satisfaction of the debt (less than the full amount owed).
- Terms and amounts of payments to be made – if you are settling the account over a period of time – instead of with one lump sum.
- Date your payments must be received by in order to have met the settlement agreement.
- The settlement letter must reference that the account being satisfied in full i.e. “settled”, “settlement of this account”, “accepted as settlement in full”, “paid in full”.
The letter will have other general information, such as disclosures about settling debt. Creditors and collectors put this information in to cover themselves. The bulleted items above are what you want to see in a settlement letter to cover yourself.
Settling with a third-party debt collector means you must get the above details documented before remitting any payment towards the agreement. If the above bulleted items are missing from your settlement letter, you should request a different letter be sent to you that meets the above specifications.
Watch this quick video about debt settlement letters:
Setting Up an Agreement Without a Letter
Some of the large banks will not release a settlement letter to you until your payment arrangements are set up in their computer system. They will request that you give them specific electronic or ACH payment information over the phone first. Should you agree to this? Yes, in some instances.
If you’re experiencing a creditor or collection agency holding back sending you a settlement letter, be sure to post about that in the comments below to get feedback about how each one of your creditors deals with this prior to settling, or negotiating your agreement and setting dates for payment. This way, you know what to expect beforehand, or can navigate the negotiation and settlement process of a specific account with more confidence.
Schedule your first (or only) payment for a future day that gives enough time for the settlement letter to reach you by mail. 10 days or longer would be best.
- Make payments on the settlement from your bank account that you set up specifically for saving and funding the agreements.
- If you do not receive the settlement letter within 72 hours of when your payment is scheduled for processing, you can call and demand the letter be faxed to you, or the funds will not be available in the account.
- You should be prepared to walk away from a deal if you do not have documentation in hand before the payment date. As a caution, be certain you don’t have the funds in your set-aside account on the date you set up a payment – if you are walking away from a deal.
Providing information and setting payment dates in advance of having received a settlement letter is usually only an option I consider when dealing with original creditors, and in some limited instances, debt collectors working for your original creditor.
Do not release payment information to debt buyers, or debt collectors working for debt buyers, without documentation in hand.
There are some instances where I will recommend you record a phone conversation about agreeing to settle a debt. I always encourage you to tell the debt collector that you are recording the call and why (they refuse to send you the agreement in writing before payment is set up).
Receiving Debt Settlement Letters Via Fax
Technology has provided many conveniences and cost savings when communicating important details that require documentation. Documents can be emailed with the click of a mouse. It may surprise you to learn that banks and collectors do not readily take advantage of technology advancements. You will find that many internal recovery specialists (bank employee debt collectors), and outside debt collectors working for collection companies, are not allowed to email anything to you. One way to work around the delays of getting settlement letters mailed to you is to get them faxed to you.
If you do not have access to a fax already, you can set up a virtual fax service. This would give you a 10 digit fax number that others can send documents to, and you can receive the faxed documents as attachments to an email, or receive an email notice a fax has been sent to you to log in and download, or print.
One of the services I recommend to receiving debt settlement letters via fax is eFax.com. The cost of an efax account, or similar virtual fax services is low. Setting up a way to receive faxed settlement letters is worth the cost when dealing with time-sensitive communication and funding of settlement agreements you’ve made. Getting the settlement letter faxed the same day is especially handy if you follow some of the “end of month”, or “end of collection agency contract” strategies that I lay out on this site, and other personal finance sites.
Working with a debt settlement company, or a professional negotiator, should not mean you let your guard down about getting settlement agreements documented and in your hands. Just because someone else is handling the heavy lifting doesn’t mean you should not be concerned about having copies of all settlement letters. Be sure to get a copy of all debts that have been negotiated and funded from any professional you work with as each of your debts are being settled.
With business trends for electronic data storage, and the fact that computer systems can crash, physical documents this important should always be in you possession.
Conclusion:
Negotiating and agreeing on an amount you will settle a debt for is primarily going to be done over the phone. Once you have a verbal agreement, it must be followed up with documentation. The settlement letter should meet certain requirements before you remit payment in full, or make a partial payment. If you do not receive a settlement letter, or a letter does not include what is standard information to protect you, it’s okay to walk away from the deal. You can receive settlement letters via fax and mail (sometimes even email). No settlement letter means you don’t have a deal. Keep all settlement letters in a safe place with all of your other important documents.
Almost done. The final step in our Debt Settlement Guide is paying debt collectors after the negotiations are done.
If you have questions about your settlement agreements, please comment below for dedicated feedback, or call 800-939-8357, ext. 2 to reach me directly.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement
How and Why Banks Settle Credit Card Debt with You
Types of Accounts to Include in Your Debt Settlement Plan
Why Settling Credit Card Debt is Like a Race
How to Settle Credit Card Debt Quickly
How to Talk to a Debt Collector
How to Negotiate Credit Card Debt Successfully Yourself
7 Largest Credit Card Banks and How They Settle Debt
Get Debt Settlement Letters and Agreements from Collectors (you are here)
Paying Debt Collectors After You Negotiated a Settlement
I had already agreed on a settlement back in February of 2016 for credit card debt with Wells Fargo. The case itself has been dragging on for 3 years.. The first payment was to be scheduled for March 15. I just now receive (June) an email from Weston Legal with the settlement papers attached.
They have set up a schedule for the 1st payment to be received in 5 days from now. I also am out of the country with very limited access to much of anything. Do I have agree on this time frame or request an extension? I originally had asked for more time to gather funds. I’m not sure who dropped the ball here by not giving me any notice. Is this how it normally works?
I would not say everything normally happens last minute, but it can, and yoru being out of country may further complicate this.
How much is the balance owed? How many payments are you making on the settlement? When you say case, are you dealing with Wells Fargo in court all this time?
I received a letter from C&W Asset Acquisition that they have taken over loan servicing from a previous company. This is for a Nellie Mae loan for which I haven’t made payments in years and is presumably in default. The letter also says that unless I dispute the debt within 30 days of receipt, they’ll assume the debt to be valid.
My questions:
— I don’t have any documentation that they are legitimately servicing this loan. Do I need that documentation before trying to reach a settlement? If I don’t have it, am I at risk of paying off this loan twice, to two different servicers?
— Should I dispute the debt in order to get them to send me such documentation?
— How can I best reach a settlement? I’d prefer not to pay the entire balance, but I could afford paying a lump sum for less. What percentage should I aim for?
You can connect with Nellie Mae and ask them who they sold or placed your account with. They will tell you. Let me know if they say anything other than C&W Acquisition.
Once you confirm you are negotiating with the right collector, and get everything documented up front before paying, there is really no risk of having to pay twice. There could be slip ups on the collection side, but you would be able to get them to correct that quickly when you did things right on your end.
I prefer you not to pay the full amount if it is not necessary either. How you go about it, and the amount you target, can vary from one person to the next.
When did you last pay the debt?
What state are you in?
Is it showing on your credit reports?
Do you have any other key derogatory items showing on your credit reports right now?
I called Nellie Mae. They said they transferred the loan to Navient (formerly Sallie Mae). Navient said the loan was transferred to New Jersey Office of Student Assistance. That phone number goes to New Jersey Higher Education Student Assistance Authority, who told me the loan was consolidated in 1999.
I do have a large group of consolidated loans with MOHELA/the Department of Education, although I don’t know specifically which loans those are.
— I don’t know when I last made a payment to Nellie Mae, but it would be sometime between 1999 and, say, 2006.
— I am in Virginia now, but lived in New Jersey until 2013.
— There is no Nellie Mae, Sallie Mae, Navient, or NJHESAA loan on my credit reports. The only non-closed loans are the MOHELA loans.
— The one negative item on my credit reports is a civil judgment from 2010 listed in the Public Records section, which I wasn’t even aware of until I requested the credit report today. The civil judgment was issued to The Education Resource, whom I’ve dealt with in the past as TERI. The amount is not the same as the (alleged) Nellie Mae loan, although it’s within about 10%. The credit report also says, “Estimated month and year that this item will be removed: 12/2016”
Call in to the hotline at 800-939-8357 and press 4 to connect with Andrew about your student loans. He can dig deeper and hopefully help you get to the bottom of this, and if necessary, help you settle as well.
Andrew referred me to Jan Miller, who handles federal student loans. Since Jan’s first available appointment is the 20th, my immediate concern is whether I should send a reply to C&W to dispute the debt since their self-imposed deadline is the 19th. Is there any harm that can come from doing so?
I know Jan. He is a great resource for resolving federal student loans.
There is little to be gained from sending in a dispute letter on legitimate federal student loans. What is it that you would be disputing?
It sounds like C&W might not have the right to pursue this debt? I guess I’m just not sure how to answer C&W and I haven’t yet heard back from Jan.
If you scheduled the call with Jan, it should happen.
I would not send a dispute letter to C&W challenging their ability to collect if it were me.
Hi Michael,
I am very grateful for your knowledge and expertise in helping with debt settlement. Thank you very much for your helpful posts.
I have reached an agreement and received a settlement offer with my debt collector. This debt has gone to court and a judgment has been written for it in the amount of $7600. I called the collection agency and they said I owed $10,500 for this court judgment. I negotiated and they sent me a settlement letter stating they will accept $1500 as payment in full to settle this debt. I sent them a cashier’s check of $1500 I purchased from my bank account before the due date said in the settlement letter. I called them a few days later to request an Acknowledgment of Satisfaction of Judgment. They stated the settlement of $1500 in their letter to me was not correct and that the settlement offer is not valid and I still owe them $9000. They have sent me 2 letters since to declare that I pay them the full amount of $10,500 and they will refund me the $1500 they already received from me. I am in dire need of counsel. Please help.
Interesting situation you have there. Who is the collection law firm handling this? Who is the judgment creditor or named plaintiff in the lawsuit?
The collection firm is Hunt & Henriques and Creditor is Citibank. I owed a credit card debt that went to court and I have a court judgment on it. In good faith, I wanted to pay this debt and resolve this judgment so I paid them the amount they stated in the settlement letter. Now they said that letter is not valid and I owe them more $$.
I don’t understand how they can send me a written letter which states that $1,500 would settle the judgment as payment in full for which I have sent them a cashier’s check and paid them the asked amount. Now they can say I owe them more $$. I thought that the settlement letter they sent me is legal and binding so I sent them the $1,500 to settle this case.
What should I do now?
I would like to review the letter to be sure the offer was clear that they were settling with you. If it is, and you paid them the agreed upon (what was offered in the letter), and you got the money to them on time, and they deposited the funds, I see a couple of options.
Connect with an experienced FDCPA attorney and look into whether your rights are being violated by Hunt and Henriques. I can email you contact details to someone who will offer you an initial free consult. Let me know.
File a CFPB debt collection complaint against Hunt and Henriques. The CFPB will want to know about it if Hunt and Henriques is trying collect twice, or back out of an agreement you accepted with them.
It is not your fault if Hunt and Henriques screwed up. But I want you to proceed with confidence.
Please email me details of an experienced FDCPA attorney so I can get assistance with this case. Hunt and Henriques just sent me a check for the amount I initially paid them. I am very grateful for your help.
I would not cash that.
I sent you an email a moment ago. Run your situation by Jeremy and please keep me posted with how this turns out.
How do I ensure that when I settle the debt, and it is paid in full, that they will not go after the co-signer of the loan for the amount that was not paid?
Can you offer some specifics of what you have going on Kellee? What type of account are you referring to? Who is collecting on it? When did you last pay on it?
Hi Michael,
I’d appreciate having your advise. My wife left her former office lease because what we considered a contract breach from lessor side, even when we notified in advance our intention to cancel the contract and the reasons which they verbally accepted, when we left the office they send a debt claim to a collection bureau. The point is to avoid efforts and time we agreed with the Advance Collection Bureau to pay a lesser amount, we asked them a debt-settlement agreement and they send us this by email
“””””””””””””””””””””””””””””””””””””””””””””””
Consumer: XXXXX
Creditor: XXXXX
Account#: XXXXXX
Balance: $2729.50
Per your request please consider this written verification of the following:
$ 1800.00 will be accepted as full and final settlement of the above referenced account if, and only if, received in this office via good funds by : 04/04/16 .
Your cooperation is appreciated.
“””””””””””””””””””””””””””””””””””””””””””””””””””””””
Should we accept this as debt-settlement agreement and pay it off? . Thanks in advance Alex.
If everything else is in order that verbiage would be fine for me.
Hey Mike I got a settlement letter, a confirmation # and setup a lump sum payment on 3/29 with United Collections Bureau, gave them my routing info & my account number for my checking account(set up specifically to handle settlements) money is in there and was to be taken out on 3/31, but it’s now passed 6pm on the 31st n they still haven’t taken it out, If they take it out tomorrow after the payment due date on the letter has passed can they void our settlement agreement?
UCB will not likely do that. It is in their system for timely processing. It can take a day or two to clear on your side is all that is likely happening. Let me know if it does not process through by Monday and let’s go from there.
Hi Michael –
I was able to reach a settlement with Atlantic Credit & Finance who is collecting on behalf of Midland Funding LLC. We agreed on 35% of the original debt and the person I was speaking with asked that I give him my bank account information so that he could “set it up in the system”. Since we discussed that funds would not be available until mid July or so, he set the due date as 7/31 which falls on Sunday and he even mentioned that since it’s Sunday, it will be drawn on Monday 8/1.
Here is a text of the letter he send via email on the Company Letterhead.
”
Original Creditor: XXX
Original Creditor Account #:XXX
Current Creditor: Midland Funding, LLC
ACF Account #: xxx
Balance:$9,479.22
Dear XXX
This letter is to once again inform you that the above referenced account has been placed with Atlantic Credit & Finance. At this time we would like to confirm the following arrangement you made with us in order to resolve your account: One-time payment of $3,317.73 due on 07/31/16.
We appreciate your cooperation in resolving this matter.”
======================================
I have 2 (two) concerns with this letter and wanted to run this by you and see what your thoughts were:
1) The verbiage to me seems sort of vague – “resolve your account” there is no mention of something along the lines of settling the account in full. “Resolve your account” could mean something other than fully settling the account (correct me if I am wrong.)
2) Since 7./31 falls on Sunday and according to the person, the ACH will be initiated no earlier than Monday 8/1 is it possible that this agreement can be voided and they can later say that the funds were never received on 7/31 and now I owe them the rest??
What do you suggest I do? As it is, I am not comfortable with either of these. Should any of the above be a concern?
thank you!
In the context of the letter and the circumstance the reference to resolve your account is settling. The one time payment to resolve is clearly stated, as is the actual balance. I pay Atlantic Credit and Finance the settlement amount based on this letter if it were me.
I understand your concern about the payment date being a day off. I do not share the concern, as the next available banking day is not in your control (or theirs). Atlantic Credit will not try to collect more from you after this. If that were to happen, post an update and I can help you from there. But the way around this would be to have the payment pull date be a few days earlier. If that is something you can do, and it helps you put your mind at ease, call in and request for the payment to transact earlier.
I personally would be comfortable with all of it.
Thanks Michael –
A couple other things. Many people on the internet write how it’s not advisable to pay using ACH as the collectors can mess around with the account. I do plan to only put slightly more than the amount in the account for them to take. Do you recommend that I close that account afterwards just for safety? I know Midland and its affiliate are closely monitored but still what would be your advice.
Also, in the case of the OC settlement, i would always get 1099-c. Since Midland purchased this debt from Synchrony, is Midland going to send me 1099-c or Synchrony? Do JDB’s send out 1099-c? Since they only pay pennies on the dollar to buy the debt and they really are not losing any more on it?
Yes, they do send out 1099c’s. It is not about what they pay for it at all. It is about the benefit you got from the credit (IRS sees it as same as cash income).
There just aren’t the same concerns with ACH payments with legitimate players in collection anymore. Those kind of concerns were very real back in the 90’s when I started out. They have been overblown cautions for years. I understand the caution, so I rarely publish anything about it. But if something went wrong with the payment it would be fixed in a day anymore. Well… at least with a huge player like Midland it would be.
I would close my special settlement checking account. I would probably use it as my online shopping account. Having the debit card ready to use with only a couple bucks on the account, and log in and real time transfer the money I need to make an online purchase. This would create a protection for using a debit card if I no longer used credit cards.
Michael –
I still have one more question regarding 1099-c.
In my case the Synchrony Bank was the OC who sold the debt over to Midland. I checked my credit report and it shows Synchrony is showing charge off/zero balance on the account.
What I was trying to understand is, will the Synchrony issue 1099-c at the end of year since they charged it off and forgave the debt? and in addition I will get 1099-c from Midland?
So if that was the case the Synchrony’s 1099-c would be the entire original amount of 10K or so, and Midland’s 1099-c would be close to $6.5.k after I settle with them.
Can this be even done? In your experience have you had someone received 1099-c from both the OC who sold the deb AND the JDB?
No, that is not what will happen. Synchrony will not send the 1099c, as they have no legal claim and cannot forgive anything at this point. Midland will be the one to send a 1099.
I have a more thorough post up about taxes on cancelled debt.
Thank you! You have been very helpful!
Mike – I apologize for inundating you with too many questions about this matter. From your experience, is it generally better to settle debts owned by JDB’s at this stage when they are collection or when it gets to pre-trial?
I do want to be done with this and move on ASAP. But I have been hearing/reading a lot about how JDB attorneys usually lack documentations to support their cases.
For example: in my state of North Carolina, the general statues 58-70-150 States:
all of the following materials shall be attached to the complaint or claim:
“(1) A copy of the contract or other writing evidencing the original debt, which must contain a signature of the defendant. If a claim is based on credit card debt and no such signed writing evidencing the original debt ever existed, then copies of documents generated when the credit card was actually used must be attached.
(2) A copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. If the debt has been assigned more than once, then each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership. Each assignment or other writing evidencing transfer of ownership must contain the original account number of the debt purchased and must clearly show the debtor’s name associated with that account number.
Is Midland usually good at producing such documentation at the time of service? If I am served a complaint and if any of this is missing can I automatically have the case dismissed?
I don’t want to come off as someone who is trying to dodge anyone but if the JDB attorneys are known for routinely lacking such documentation due to the fact that oftentimes companies like Midland purchase debts “as is”
It crossed my mind if this were the case, would not that also put me in a better position to negotiate a lower settlement?
I am at 35% right now and seems like it’s a decent one. What is your take on this whole thing? Am I potentially asking for more trouble by going down that route?
Once again, i do appreciate your insightful responses on this particular situation.
It is far better to settle accounts before they get to the courts for collection. In fact, if you can swing it, you want to settle accounts before they ever get placed with attorney collectors (sometimes hard to do with AMEX and small credit unions). The difference can mean as much as 20 percent, and even as much as 40% more saved. And without the stress of court.
It is hard to get a firm grip on what you are doing. You contradict yourself with saying you do want to get this over with as soon as possible, but wonder if you can take advantage of the requirements for debt buyers to prove their claim, which are a bit more stringent in North Carolina (but Midland has a consent order to pretty much do the same thing – and more – in every state as of last year).
You either want to get this done and start improving your credit, or roll the dice that Midland can prove up in court. If you are sued and lose you will pay more for the settlement, and lose a great deal of your personal time dealing with the courts, or money if hiring a good attorney. If you settle it is over with.
You will not likely improve your settlement down the road, and if sued will look back and probably regret not taking the deal (if your honest with yourself).
My experience is that people with resources to knock their debts out early on, regret not having done so quickly. People with no resources to knock debts out are forced to put one fire out at a time (and pay a premium), or file bankruptcy. And most of the fire fighters would love to switch places with the others.
Thanks Mike, I guess it is better settle and move on than potentially invite more trouble down the road. I let my emotions get in the way after having read all sorts of “nasty” things about how Midland and its affiliated companies/attorneys have done.
I have spent a lot of time perusing the creditinfocenter and folds over there, in general, seem to be wanting to fight the cases for the sake of fighting. 🙂
Some sites are better than others for delivering usable information when we are in debt collection situations. There are some awesome posters that know their stuff over on CIC. But there are far too many emotionally frothed up people who say “never pay a debt collector” because they refuse to. Too many people read that and get charged up and let opportunities to resolve debt pass them by, and later pay more to resolve a debt when sued, or legal costs, or stress and life costs that could have been avoided.
It really boils down to goals and resources for me. Do I have the resources to resolve the debts, either now or in a reasonable period of time? Do I have credit and finance goals that will be impaired by unresolved debts? Then do what makes sense from there.
Mike – speaking of credit repair. I did have one question unrelated to the above.
I had 2 credit cards that were charged off back in 2011 (with c1 and BoA) and without any collection efforts, both banks issued me 1099-c. However, when I am checking my CR, I see that both of these banks are reporting my accounts as follows:
Account Status: Closed
Payment Status: Charge-off
Balance: Whatever the balance they charged off
and both are updating my report monthly with FP (Failed to Pay)
Since they issued 1099-c, can they report balance other than zero?? I understand that 1099-c means that they forgave me the debt and its uncollectible but for the past 4 years they showing Balance the charge off amount.
Anyway this can be removed to changed to zero balance.
All I have are 1099-c they sent me,
thanks
Hi Mike, I just reached agreement with URS, settling a citibank amount for $9616 for $2420. I have received the settlement agreement letter by fax and it includes all your points you said to make sure were on it, I just want to make sure that this wording would fit your definition of settlement full.
“Our client, above named creditor, has agreed to accept your 1 time payment(s) of totalling $2420.83 as settlement for monies owing on your account.” What do you think?
I would be good with that wording in the settlement agreement with URS if it were me. Congratulations on getting this wrapped up!
Thanks Mike, now I’m dealing with United Collections Bureau for citibank charge off as well. They sent an offer for settlement in the mail on 3/11 that expires on 3/30. I called and stated I will see if I could come up with the settlement amount they offered but when I asked about a settlement agreement letter for that amount offered, the representative kind of played games and came up with excuses: “like it could take up to 48 hours to have them type one up and email to you because the lady is swamped and goes home at 4” AND “faxing it would take longer because they have to receive an authorization to send me faxes” and they said “my settlement offer letter is the settlement agreement letter”. And “around April 30th I would receive a satisfaction letter after I pay them by March 30th”. And they said if i payment is not made by 9am on the 30th, the price goes up $100 because they weren’t supposed to offer me so low to begin with”. Could the settlement offer letter and a recorded phone conversation(with their consent) be enough if it ever comes back? I just feel like these guys are playing games when it comes to the settlement agreement letter compared to URS, with them they said it would take up 2 hours to get typed up, faxed and it was done. I don’t mind walking away from the deal, I want to get it done, but I don’t want for it to bite me later.
If you are up to it Tom, send me the settlement offer letter from United Collection Bureau. My email address is the one you get these comment notifications from. I will share my thoughts after I look at it.
Generally I would say the offer letter is fine as long as you are paying the amount stated, and before the offer expires.
I don’t think I get comment notification, I just ran through all my email folders and nothing popped up.
Hey Mike, don’t worry about my earlier post. I dealt with someone else at UCB and they were more than happy to fax me a settlement letter, and not only that but they had the wrong due date for payment and I called back and they fixed it right a way and faxed me another one. I guess it really just depends on the type of person your dealing with on the phone. Thanks again Mike.
I am trying to resolve a default judgment that is 5 years old. The debt is form medicredit. I contacted medicredit and the stated the balance due is $2000 but they would accept $1300 to settle. They will not give me anything in writing in advance. I contacted the attorney that has the case and they gave me the same balance but offered to settle for $1900 and won’t provide anything in writing in advance. I worry about paying without anything in writing and If paying medicredt the $1300 makes this go away since that circumvents the attorney. How do you suggest I resolve this?
You may want to use a recording app for your smart phone (iphone and android have good free ones) to record the conversation with the Medicredit rep. Tell them you are recording and why (they wont send you something in writing). Cover all the details that are being agreed to. Get them to identify themselves. Take notes of the number you called and time of day.
Save that recording until documentation of the deal you paid arrives. I would save the recording after that too. If anything happens that was not agreed to, or some error occurs, you have what you need to remedy the situation quickly.
Hello, I am in need of your help. I took out an installment loan with Check n Go in 2013 for only about $3000.00. The payments would have been over $700.00 per month for 12 months and I ended up defaulting after two payments. It went to collections and I never heard anything about it until it showed up on my credit report in mid 2015. The balance is now $4000.00 and owned by Real Time Resolutions collection agency. I’ve not gotten any letters or anything but would like to settle this debt. I have anxiety and hate talking on the phone and have no verbal negotiation skills whatsoever. Can I send a written letter requesting to settle the debt, for say 30-40%? Or do absolutely HAVE to speak someone over the phone first?
Thank you and I look forward to hearing from you.
What state do you live in? A written acknowledgment can reset the SOL to sue you in a handful of states.
Watch this video about who is a good fit for DIY debt negotiation.
If you could be resetting the SOL to sue, and before you resort to sending efforts to settle in writing, is there anyone in your friends and family circles you could ask to help do the talking?
Hello, and thank you for your reply. I live in California. A friend of mine agreed to do the talking for me. The most I can pay is $1500 in full and I can send cashier’s check. as soon as I receive a written/signed letter stating that it will be considered settled once that is paid. Do you think this amount is reasonable?. Do you have any other suggestions on what he should say? I will also check out the link you posted. Thanks so much again!
If 1500 is all you can than that is what you stick to. You may not get it hammered out in one phone call, but stick to it, as you sometimes have to wear them down.
If your friend is in the room with you when you make the call, you can often authorize him verbally to speak for you with the debt collector on the other end of the phone. You may also want to be ready to send a written authorization if they require that (it happens).
Have your friend read up about negotiating with debt collectors before the call.
Hello, again! Well we called and they continually stated they could not discuss acct info without my birthday, address and SSN, which we refused to give of course,even though we gave them acct number! We ended up telling them to send letter validating debt to whatrver address they had on file and the rep said ok and hung up. I don’t know if he will ever send it, as I have never gotten a letter regarding this debt (just showed up on credit report.) Should I wait and see if they do send a letter validating debt or should I be proactive and send them a debt validation request letter myself? If I do send one myself , do I just include my name,mailing address and acct #? Just want to pay this thing and not make things worse! I also don’t want to get sued! Thanks so much, Michael!!
They likely already have your SSN and DOB. They will have all of the addresses that show on your credit report too. If your current one is on there, they know where you are at right now.
If I want debt validation I request it in writing and use certified mail. You can be identified by the account number. But try not to get hung up on all the identity stuff at all. If you are dealing with a legitimate debt collector on an account you are familiar owing, they have all the details already. They ask you to verify them to be sure they are talking ot the correct party about the debt. They do this for their own CYA effort.
Thanks so much for all of your help!
I am currently trying to pay off a old cell phone debt. My first question is would it be better to pay it off in full or to negotiate a settlement ? Also Im a little thrown off because this debt is being handled by two companies. One is reporting it to the credit companies and the other is taking the payment. Neither company deems to have any control over what the other company does. Also I have requested a arrangement letter and been refused by both companies. They both state ” they dont do that” and will only send me a letter after a payment has been made stating that their “recorded ” conversation with me can be used in a court of law. I have always been told to never make a payment with out and arrangement letter first.Please help!
Who are the two companies you are dealing with?
How old is the bill?
The older the debt the more I am geared toward settling for less.
I am okay with using a phone recording of your own to protect you in some limited cases, but not relying on the fact that they are recording.
Share some more details and I can offer more specific feedback.
Have a Bank of America cc balance is just over $19,000. Last payment Jan 2015. I have had a huge drop in income over the past 2 years, and that is the reason this card is so behind. 7/2015, they offered to accept $8600. I was unable to even afford roughly $400 a month, so I could not take that offer. In December, I recieved a letter from a law firm saying I had 30 days to dispute the validity or contact them to make payment arrangements. I may have a way to come up with a settlement to avoid a judgement or bankruptcy, depending on if they will accept the amount I can offer. If they sue me, I’ll be forced to file bankruptcy. I’ve already met with an attorney to discuss my options on this account based on the letter. The attorney said not to worry about the letter unless I am served with a suit, and actually advised me to file Ch 7, based on my current financial situation. Is calling Bank of America my next step? Is there any reasonable hope of settling for under 40%?
Call me to go over some of the details that are missing from your comment. You can reach me at 800-939-8357, option 2.
There are instances where you can negotiate a better than average settlement with FIA card services, or the attorney they have the account with. Your hardships may be ideal.
I tried to settle with a collection agency that is suing me. We agreed on a settlement amount and they told me they would fax me the agreement. I had already received papers from the court in the mail which I had to respond to by a certain date. I was patiently waiting for the fax so I could settle the account. A couple of days before the required date I had to respond to the court by, I had no option but to hire an attorney. About 2-3 weeks later, I get a call from the CA telling me they never received a payment. I told them I never received their fax. They looked at their records and they had just sent it out (about 30 days after the initial request). Did they violate any law?
I cannot see a violation in that, but run it my your attorney.
Thank you Michael for your reply.
We spoke to Capital One recently and reached a settlement figure on one debt.
Unfortunatley, there is a 2nd debt with this bank as well. When we inquired about it, the
bank told us that this one was with the law firm, Hayt, Hayt, Landau. This has been since 2009!
I will try to reach a settlement agreement with them for 50% or less.
Hello Michael,
May I ask first what has been your experience with the law firm Hayt, Hayt & Landau
out of Miami, FL regarding negotiations to settle an old credit card debt?
We are about to contact them with an offer of settlement regarding an old
Capital One judgment (just discovered) recently after attempting to pre-qual
for a mortgage. This debt dates back to 2009. We contacted Cap One to discuss
a settlement but they said the debt/case is still in the atty’s hands. (?)
Your advice and information is appreciated.
Rob
I
Hayt Hayt and Landau are a pretty straight forward collection law firm to deal with. If you can be convincing enough, settlements of 50% are possible. That target is as much an element of Capital One being the creditor as it is about Hayt Hayt & Landau, or the debt being in court.
Hello,
My husband and I are currently trying to purchace a house. I found out that I have a judgement from 5 years ago. I called once to see if I could settle and the quoted amount due was double what the amount of the actual court judgement states. She also stated that they would only accept 75% of the amount due to settle. Do you feel that I should wait two years to see if the judgement comes off my credit report or continue to try and settle? I would like to buy a house sooner than 2 years, but I want to be smart about contacting the Collection agency. Would it be smarter to settle with the court since the amount is half the price? Any suggestions would be greatly appreciated!
Thank you
It is not uncommon for a judgment to legitimately double from the original amount owed. What was the balance at the time you stopped paying the account? Who was the account with? What is the name of the collection agency handling this?
Unfortunately, Waiting 2 years for the judgment to drop off your credit is not enough. The judgment is in the public records and that is something mortgage lenders look up too (not just credit reports), and they are unlikely to lend to you with an unresolved judgment.
You cannot settle with the court. They are not a party to the lawsuit or the claim. You would have to give the court 100% of what is owed with all interest etc.
I can offer more feedback with answers to those questions.
Hi Michael, I received a letter from Fenton & Mcgarvey Law Firm with the original creditor as Credit One Bank. They offered to settle for 25% of the balance reflected on my acct the day I call. I called today and reached an agreement of a $225 settlement on a $800 debt. I asked them about written documentation and he told me once the payment was received I would receive a letter of the closing of the acct. I advised him I would be paying by money order and I would be sending the payment off on Dec. 11th. Should I send that certified and the letter I received offering the 25% payment enough documentation to use as a settlement letter/offer?
Thank You for your help in advance.
Is there a paid by date on the original settlement offer letter the debt collector sent? If so, what is that date?
Yes, the letter states the funds have to be in their office no later than December 26th on which the offer will expire.
I would be okay with the letter in that case.
I do not like using third party money orders because they are hard to track. If you pay with a check and will not be using your own, think about getting your bank to issue a cashier check drawn from your account. Your bank will be able to help you track that payment if you ever need to.
I defaulted on multiple student loans taken out with Sallie Mae, now Navient. The last payment I made was in April of 2012. The total amount owed right now is about $88,000. I haven’t answered a phone call in years and have ignored previous lump sum settlement offers.
This week I received a letter from Allied Interstate offering a payment plan of $250 per month for 352 months, with the first payment due 11/18, and an interest rate of .001% after I enter into the agreement.
My financial state has drastically improved since 2012 and I can afford this payment. I knew I was pretty far gone with damaged credit, and was going to wait on a settlement I could afford and rebuild from there. I’m looking this as an opportunity to essentially start fresh. 30 years, 250/month, no interest. If I was making regular payments on this account, I’d be paying over 500 a month, and in 30 years have paid 100k of interest on top of the principal.
I am curious about the following:
How will this be reported to credit agencies? I am attempting to climb out of the credit rating basement, and can only see this helping over time, as the charged off original accounts fall out.
What potential downfalls are there in entering into this program?
In these types of circumstances, are there typically pre-payment penalties? With almost 0% interest, it would make sense to continually look at paying off other debt ahead of this.
I am considering hiring an attorney to formally answer this letter to ensure I am protected, but any and all advice from you would be very much appreciated.
You want to bring the student loan current if your goal is improving your credit, and I am not sure the plan being offered would do that. The collection dropping from your credit would help, but that is years out.
I do not see prepayment penalties in this type of arrangement.
I am not sure this is the right thing for you to do at this time. I would suggest you call me for a consult at 800-939-8357, option rings to me.
Michael,
I called but went to a bunch of automated messages and then was hung up on. Because I’m at work, I couldn’t go through options.
With this scenario and with these being private student loans, I believe I’ll eventually have to pay. I don’t think legislation is going to allow for bankruptcy anytime in the next few years, especially before a potential judgment and garnishment.
My timeline for credit improvement doesn’t necessarily have to be immediate. A few years of on time payments with an agreed upon arrangement, according to my research, would be better than the judgement I would potentially face in the future being on there.
Also, like I stated earlier; The nature of this debt being private student loans, without any undue hardship, will not just disappear. If this is a chance to pay what I owe, over 30 years (more likely paying it off 10-15 years sooner), without any interest payments, at a very affordable monthly cost, seems almost too good to pass up. My fear is entering into agreement with Allied Interstate and having the debt sold and not being legally protected and bound to the agreement I potentially accept.
This settlement offer is on their letterhead and clearly dictates terms, number of payments, monthly minimum payment and interest rate.
Sorry about the phone system. It is usually pretty good. Just dial and press 2 right when your connected. If you get my voicemail be sure to leave a message so I know to call you back. I am usually available as late at 9 pm eastern, but am on the phone a lot. You could send me an email with the number and good time to call you. My email address is the same one you get these comment notifications from.
I would want to talk with you more about settling with Navient and what that would look like for you with a 12 to 36 month view.
The current Navient payment offer is a good one, and made more so by how attractive it is to you based on affordability. I would want to compare the offer with some of your lump sum settlement capabilities.
Good morning Mike,
I have another question. Salle Mae, place a negative report that I was late on making payment, when I never actually began payment until they contact me. Can I dispute this with the credit report agency referencing late payments, My payment have been on time every since they contact me about payment arrangement.
How much time went by between your loan payments having been set to be paid, and when you did start paying?
My husband became ill in July 2012 but the training facility report it in August or September 2012. They report late payment in January 2013. After they notified me on making payment. I have made payment from Feb 2012 to present, never a late payment, I have it set for automate draft to avoid late payments.
I have made payment since February 2013.
There really isn’t anything you can get Sallie Mae to do differently. Check to make sure the loans have been brought current now that you have on time payments for this long (you should). If not, let me know. If the loans have been brought current that is about as good as it gets.
This really is not something that will be dragging down your credit much at this point.
Michael:
I have an old debt that is settled (per NCEP not just because I say so). I have been trying to get them to send me a settlement letter for over a month. It is the only major hiccup on my credit report and I am in the process of buying a house…. Every time I call they say they will get it out, and they don’t!
What do I do to get this letter that my lender is going to need very shortly?
Thank you in advance,
The loan officer may be able to confirm the settlement to his/her satisfaction by calling NCEP.
You could file a credit reporting dispute with the credit bureaus, or perhaps even skip that step and file a credit reporting complaint against NCEP with the CFPB.
If it were me I would file the credit reporting complaint with the CFPB, if it is NCEP that is showing on your credit as unresolved debt.
Is NCEP showing as a paid collection but you are still be asked to document the settlement?
Hello Michael, I have a judgment claim on my credit report from a student loan that was sent to a collection agency. We set up payment arrangement but I know longer could pay it. I wanna take care of this issue though. If I was able to settle whats the amount I should try to settle for. Its a sum off $4500 and how should I address this. Its from the year of 2007. I had my bank look over my credit and they said that was the only thing that was hurting me.
Who is the debt collector you are dealing with on the student loan?
Dumas and McPhail Attorneys at Law.
Give me a call at 800-939-8357, choose option 2. I want to understand your situation and who all is involved better.
Ok I called and left my number!
It was nice talking with you on the phone today. Let me know if anything new develops.