Bank of America – Settling My Charged Off Credit Card and Debt Collectors
I do have some knowledge of credit repair/collections/debts, etc, but I have some specific questions that I don't have answers to and there is a disconnect that happens in my mind when I begin trying to figure out where they truth actually is with respect to collections/charge off procedures, etc. I want to take the necessary steps to clean up my credit, but there are serious issues that I am having because there was about $35,000 of credit card debt that I let go, spread over different credit cards and I don't want to make mistakes tackling this issue.
Therefore, if you don't mind, I will ask several questions:
1) Part A: When a consumer (such as myself) stopped paying a credit card account....i.e. Bank of America...and it is 3 months past-due, am I correct that at that point, it sits in the internal collections department of BofA? (I had this happen to me, but not sure if this is correct).
Part B: After this account was Charged-Off, did BofA sell the debt or did it assign the debt, and how would I know?
Part C: Since a Charge-Off is a Write-Off (and in this question - BofA), usually doesn't the bank, BofA write the ENTIRE amount off their books as uncollectable debt and get covered by FDIC for the entire amount, and if so - how then can they sell the debt to a collection company if they already got paid...or do they only sell 10% of it for (i.e. - 10 cents on the dollar for the entire amount) and get covered for the other 90%?
2) Part A: I noticed that on my report there are charge-offs and open collections. In speaking to mortgage lenders, they expressed a concern and told me that all my open collections would need to be paid if I wanted to buy a house. Are these open collections assigned by the original creditor or was the debt purchased, and what about in the case of charge-offs....if it was a write-off, how could a collection company purchase it?
Part B: (Sort of mimics part A, but slightly different) When it says "Collection" on the report, not "Charge Off", does that mean this is a newly created collection item after the sale, after the Charge-Off occurred by the original bank, or did this collection report, while this was with the original creditor?
3) How would I know when specifically to use the debt-validation tactic? (as I read your blog on backfiring and I don't want it to backfire on me)
4) Is there a point in disputing an item that is being reported by a collection agency/original creditor, if there is still a balance being reported? (wouldn't they verify it anyway?)
5) Part A: Statute of limitations normally is 4 years from last DLA date....should I wait until this expires to try to delete the item or would it not matter? (as after 4 years they legally cannot collect on it)
Part B: Is there a point in settling a collection/charge off account (if this is reporting under different collection agencies), if the original DLA expired on the original bank account, or is there no way to stop them from selling/assigning and selling again to new collections...and how can I permanently stop this process?
If you can answer all of these, you are a hero because after reading too many forums and all kinds of sources, I still cannot fully understand the truth about this and where should I begin.
Thank you for your time and I really appreciate your help in advance.
What are the pros and cons of settling my charged off bank of America credit card that is with a collection agency?
—Adrian
Short answer
Bank of America tends to keep an unpaid card with its internal collection department at 90 days, but it does assign accounts out before charge off, and it can sell them after. Call the bank and ask who has the account now. Charge off is an accounting entry, not the end of the debt.
Key points on this page
- To find out which way your account went, call Bank of America and ask who it was placed with or sold to. If the balance was sold to a debt purchaser, that buyer may have sold it on again.
- You can also run the name of the company contacting you against the usual suspects in debt collection and debt buying, to work out whether they are an assignee or a buyer.
- Charge off is an accounting function. The debt remains collectable, and there is no FDIC insurance on charged off credit card debt. The FDIC insures depositor funds.
- Only one party should report a balance owed. If a debt buyer reports a collection account with a balance, the original creditor should show no balance owed to them.
- Disputing a valid entry is usually a waste of time and postage. A dispute works when the reporting is inaccurate, out of date or erroneous, or when the furnisher never responds to the investigation, in which case the item should be deleted.
- Debts past the statute of limitations often settle at the steepest discounts. Never let the collector know you need the account resolved for a home loan, because they will not go as low. If you are not resolving them at all, a cease communication letter, sent certified with return receipt, triggers rights under federal and state law.
1a. Bank of America does currently tend to keep accounts in internal collection departments when the credit card has not been paid for 90 days. That is not always the case though. BofA can and does assign unpaid credit cards out to assignment collectors prior to charge off.
How to Find Out What Bank of America Did with Your Unpaid Debt
1b. You can find out which way Bank of America went with your account by:
- Calling Bank of America and asking who your account was placed with or sold to – just keep in mind that if your credit card balance was sold to a debt purchaser, that buyer may have sold it off to another debt buyer.
- Running the name of the company trying to collect from you against a list of usual suspects in the debt collection and debt buying world and identifying whether the company is likely an assignee or buyer.
BofA insurance claims against the FDIC for charged off credit card accounts:
1c. Where are you getting your information about banks insurance claims with the FDIC? The FDIC insures depositor funds.
Banks charge off credit card debts that remain unpaid. If they sell the debt right away or later on, they would make an accounting adjustment at that time. Charge off happens as an accounting function. If Bank of America is later paid through a debt collector they hire, or sells the debt for say 9 cents on the dollar, they adjust the accounting.
You mentioned you are somewhat confused after reading many web sites and forums. I would suggest not putting too much value into anyone of them that gave you an impression there is FDIC insurance for charged off credit card debts.
Charge Off Shows on Your Credit Report From the Original Lender
2a. In this instance Bank of America. A debt collector may report an additional entry at some point as well. If a debt buyer is reporting the collection account, the debt buyer will show a balance owed, while the original creditor would need to show there is no balance owed to them (as they sold it off). Be sure your debt balances are not being reported as owed multiple times to multiple places.
Just because an account is charged off does not make the debt noncollectable. Charge off is an accounting function. The debt remains. As mentioned above, if something is paid on the debt after charge off, the amount paid, if received by the bank, will cause an accounting adjustment.
Debt buyers purchase charged off debts. It is a practice that became popularized after the savings and loan crisis in the 80’s. They buy the debt because the bank is a willing seller. The legal transfer right is your original creditors.
It is possible to purchase a home with unpaid collection accounts. Lending standards have tightened some. It is not too surprising you are being told that unpaid collection accounts are a barrier to a home loan. The barriers are set by the lenders and underwriting standards. The underwriting can change a bit from lender to lender or even from person to person. Resolving the accounts by settling them may indeed be required though.
Collection Agency Shows Up for the Same Account on Your Credit Report
2b. Accounts below that heading are all collection accounts. Accounts that appear there are generally going to be accounts sold off or assigned out to a collection agency.
Charge off is an original creditor reporting item and would appear in the banks trade line they have on your credit report.
Debt validation is your right:
3. Requesting a debt collector or debt buyer validate sets a few things in motion.
My cautions about debt validation are generally (but not always), aimed at someone who wants to resolve old credit card debts by settling them for less than the balance owed. If you want to verify the amount owed, or that the debt collector is the proper party to negotiate with, you can do that over the phone with your original creditor.
How and when a debt validation request would backfire on someone who wants to settle a debt will be situational. There is no way to cover this caution well without knowing a great deal more about who the debt were with originally, where they have been placed for collection along the way, and who has the debt now. If you would like to provide all the details about the accounts in a comment reply below, I can get into more useful feedback.
Credit report disputes:
4. There is a point to disputing an entry on your credit report. It requires your dispute be investigated.
If that investigation turns up inaccurate, out of date, or erroneous reporting, it gets fixed. If there is no response to the investigation efforts of the credit reporting bureaus by the furnisher of the information (bank, debt collector), the item should be deleted. If sending a dispute just because you don’t like something on there, but the item is valid, it would likely be a waste of time and postage (though not always).
Credit Cards in Collection and your states SOL
5a. If the statute of limitations is past in your state, disputing collection entries for credit card bills will run into the same issues as in item 4 above.
The longer its been since a payment was made on the account your disputing, there may be a slight increase in the percentage chance you get an item removed because no one responded to the credit reporting agencies investigation request.
A balance being reported as still owed on a collection account is not going to be the only validation metric. You could have a zero balance being reported by Bank of America, and no one else reporting the account at all. That would not mean you can easily dispute away the charge off entry on your credit report.
Settling Credit Card Debts Past the Statute of Limitations
5b. If old charged off credit card debts are passed the statute of limitations for you to be legitimately sued in order to collect, and the accounts are with debt buyers and collection agencies, it may still make sense to settle them for less than the balance owed.
In your case, you are looking to purchase a home but underwriting suggest you settle the old debts before being approved. Settling debts that are past the SOL for you to be sued are often done at the steepest discounts. Just be sure you are up to the negotiations and never let on that you are trying to accomplish something other than just settling and moving on with your life. If a collector is aware you have a credit purchase or credit report need, they may not go as low in the settlement they agree to otherwise.
The shelf life of unpaid debt:
There is really not much you can do to permanently stop the next debt collector or debt buyer from getting your debt and at least making one attempt to collect from you.
Bankruptcy is probably the most thorough way to eliminate collection calls and letter, but even then, collection calls can happen.
If your debts are passed the SOL for legitimate lawsuits, and you are not going to attempt to resolve any of the debts, you can always write cease communication letters to any debt collector or debt buyer you hear from. A cease communication letter triggers certain rights under federal and state laws. It’s the epitome of telling the collection agency or debt purchaser to go pound sand. If they don’t follow the law after receiving the cease communication letter, you can pursue them for collection violations. Be sure to send the letter certified mail return receipt requested and keep the green card and a copy of the communications you send in a safe place in case you need them later.
For more information about some of the topics covered above I would recommend reading:
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.
I am being sued by Bank of America for a unsecure loan in the amount of 56,000. I have been paying this Loan for ten years I now owe 10,800. My last payment. To them was last year when I went into default due to hardships. My question is will the judge take into consideration that I paid 75% of it and the interest I paid in it for ten years already paid that amount. Would the judge lower the payment? I already spoke to their lawyers and they wanted 200 monthly but I can’t afford that now.
The court is not there to consider your past timely payments, just whether or not you owe the balance that remains.
What if you could settle the Bank of America account for half the balance? If you had, say 6 months, do you think you could pull the money together?
Recently I consolidated my debts with Clearpoint Credit Counseling service. BOA was the only credit card to refuse this request. Next I went to BOA and requested their payment program. They also refused this request. BOA is the biggest reason I went into consolidated debt management program, their fees are too much. I continue to get late payment fees, even though the card was closed 6 months ago. I would really like to repay this loan or perhaps file bankruptcy on just this loan? What are my options? Thank you.
What is the balance owed to BofA? What is the interest rate? How long have you had the account?
The interest rate is 23%, balance 10,000. The card had been open since 2010. It is currently in arrears, because I cannot get them to accept a payment plan.
When did you last make a payment?
How much of the balance owed is from balance transfers, cash advances, in the last 12 months?
What if you were to settle only this BofA account for less than the balance owed? How long would it take to put your hands on, say 4k?
I would not be able to do that at this time. Payment arrangements with my other debtors allowed me not to have to file bankruptcy. This is the only account I do not have payment arrangements. That is my dilemma.
You could settle for lower than 40%. Sometimes much lower. But I am trying to determine why BofA is not accepting the credit counseling payment proposal.
Can you answer my other questions about your BofA credit card usage?
Did Clear Point Credit Counseling tell you why BofA would not do the DMP? Do you have too money left in your budget after all your bills are paid (or too little)?
You can often set up payment arrangements with a third part collection agency BofA sends your account to, but I am not a fan if you can avoid it.
I’m pretty much in the same exact situation and almost the same amounts. I believe they didn’t accept because on paper I have money left over.
Dear Mr. Bovee,
I live in Texas. Back in the early 1990s my business failed. I defaulted on several bank credit cards with balances of several thousand dollars. (2-4K each) I am now retired and living on a very modest social security income. I recently received a check for proceeds from a personal injury case in the amount of several thousand dollars. The check to me is written on an account of one of the credit card issuer banks that I defaulted with more than twenty years ago. It is one of the larger national banks. Can that bank seize the funds if I deposit that check to my own bank account or take it to their bank to cash? Thank you. James
Were you ever sued for collection? There would have to be an existing judgment for those funds to be at risk.
i was never served with any actual lawsuit but I did receive demands for payment from the bank and there could have been collection efforts from third parties but I don’t recall if there were, but eventually, after I didn’t pay the exorbitant requests for payment their efforts to collect from me did cease, after a year or two. But my understanding from reading online is that banks never forget or forgive an unpaid debt even after the statute of limitations bars legal action, that is, while the statute of limitations stops the ability to collect via a lawsuit they do not stop a bank from other means of collection, and since the check is drawn on that bank I was afraid that my name and address, which are on the check I received from my lawyer, would bring up a flag that a debt is owed when the check is processed by that bank. I was thinking of calling the bank to ask if they have any record of debt that I owe the bank but I was afraid that might cause them to flag my name, address and possibly my ssn in case they do find a record of the old debt and I try to deposit any check drawn on their bank. I honestly cannot recall if I settled that old debt from back in about 1992. I know that I did settle a few. Thank you very much for any insight you may provide. James
I suspect you have nothing to worry about. But if you like, I can email you a list of experienced debt collection defense attorneys you can call and run this by? What state are you in?
i am in corpus christi, tx thank you very much.
We have a lien on our property from old B of A credit card that we our trying to have removed.
This card was discharged in a chapter 7 4 years ago. FIA was the collection agent at the time and the ones that filed the lien. But now tell us they no longer handle it (the lien was filed in 2013).
Have you contacted your bankruptcy attorney about the common way to handle something like this? It comes up, so he/she will be able to tell you what to do about it.
Hi Michael i was wondering how i should go about cleaning up my credit. Within the last year (due to unemployment) i fell behind on 2 BoA credit cards. I recently got my credit report and noticed BoA charged off the 2 cards. 1 totaling approx 15,000 and the other approx 8,000. I’m not sure what my next move should be. All last year i was getting calls to settle, unfortunately at that time j had very little savings so i was suggested to not pay the monthly payments to try and see if they would settle for my agreed amount. I’m struggling back and forth with the idea of claiming bankruptcy or trying to settle. And if i settle is it possible to have the “charged off” removed from my credit report?
You cannot pay the settlement and get the paid charge off removed, but you don’t need to. Your credit will bounce back from there.
For me, it is not so much about credit reporting and debt relief, It is about cost and time. If you can settle with BofA for, say 7 to 8 thousand, then compare that to chapter 7 at under 2 thousand dollars. Chapter 7 wins. Next compare how long it takes you to pull together the 8k vs the 2k.
Be sure to read that article about credit reporting and debt relief. It will help you make the decision you have.
I had a “gold loan” with Bank of America – basically an unsecured line of credit – that I was unable to keep up with the payments on. It has been sent to D&A services for collections, the balance is about $7,600. Bank of America is my current primary bank, and I also have a HELOC with them that is current and in good standing. I did receive a letter from B of A saying based on a credit review, I could not make any additional draws from the HELOC (it was maxed anyway, so a non-issue). I am not sure if D&A will be willing to discuss a settlement on the gold loan, but I wanted to have my options ready if they are.
My concern is can B of A forfeit or close my HELOC early due to a settlement/ partial payment on the other account? The HELOC is $155K and is secured by my house, so I really don’t want to mess with that. I am working on a loan with a family member, so I could maybe pay the full amount, but I really need to conserve my capital to deal with a few other debts. Thank you!
Is is possible that and creditor will evaluate your risk differently when they see you are not paying all bills on time. Settling with BofA, or paying in full, is still going to show the late pays and collection placement.
I was informed that a debt collection agency filed two lawsuits against me in hopes of being granted a default judgment against me for two BOA credit cards. I do not deny the debt–just due to unemployment for 16 months made it impossible to pay. Instead of rolling over and ignoring the summons, I replied to the court and the attorney for the debt collection agency explaining the circumstances. The judge ruled that they have 30 days to contact me to work out a settlement. I have 2 questions: 1) what happens if I don’t hear from them within 30 days and 2) the filing claims the plaintiff is Bank of America, not the debt collection agency. Can I argue that is incorrect since BOA no longer owns the debt?
If nothing happens with them contacting you to try to resolve the debt the court is not likely going to throw the case out. It will just grind on to its conclusion, which could be summary judgment.
If the filing identifies BofA as the plaintiff than it is most probable that they did not sell the debt. Most of the larger creditors either do not sell debt, or do not sell much at this time. Chase quit selling debt in 2013. Amex never really has. Discover stopped many years back.
I am seeing BofA sue more recently. What has happened to suggest to you that the debt is sold?
Perhaps I misinterpreted my credit report. I don’t understand why a huge “too big too fail” conglomerate would pay for attorneys to represent them to collect a debt that they charged/written off–especially under $10,000.. Cost of doing business. Anyway, if I don’t hear from them by the date the judge stated on the answer to the summons, the judge could still rule a summary judgment for the full amount? As I explained in my answer to the summons, I am not working, collecting widow’s benefits from social security which they cannot garnish, have no savings, the threat of ruining my already low credit score is moot, and even if they did put on a lien on my house, so what? I’m not going to be selling until after I die which I am hoping is at least for 15 years. Realistically, what can they do to me? .
There may not be anything they can do to collect from you after a judgment is entered June. But that typically does not stop the debt collection machine from running people over. There are only a couple of exceptions to this type of behavior when it is obvious someone will never be able to repay, and BofA is not one of them.
What can they do to you? Nothing much. Maybe have you respond to asset discovery requests just to be a PITA.
Thanks Mike. It may develop into who can be a bigger PITA. They are more than welcome to my Franklin Mint Wizard of Oz collection and my Thomas Kincaide painting. That’s all the “assets” I have since my husband died with no life insurance and the short sale of my property in 2008. Oh there is the 2002 car I have with 192,000. LOL
Hello,
Great wealth of information here (pun intended!). Thank you for your service in helping people. So my situation is a little tricky due to a recent death in my family. I live in NJ and unfortunately, this state is great for every possible tax or fee one can think of.
I have been out of work for almost two years so I have no working income. I currently have a $21,000 credit card debt with Bank of America (Mastercard) that has a low APR. I am not behind on payments. The monthly payments (which are approx. $305) have been made in full and on time. This is the only substantial debt I have except for a $4000 car loan (and mortgage) that is paid on time with a low rate. My credit score is now 709. It used to be above 800 (I have never had debt until job loss) but because I lost my job, I fell behind on the mortgage. The mortgage was refinanced and is now current but my credit took a hit. I am looking to settle my debt with the bank directly. I have been living off of savings and borrowed money. Fortunately, I am now receiving a monthly stipend through inheritance (my father). This income is not taxable, except the interest portion which is roughly $1900 a month. I also receive random child support payments. They are very inconsistent and can be $0 for three months and then a lump sum of $1200. Will the bank be able to go after my monthly inheritance and do I have to report this information (income) to them? Will they also be able to go after my child support? To further complicate matters, I inherited shares in an S corporation and In the next couple months, I will also receive a lump sum of inheritance (do not know amount yet). I am concerned that this lump sum will not only kick my son and I out of the state Medicaid program (insurance is ridiculously unaffordable without an employer) but that the bank can go after it. I need to get back on my feet and pay back family members that I have borrowed money from and settle some major home repairs. Therefore this will not leave a lot afterwards. I also do not know how long it will be until I find employment so I need to be very frugal. I want to handle this so there is the least amount of damage to my credit and not risk having the bank go after my inheritance or company shares. Since this inheritance is all new and not settled yet Im wondering if I should try to negotiate with the bank prior to receiving the lump sum or wait until I have funds to settle a portion of the debt?? Coincidentally, my checking account where inheritance is deposited is also with Bank of America. Any advice you can give would be much appreciated. Thank you!!
BofA will not have visibility into your finances in the way you are concerned about unless you give information to them. BofA would have to sue you, and get a judgment, before there is any risks to your cash flow. Done correctly, you can settle with them well before that, and for what I would estimate to be 8k or under.
You will not want to negotiate with BofA while current. It does not work that way. You have to fall behind, and by several months. That means a hit to your credit score, but you can bounce back from that.
I would encourage you to call in for a consult Pam. Your impression of how settling with BofA will work is a bit off. I will help you better navigate the process, or perhaps help you better understand why you would avoid doing it. You can reach me at 800-939-8357, option 2 rings to me.
Thank you. I called and left a message.
What are the basic steps to negotiate a payoff and avoid a lawsuit? I assumed I need to let the account fall behind by 2-3 months and then I would call BOA directly to negotiate a payoff amount. My guess is they will close the account when its all over but Im weary of what will happen to my other credit cards which currently have little to no balance. I need to keep some sort of credit as eventually Im going to need a car. But most importantly what are the steps to handle this?
Michael,
I was served 2 days ago to appear in Cook County Court (Chicago, IL) in 2 weeks. I’m being sued by Midland Funding LLC for credit card debt of just over $3,000 from over 3 years ago. Midland has assigned a local Attorney in this area to represent. Should I contact the Attorney representing Midland to try and settle outside of court or should I call Midland Funding directly.
At this point you want to be in touch with the attorney for Midland Funding in order to negotiate. I have dedicated page up for working through Midland Funding collections.
The deadline to reply to the Civil Case is March 25th, 2016. Under the circumstances, do I have a chance to win the case since, since the merchandise was returned to the seller. If not, then what’s the lowest amount I can negotiate or settle with Bank of America. Will I have to settle with BOA or their attorney’s Fredric Weinberg Associates.
Please advise. thank you
You will be able to settle if that ends up being the goal. How much they will take could depend on several things, one of which is how big of a collection target you look to be. I can add more feedback about this once I know if you got a response to your dispute.
Hello Michael:
Thank you for your insight and input. I did not get any offer to settle from BOA. I got a letter initially stating that my dispute was denied as I agreed for a store credit in the fine print of the puppy contract, even though I returned the puppy within the 48hours (the time required and stipulated for a return). I did not read the fine print. I had clarified with the sales person that if my spouse does not agree with keeping the puppy, then if I will be able to return the puppy. I was reassured and believed the sales person.
A year later, I got a statement indicating charge off. I stopped getting the statements after that. Now I got the civil court summons. In general, What’s the lowest amount BOA will consider to settle the amount.
Once sued, optimistic settlement amounts tend to be in the 50 percent range.
I would go after the pet shop if it were me. But I would still settle with BofA for as little as possible right now, as that is not going away, is time sensitive, and I would want to avoid a judgment on my credit reports if I could.
Should I call BOA, and ask for settlement? Do you help negotiate with BOA? and what’s involved with your services?
You will typically want to call and negotiate with the attorney suing you on behalf of Bank of America.
We have people in the network that can help you settle the debt. You would probably benefit more from some one on one coaching, which is affordable and designed to help you reach the best outcome (it’s what CRN is most known for).
Fill in the consult request form and submit that in order to move forward.
My wife and son bought a puppy dog from a puppy store in 2011. I went and returned the puppy within 48hrs. The store would only give a store credit and not issue credit back on the credit card. I filed a timely dispute with the credit card company “FIA”. FIA was bought or taken over by Bank of America and I started to get statements from Bank of America. Later in 2013 I got something in mail stating that the debt was charged off. One time I called Bank of America and was told the debt was sold to another collections company. I never got the evidence submitted by the seller to the credit card company. Now, I got Civil Court Summons that I owe over $4000. Do I have a recourse to defend the dispute further. The Plaintiff on the summons is Bank of America via Plaintiff Attorney: Fredric Weinberg Associated. Not sure If BOA sold the debt to a 3rd party company. The credit report only shows Bank of America and no other creditor or 3rd party company.
In general, Don’t people have 3 to 3 days grace period to make a decision on high ticket items. I am located in NJ. Should I file a complaint with Division of Consumer Affairs against the Puppy Store. Would appreciate any insight and feedback. Thank you
To continue with the earlier message, I forgot to add the information from the credit report:
Status: Account charged off. $3,934 written off. $616 past due as of Feb 2016.
BANK OF AMERICA
Address:
PO BOX 982238
EL PASO, TX 79998
(800) 421-2110 Account Number:
426428999844….
Address Identification Number:
0209573352
Status Details: This account is scheduled to continue on record until Dec 2020.
Credit Limit/Original Amount:
$11,500
High Balance:
$5,320
Recent Balance:
$3,934 as of 02/2016
Recent Payment:
$0
Your Statement:
Account closed at consumer’s request
Since, seller accepted and got the merchandise back, do I have a recourse against the seller to get the credit instead of store credit. (there is nothing else in the store that I can buy for that amount other then pets, and I have dog and cat allergies and cannot have a pet inside the house).
What, if any, was the response you received from FIA/BofA about the disputed amount? Do you have a copy of anything sent in writing, or accurate notes?
Hi,
Five years ago Bank of America charged off almost all of my equity line but left a small unpaid balance in my account which is still there today. If I do nothing can I have the account removed from my credit report in another 2 years, or does the small unpaid balance mean that the account is still active and therefore will remain on my credit report until I pay off the small remaining amount?
Your help is appreciated!
Bank of America negative credit reporting has up to a 7.5 year shelf life. They cannot keep an unpaid balance on their longer than that. If there is some error allowing BofA to stay on your reports longer than is allowed you can dispute it, and these days have more confidence in the correct outcome.
Hi Michael,
I have two mortgages with Bank of America (B of A). The second mortgage is a line of credit. Due to the high interest rate, I attempted to do a modification on two occasions and was denied both times. I fell behind on the second mortgage after 8 years of never being late. B of A decided to write off the second mortgage valued at 40K without notifying me in writing. I called to discuss some sort of payment plan and was told the second mortgage was being placed in collections and would be written off as bad debt. I informed the agent that I was not aware of this decision and what were my options. She said she would get back to me and called the next day with the following–B of A would allow me to make monthly payments less than what I was paying and I would have no interest. I would not receive statements and after six months I would have to call to renew the payment plan–automatic deductions from my checking account. The loan no longer shows on my B of A mortgage statement but does reflect on my credit report as being charged off as bad debt but in payment plan.
I am curious as to whether or not if I could sell the property and if I would have to pay off both the first and second mortgage if the second is “written off” and in a voluntary payment plan. My credit score was seriously impacted and all I was trying to do was to reduce my interest rate / receive a modification.
You will likely have to have paid BofA on both in order to pass clear title to the buyer when you sell.
This would be a great time to settle the second mortgage with BofA in order to save money. The credit damage is already done. Call me to talk over that strategy if you like at 800-939-8357, option 2 rings to me.
Hi MIchael –
I love your blog and I have been following it for some time. It is very informative!
I have a situation I wanted to ask you about. I have an account with BOA that used to be called MBNA or Gold Option. In 2009 I lost my my job and had difficulty keeping up with this payment. I believe the payment back then was like $480. The original loan was $16,000, but I believe the balance then was around $12,000. They worked with me to knock the payment down to $370, but they would not budge beyond that because it was considered “gold option” and they had no ability to reduce it any further. It was a strange deal.
I kept up with the $370 payments for a while, but due to a reduction in income. I fell behind again on the payments, where it got to 120 day late status. At that point I was able to start making payments again, but I could never get the payments past the 120 day late status stage.. I would get calls every month from BOA asking about whether I was going to pay because it was going to be charged off. I would always make the payment before the due date to keep it from charging off. My balance at this point after consistent payments was $2,000 (November 2015).
In November 2015 I got multiple calls from BOA asking about what my intention was with this debt. I figured that they were calls like all of the other months because it was still at the 120 day late stage and I would just pay it before the drop date.. Well I went online in November to make my payment like usual and I find out that the account is no longer listed online and was charged off!! I don’t know what changed from my making consistent payments to it being charged off!
I did check my credit report and the charge off is now showing out there. Also, I got a collection call today from a “Mercantile Adjustment Bureau”. I have not received anything in writing from them and have never heard of them. In fact, I have not seen anything at all in the mail regarding this charge off.
It is so frustrating because I had every intention of paying this debt off. I had just paid off two other BOA accounts that are now with zero balances. This was the next account I was attacking and I was so close to paying it off.
My questions are:
– Do you know anything about Mercantile Adjustment Bureau? Is this part of BOA?
– Do you think I should call BOA and work out a payment arrangement with them?
– Is there any way to get this charge off removed from my account if I pay it off?
I want to pay it off like I said. I just wish it hadn’t gone to charge off status before this happened. I am planning to buy a car, but not for a year or so. No other large purchases are planned. I do have other credit cards that are in good status. But, my credit report has definitely taken a hit since 2009.
I appreciate your assistance!! Your blog is so informative!
Alyssa
Mercantile Adjustment Bureau is a third party debt collection agency. They are not part of BofA, but working to collect for the bank.
I would call Mercantile Adjustment and work out any payment arrangement with them. You could call BofA, but they will likely just forward you to Mercantile.
There really is no way to “un-ring” the charge off bell. That is one of the reasons I often recommend settling charged off debts for as little as possible. The credit damage is already there. And in your case, it sounds like BofA was showing on your credit reports as 120 late pay in perpetuity.
I am shocked your account was not charged off years ago.
If it were me, I would try to negotiate the best settlement with Mercantile Adjustment, get the zero balance owed reported on my credit reports from BofA, and move on.
Thanks so much Michael!
I talked to someone at BOA in house collections yesterday and they were actually surprised this charged off because I was keeping up with the $370 payments for a long time. But, somehow I missed the November payment before the deadline and it charged off. I was never notified that it was about to be charged off. The BOA rep said that I had been making payments consistently and he thought maybe they could work out an arrangement with me. He talked to his manager and they said they would be willing to take the account back from Mercantile and set up a payment arrangement through them. I still have never received any notice of it actually being charged off from either BOA or Mercantile. But, I am getting a lot of calls from Mercantile.
The guy I spoke with at BOA in house collections said I could set up automatic payments of $370 through them like I was doing and it would be paid off in 6 months. He then asked me for my bank information and that is when I got nervous and I told them I would call them back. They said they would send me something in writing, but could only send a letter once I set up my bank account with them. Something just didn’t feel right about it.
Is there any benefit to working with in house BOA versus Mercantile at this point? I have every intention of paying this off. I checked my credit report today and I don’t see Mercantile showing on my credit report. I have received nothing from BOA or Mercantile in writing.
Thanks so much for your help!
Given the opportunity I usually prefer working with the original creditor in a full pay situation. I would go ahead with BofA, and do be sure to get any agreement from them in writing.
Hi Michael, I have a credit card with Bank of America that was charged off (in 2013) because of non payment. I want to clean up my credit report and pay off the credit card. According to my credit report, I do not see that the account was sold off to a collection agency. It is still with BofA showing a balance of $4500.00. I can’t afford to pay this amount. What is the best way to deal with this? If I “settle for a lesser amount” will this hurt my credit? I can pay $2,200.00 to settle this once and for all. I live in the State of CT, I believe the SOL is 6 years here.
Thank you
With a debt this old, your credit situation can begin to improve by resolving it, rather than letting it go unpaid. I like your chances of settling with BofA for less than half of what is owed today.
Have you received any recent collection notices or calls? I am wondering if BofA has your account placed (not sold) with a collection agency, or if you will need to call FIA card services to negotiate your settlement.
I would like to pay (4) 10 year old time barred debts in full. I live in the State of Maryland. How do I complete this task without getting extra fees and interest added on to th pricipal balance. What information do I need to have in writing before the payment is submitted. 2 are with banks that assumed the debt when they purchased other banks, one is an apartment management company and one is with a bank that hired an attorney to collect 10 years ago. Thank you
Call me for a consult Jay. You are basically looking at settling even though you want to pay them off in full. When you only want to pay the balance owed at the time you stopped making regular minimum payments it often means negotiating away the fees and penalties.
You can reach me at 800-9839-8357, press option 2.
I defaulted on my credit cards in 2010 when I went through my separation.. All credit cards were in my name so my ex was not required to pay on any of them. Two of them had a cancellation of debt (1099-C) filed with the IRS here in California. I got the letter from the IRS dated 5-4-2015 and they adjusted my 2013 tax return and had me claim this credit card debt as income and had me pay taxes on it. I paid the IRS 7-20-15 and thought I was done. Now I am trying to close on purchasing a home and I am being told Fannie Mae is requiring me to pay this credit card (through Chase) off at closing. My question is…. IF is was filed with the IRS and I had to claim it as income why would I have to pay it off. The cancellation of debt shows that they cancelled the debt and in turn I claimed it as income. Chase said they will not report it to my credit burrows as a $0 balance because it still is not paid. This is were I am confused. How is it still owed (according to Fannie Mae) if they (Chase bank) so to speak wrote it off. I don’t see how I can pay a card off that the IRS made me claim as income? To me its like double dipping.
If I do pay the card off (as Fannie Mae is requiring) how or what do I do to notify the IRS that I paid it off so they can adjust my taxes?
Your situation is a catch 22 people find themselves in when Chase proactively forgives debts that they no longer intend to try and collect on.
You can settle or pay Chase the balances owed; get the credit reports updated shortly after to show the balances are resolved; and amend your tax filing if within the last three years.
Talk to a tax professional before you move forward.
What are the balances owed on all of the accounts at issue?
She will have trouble raising money since her earning power is now reduced. Another issue is taxes on the discharged amount. She will have trouble raising money to pay the additional taxes as well.
How old is she? What can she afford to pay that is more than $50?
You generally have to meet some payment criteria set by the loan owner or servicer. It sounds like she might be on the pay forever plan. That is something I like to help people avoid, but it is not always possible.
Earlier this year, a collection agency was handling a private education loan account on behalf of Bank of America. My mother defaulted on this loan 3 years ago, when she lost her job. This collection agency contacted my mother and she responded in the form of a debt validation letter. After the collection agency confirmed the amount, which matched with her records, my mother sent another letter with her conditions of the payment arrangement and began a $50.00 a month remittance, since her earning power is much less than 3 years ago and it is all that she can afford for now. Well, the collection agency was insisting on having her agree to a temporary payment plan, with regular reviews to seek monthly increases or full payment of the remaining amount due. She found their terms to be inflexible and rejected their temporary payment plan several times, while continuing the $50.00 a month remittance. This went on for months, until today, when my mother received a returned check from the collection agency, along with a note that said:
“The enclosed payment(s) is being returned to you for the following reason – Close account – Contact BOA (Bank of America)”
We’re not sure what to make of this note. Do you believe the collection agency ceased efforts due to my mother’s refusal to sign the temporary payment plan agreement?
It sounds like BofA pulled the account back from the collector, and probably because the collector failed to collect consistent with expectations.
There are options to consider with private student loans with BofA, such as negotiating a lower pay off amount. Is it possible to raise cash in order to settle with BofA?
I have a question pertaining to a Bank of America Charge off on my credit reports. The account was charged off in 2009. In 2012 I was served papers by Blithe and Gaines suing me for the money owed to BOA. In order to avoid a judgement, I hired a lawyer and settled for a lump sum payment less than amount owed and the case was dismissed. My credit reports note paid charge off, settled for less amount. My question is. In May Bank of America as well as other credit card companies were taken to court regarding reporting old charge offs after bankruptcy. The agreement was that these companies remove old charge offs from consumers credit reports. Although I did not file bankruptcy, BOA has not removed this account. This is from the article: Bank of America promised to go further, agreeing to fundamentally change the way the bank reports all the stale debts that are sold to financial firms. For all credit-card debts sold since May 2007, court records show, the bank will remove any marks on consumers’ credit reports. That way, a lawyer said, “should a previously sold credit card account go through a bankruptcy discharge,” the mark will already be gone. So my question is, why hasn’t my charge off been removed? Should I contact BOA and ask them directly or do I file a dispute with credit reporting? Do I include the article? Thanks for reading!
Who was the named plaintiff in the lawsuit against you?
It appears to me that BofA never sold your account (not all debts are sold). That means you do not fit either criteria for Bank of America to proactively drop the paid collection from your credit reports.
If the named plaintiff is different than Bank of America post who that was and lets go from there.