Settling Credit Card Accounts with a Collection Agency After Charge Off
Credit card accounts have not been paid for a while and now collection companies are calling. I settled one late bill with my bank and I am now tapped out. Can I settle with collectors after charge off?
How to deal with a debt collector after accounts charge off?
—Pay collections
Yes, settling a credit card debt after it has been charged off and a debt collection agency is contacting you for payment is always an option. Below is an edited version of an article we published that explains “Charge Off” and what typically happens with your unpaid accounts after they are considered seriously delinquent and the unpaid balance is assigned to an outside debt collector. Settling the debt may be just the opportunity you need to move on with your finances and restore your credit.
For your unpaid credit card to reach charge off, you will have already been through many collection calls from your original creditor. The first stage of collection calls can last six months.
Creditors have 3 options available when they charge off defaulted credit card debt. The most popular option with newly charged off accounts is to send the debt to a collection agency.
Credit Card Debt Sent to Collection Agencies are Mostly Done on Contingency
The amount of time your account remains with an assignee debt collection agency will vary. Let’s assume that the agency that has your unpaid credit card bill will only have the ability to collect from you for 90 days.
The typical debt collector working for your creditor has two ways they attempt to get you to pay; your phone and your mailbox. There are other ways to collect, such as:
- Collection calls to your job,
- Debt collector calls to family members and friends (this does happen – it sucks and is embarrassing).
Lets focus on the most general efforts used by the debt collector who is collecting on your account just after charge off. When a debt collector gets assigned your account, you will often start getting collection calls (at a high volume). You should also get a collection notice in the mail within a week of the agency having contacted you by phone.
You do not have to pick up the collection calls if you are not ready to negotiate a settlement with the agency. My suggestions for speaking to a third party debt collector are not the same as picking up, or making calls out, to your original credit card lender. And you do not necessarily need to send a debt validation request in response to the collection notices you receive in the mail. That is often counter productive to your settlement goals.
Settling an Account with a Collection Agency
Some important details to consider:
- You will have to pick up the telephone in order to learn about your options with the account. I typically recommend that you not limit yourself to written communications with collection agencies.
- You will be speaking to someone who has been trained to push your buttons using the most effective and proven methods for collecting unpaid debt.
- The agency can only work out arrangements for payments that your original creditor allows them to, or where the debt collector can go back to your creditor and get approval.
- You will not be able to re-age the account when settling charged off accounts with debt collectors (the credit report damage is done by your credit card bank, the debt collector will have no control over that).
- Avoid some of the nut job advice on the internet about handling this stage of collection.
- In some ways, you have more payment term options you can negotiate with a collection agency than you would be able to with your bank.
- The collection agency only gets paid if they can get you to pay them (that may not always be the case, but contingency debt collection is the most common model currently).
Charged Off Debt Get Reported to the Credit Reporting Agencies
When this derogatory credit reporting happens the damage to your credit is done. You do not get to re-age charged off accounts. The credit damage from not paying a charge off account can then only get worse if you are sued, followed by getting a judgment against you. The judgment then shows up in the public record section of your credit report. Also, another debt collection trade line may later show up on your credit reports, and this would be considered additional damage.
A debt collector may comment how you should be concerned with your credit report and credit score after the account they are collecting on gets charged off, but this is just a collection tactic. Collection agencies will have no ability to change how the original credit card issuer reports to Equifax, TransUnion or Experian that your account was charged off.
There are tactics and timing I share on this site, and when you want to work with me one on one, that will better prepare you for dealing with outside debt collectors. You can optimize your results by knowing:
- How to negotiate a settlement deal that is timed with internal goals the collection agency has, and even that an individual debt collector may have.
- When to pass on an offer to settle that is too high without being concerned your particular debt collection agency will sue.
- What your bank will allow the collector to do (how low a settlement can get and what payment terms are common).
- The tricks and tactics that will be used to get you to pay more than you may have needed to.
- Collection abuse tactics.
If you are struggling with several credit card debts that are past the charge off stage, you should learn about your options and identify resources for handling the accounts before they end up in more advanced stages of collection which can include being sued.
It is important that your next step to deal with your now charged off debt be the step you take to put the debt to rest before the situation can deteriorate further. If you are serious about resolving unpaid debts and want to develop a workable plan, getting started is easy. Just post more about your situation in the comments below, and lets go from there.
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- ask a quick question here
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About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi, my original creditor sold my debt. The charge off on my credit report shows a balance of zero. What are my options to get this derogatory removed?
It is not common to get an original creditor to remove a charged off account from your credit reports. It will age off after 7 years from when you stopped paying on it.
Who is the creditor involved?
Who is the debt buyer?
Hi, I have 3 store credit cards that have now been sold to Crown Asset Management. The total owed for these 3 cards is
$11,028. I want to begin negotiating settling with them. Any advice with this company?
This is a good time to publish an article about this debt buyer. I will look to get that up on the site in the coming weeks.
Negotiating and settling with debt buyers is much the same as a regular collection agency. In fact, Crown Asset may actually place your accounts with collection agencies and law firms to collect for them.
When did you stop paying on these accounts?
What state are you in?
Do you know how long Crown Asset Management has had your accounts?
I’m in North Carolina, I stopped paying in November 2019 when I had hired Carolina Legal Services which turned out to be a scam. You and I talked early last week about my options, I didn’t put my whole name in the post.
I am not sure how long they have had these accounts. I found out when I called the credit card company trying to locate my debt.
Thanks.
I would follow the general outline I give for negotiations with them.
If you learn any of the accounts are being handled by an agency or law firm let me know and we can go from there.
Hello!
I have a question regarding Care Credit. About a year ago, Care Credit removed the account from my credit report after I disputed it. So it is no longer on any of my credit reports. Now they have filed a lawsuit against me in Pennsylvania. Their lawyer is through Patenaude & Felix APC. My question is if I get a lawyer and agree to a settlement, once I pay it off, will they be able to put this account back on my credit report even though they took it off?
It could end up back on your credit even if you do not settle. I see that happen more than it being taken off, and then settling causes it to go back on.
Hi Michael, I’m currently working to pay down 3 charged off accounts. Is there a benefit to paying what is owed rather than settling for a percentage of the balance in one lump sum payment? I have one payment left to Client Services for a Synchrony balance. I chose to pay what was owed on the Synchrony account which required an initial lump sum payment followed by 12 smaller monthly payments. After the final payment I plan to start discussions with Client Services again for a Capital One $5600 dollar balance charged off from a year ago. My 3rd charged off account which is a LendingClub balance of 22K charged off a year ago as well. This account is being serviced through Viking Client Services. Any experience with this agency? Because of the balances and time since charge off is there a possibility of being sued for either of these balances? I’m guessing that’s always a possibility. I dont think I can take on trying to pay down both debts at the same time so I’m wondering if it would be best to start discussions with Viking for the 22K balance as opposed to Client Services and the smaller Capital One balance. Thanks
There is not much different to your credit if you settle a debt for less, or pay it in full, after the accounts charge off. Your credit reports are updated with zero balance owed reporting in either case, and that is what allows things to improve. Paying a charge off, or settling one, accomplishes the same thing.
The big difference between the two is that you are able to accomplish that update of a paid charge off faster when you settle, and you save more money.
You have to be concerned about being sued on both of these accounts.
There may be a way to manage both.
I suggest you schedule a call with me using the box above this comment, or at the get help tab at the top of the page.
I have reached a settlement with Amex; 3K upfront and 5800 spread out over 2 years to cover 15,278 debt. My question is; if I sign this month to the agreement I assume that a 1099 would be generated for this year to attach the forgiven debt to my income. Is that assumption correct?
You typically do not see the 1099c until the January following the year you complete the settlement.
The debt is not settled until you give them the last amount agreed to.
Not everyone will owe tax on forgiven debt.
Hello Michael,
Thank you for all the information you provide.
I have an offer from a debt collector, Mercantile Adjustment Bureau, for my debt with US Bank.
They have offered $8,059.40 to satisfy a $20,148.49 balance.
I cannot afford the 8k and wanted to ask your advice on how to proceed. I was going to offer 2K, which is what I can afford and see what they respond with. I am not worried at this point about my credit; I’ll worry about that once all my credit situations are dealt with.
On another note I have a case pending with Amex, is it possible to negotiate with the law firm who brought the suit?
Thank you once again for all the information you provide.
You may be able to get Mercantile Adjustment Bureau to accept a lower settlement, but not as low as 10%. They are already at 40%, which is the most realistic outcome. Getting this to 30% has a chance.
If you cannot afford to pay a lump sum settlement you can often get the deal spread out over many months.
Mercantile Adjustment Bureau will only have the account for several months. Once it leaves there it could go to another collection agency, or to a law firm who may sue.
When did you get served the legal papers for the AMEX lawsuit?
Who is the law firm suing?
How much are they suing for?
I was served (somewhat illegally, slipped under my gate) on January 8th 2020.
I responded with various affirmative defenses. They responded with requests for admissions, requests for documents and form interrogatories.
The law firm is Michael and Associates (Thousand Oaks, CA)
Amount is 14,769
Thanks.
How prepared are you to settle the AMEX account?
What if they agreed to 50% with 12 months to pay?
Could you tackle AMEX and the other account at the same time?
Financially I’m in worse shape than earlier in the year.
Not sure I could handle both at the same time.
This is quite a jam and I still have other accounts.
Just to be thorough here… have you looked into whether you qualify for chapter 7 bankruptcy?
My understanding is I do not due to the fact I own property.
I would be sure to talk with an experienced bankruptcy attorney in your area to be sure. Even if you qualify for chapter 7, and choose not to do it, it is good to know the option exists. Similarly, it is good to know more details about chapter 13.
Either form of bankruptcy would stop a lawsuit in its tracks.
With that all said, I would focus on resolving the AMEX account first, as that one is in court, and the US bank is not, and you have the limited resources to work with. It is not unless I felt confident I could swing payment plans on 2 settlements that I would try to negotiate with both collection agencies at the same time.
This could mean you end up dealing with more aggressive collections on the US bank account later, but this may be how it goes, where you are putting out a fire while you can see flames approaching in the distance.
Thank you Michael,
I will look into the bankruptcy options with a lawyer (though with no income stream I doubt Chapter 13 is an option). Meanwhile I will begin negotiations with AMEX.
Thank you again for your time and information, much appreciated.
Hi Michael,
Thank you for all your hard work!! I learned so much by reading everything I could. It gave me the confidence to attempt a debt settlement with a debt collector. But now I’m stuck in trying to negotiate.
USAA charge off 12/2016
$10,646
CBCS/ Revco has the debt till this Aug
Last written settlement of $5,855.84 on 10/19
We called offered $3000, 3500 &3900 during 3 different phone calls, 3 different people.,
During first call they offered a debt settlement of $4791.50
We are applying for mortgages soon & want to make a one time payment. Do you have any tips? Should we take the offer of $4791.50??
That amount is close to what I often see with USAA. You likely will not get much lower right now. If I wanted to accomplish a goal, like a new home loan soon, and I had the resources, I would take the deal.
Make sue you get it in writing before you pay it.
Thank you so much!
Hi Michael, my credit has been pretty much destroyed after my husband’s business went under in 2017-2018. I’m trying to go back and Negotiate Credit card debt with collection agencies. Many are willing to settle for a lesser amount and said they will remove the account from my credit. My question is will this help my credit score? I know “charge-offs” are the worst. Also, one told me that I would still need to contact the original creditor to see if they will remove the account from my credit. Will removing the collections accounts help my score? Should I attempt to contact the original creditors and see if they will remove the account?
Removing a negative from your credit should be positive to your credit.
Banks are not known for deleting collections or late pays (even when paid) from your credit earlier than the 7 years allowed to remain on your reports.
Michael I owe $5300 to Carecredit. My last payment was May 2014 it shows on my credit report as charged off but no collector has ever tried to contact me about the debt. Every month Carecredit reports my balance and charge off in payment history. Should I call and try to settle or will it fall off after the 7 year mark? What should I do?
If you can wait for the collection to age off your credit, I would do that.
If you have a credit goal you are trying to reach before then, like a home purchase, I would settle it.
Hello Michael,
I have around $60 K Debt including credit cards, personal loans, Medical bills and Toyota Repo. Most of the credit-cards and personal loans are charged off. Unfortunately i am in very bad financial situation and stopped paying all the payments. Now i am planning to rebuild my credit score so could you please suggest me how to take care about my debt and get back on track with decent score.
Break down the creditors and/or debt collection companies you are hearing from in a comment reply. We can go from there.
Hi Michael,
Thank you for doing your videos and helping us all. My question is I have a Walmart card that I have not used in about 5 years and I am almost certain there is a balance owed but when I call the number on the card and even go on to http://www.walmart.com/credit, I can not find any information and my account is not recognized. Any suggestions on how I can find out the information needed to settle the debt?
What is showing on your credit reports for this account? Any collectors or debt buyers, or just Synchrony showing a charge off?
Hi Michael, I have a tradeline in collection with Cavalry Portfolio- It is for $1975, opened in Jan 2017, OC is synchrony bank. I read on their website that they delete if paid in full or settled. I am wondering, in your experience, how much can I settle this debt for with Cavalry? Im in NY.
It varies from one person to the next. Partly because you could be negotiating the Cavalry account with a different collection agency they send it to, or a collection law firm. On top of that, each of us will appear (from our credit reports and other details) to be collectable to debt collectors differently. Right now we all have COVID in common, so that can help establish a hardship, but what you can convey over that may be even more important.
Hi Michael..i owe to discover about 16000..my last payment was Sep last year and it was charged off March 31 20202..i tried negotiating for a smaller amount and they just would not work with me..so I’m waiting to hear from collection agency to see what their offers are..how do I handle that
It will depend on if the account goes to a collection law firm or not. Let me know who gets it.
Hey Michael,
I have a charged off a account with TD Bank totaling to about $4,300 and was closed off in 2018. The balance was only about 51% of my utilization at the time. I know they sold the debt to an agency. I am interested in settling for about 25% of the debt owed because I would like to buy a house in the next year. How can I go about this ? I also have one other charged off account with capital one for 6K. Thank you in advance for your advice!
Settling may not happen at 25%, but you can certainly resolve these for less and still accomplish your house goal.
When do you expect you would have closer to 50%?
You can often pay these settlements over time, so not having a lump sum to work with can still work.
My account ($1400) with comenity bank is set to charge off in a few weeks. The best settlement offer I could get on the phone was 60% of the balance (around $840). I am comfortable paying 40-50% of the balance but comenity will not budge and stated that they will be noting the account to not go lower than 60%. Should I wait and negotiate with a collection agency for a better offer (if so who does Comenity sell their debt to?) or just pay comenity?
I would hold out for the collectors if it were me.
They do not always sell, but when they do it is to debt buyers I regularly help settle for 50% or less.
When a debt is sent to a collection agency and you want to set up monthly payments with them do they charge the same monthly amount as the credit card company or is it less?
I typically see monthly payment higher than what you paid when current, but it can vary.
Who is the creditor at issue?
Who is the collection agency?
What is the balance owed?
I have a $20000 balance with AMEX that they have been unwilling to settle with me. It has now gone toGC Services LP. Do you think they will settle. My offer to AMEX was $8000.00. Any advice how to handle the collection agency.
Thanks!
Hoe late are you with payments?
Hi Michael, thanks for helping people. I made a purchase ($24) in Aug, 2019 at Macy’s but soon forgot whether I paid it or not. Then I received their first paper bill and I was ready to pay, I called Macy’s agency but was told I have 0 balance. In Sep, I made another purchase ($26) at Macy’s but unfortunately forgot this bill again , then I travelled out of America for 3 mounts. When I came back home, I noticed from paper bill that my Macy’s bill rises up to $210 ( for these two missed payments), my account is closed, my credit score is damaged from excellent to fine, also my case is transferred to debt collector. I am willing to take my responsibilities of the second bill, but I insist Macy’s also has fault by misleading me on the first case. So the debt collector took my personal information and sent my case back to Macy’s as a “ disputed bill”. Now Macy’s started to send me new increasing bill again($290 this time). What should I do? If I pay off my bill, will my credit score recover? If I don’t pay off this bill, will it keep growing and will Macy’s report again to damage my credit score again? Thanks
I would try to get Macy’s to reduce the late fees and pay it. They are not likely to remove the late pays from your credit, so getting this paid and showing zero balance can begin the healing from it happening.
Michael, this is not related to credit cards and for that I apologize, but this is the old forum I know where I could get a reliable response. My husband had a bill from Sprint that went to collections in April of 2011. For some reason we did not pay it at the time and it went unheard of again until this week. He got a new notice from a different collections agency referencing the same debt, offering a settlement. We live in TN and it seems this is past the statute of limitations. Is there a way of getting them to leave him alone since it’s that old? It was originally just for $261 and now offered at 35% but I would rather focus on current medical bills and avoid them going to collections right now. Do you have any advice?
If it were me being contacted about an old debt from 9 years ago, I would ignore them. It would be passed the SOL to sue and to credit report.
Upon looking at my credit report, I have two small delinquent items from a hospital back in 2015. One is for $100 and one is for $200. I’m trying to better my credit but I’m afraid for some reason if I call the collection agency, 1) they will tell me I owe a lot more than $300. 2) that somehow it will screw up my credit score. My score is not too bad 700-719, but I’m trying to acquire a mortgage within the next 30 days. Should I reach out to the collector American Adjustment Bureau and what should I expect. What kind of language should be used when negotiating. Should I get an email from them saying its “paid in full” then pay with a credit card?
Talk to your loan officer about whether or not these need to be handled prior to closing. Sometimes you can still get financing through with really small balances like this, especially with an FHA loan.
I would typically say just pay them, but doing so could drop your score a little for a month or 2, so I would want to make sure there is no loan without doing so, before I do it ahead of time.
Ask if they would pay them as part of the loan closing, so then your score may not impact your rate.
Hello, I had a Chase card in which the debt went up to 9k after I stopped making payments due to a medical crisis. I stopped paying for 6 months and it was charged off and United Collections Bureau has contacted me. They are offering a settlement of a little over 4k. My credit is already rated at “poor” and I’m wondering if I should just pay the settlement. How will that effect my taxes? Thanks.
If this is the only unresolved collection item on your credit, settling could help you improve credit.
I see settlements on Chase accounts that are better than this, so it may be worth trying to negotiate lower, or getting some help to do so.
Check out this article about taxes on cancelled debt: https://consumerrecoverynetwork.com/debt-forgiveness-taxes-settled-credit-card/
Charge offs: Capital one;
I started paying a collection agency (Scott Parnell and associated), after they served me I gave them a call and began payments. It’s an old Capitol one account and I just began attempting to repair my credit to build credit again and on a credit report I am seeing this same account with monthly charge offs from when it closed, up to now. I have other accounts that I haven’t even dealt with and they only added about 18, each. Yet capital one which I’m actually paying off,has added about 43 and keeps adding them every month even though I’m paying the collection agency….I don’t understand
I feel quite grateful to have encountered the website and look forward to some more cool ideas by reading here. Thank you once more for sharing!
I have a credit card with comenity bank which was duly paid for 2 years until I left the country . I lost my job and things were a little bit tight at that time . The total balance outstanding couldn’t have been more than $400. I returned to this us last month to find series of collections letters from a company called mcm collections with a balance of $1989. I called them and offered to settle for 800 and they said no , they wanted a settlement of $1,390 which I couldn’t afford. The original credit was for less than a thousand . I guess they were more interested in taking me to court. What are my options pls .would like to resolve this
Have they sued for the debt?
If not, is the account with a collection law firm right now?
Michael, After my divorce I was unable to pay all my CC bills and I have made arrangements with the ones that were willing to help and not just yell at me on the phone. I still have a PNC CC with 10,000.00 balance that shows on my credit report under Closed Cards (March 2016) as “In Collections/Charge-off”. I just got a letter addressed from PNC wanting to settle for 90% off ($1000) I am not sure if this will help my score since it’s been 3 years (I’m in NC) or am I just throwing away $1000 dollars of hard earned money. I work 2 jobs, 7 days a week to dig myself out of the hole I was in and don’t want to put myself in a bind over a debt that isn’t going to improve my situation. The letter states it will Settle the Account, but it doesn’t say it will remove from my report. It doesn’t show in derogatory marks, but just as a closed account. Thanks for your help.
If you have other unpaid collections, taking care of just this one is not likely to help much. But if you take care of this, and other ones you may have, you can start to improve your credit and finance options.
I have two chase bank cards already charged off for at least two years. I called chase and they’ve sold the debt to NCI Nationwide Credit Inc. NCI is offering me really good settlement offers seeming almost to good to be true. One account was around 4500 and they’re willing to settle for around 450 the other was 2500 and they offered a settlement of 388.00. I want to pay these but is NCI a legit company and how can I be sure they’ll report the accounts settled for less than owed if I pay? Couldn’t they just take my money and not report anything to the bureaus leaving me $1000 less and in the same boat I was in? How should I handle this? Chase won’t negotiate with me because it’s been so long and the debts been sold to NCI.
Chase stopped selling debt in 2013.
You can call Chase and confirm NCI is who they have your account placed with.
NCI should not be who is on your credit reports. That should be Chase still showing a balance owed to them. And Chase is good about updating your credit reports within 30 or so days of your settlement payment to show that it is now a zero balance, and resolved account.
If anything goes wrong with the credit reporting, or anything else, the settlement letter you get first, and proof from your bank account you paid, is all you need to correct someones mistake.
I have 4 debts I am pay a law firm for.
$5674. $50 a month. Have paid 2 years straight. $16589 been paying $50 1 year straight. $709. $25 a month have it down to $500 and $3849 been paying $25 a month for a year. None of them are on my credit report as public. Is it worth calling them and asking them to settle on the three I have been paying on the longest? Obviously I can’t settle on the biggest one.
Hi Michael! I had an Ashley furniture account that last payment was approx 3 years ago or so and the balance was approx 1200 or so. Then it became a charge off at a balance of 1500.00.
Now it has been with Midland for approx 2 years i believe and today my security guard at my complex said someone is trying to deliver something that allows ONLY my signature which the guard said it looked to have some law firm and something about Midland on the envelope.
At this point i could probably pay up to 600 or 700 tops to just get this over with. What is their options in dealing with me and what are my options of settling this?
Ps. I am in Texas
Settlements when the debt reaches the court are often at 50 to 80 percent of the balance they are suing for. I would try to raise more cash and then negotiate with the collection law firm.
Are there other debts besides this one?
Hello Michael,
Thank you for all the advice you’re giving people. I live in AZ and I quite my job back in 2009 and had to stop paying my CC bills while I tried to get my own company going. I since could never get it going enough to start paying company’s back that I owe them. I even owe the IRS which I am going to pay off first. But now that I have a great paying job again I’m trying to pay people back that I have been putting off since 2010. I have 4 accounts that are Macys for $432 and Kohls $224, will they be willing to settle for half? I also have a Capital one for $232 but says Paid as agreed but also says “Transferred or sold”. I have 2 other large amounts that I need advice on and they may be for the same charge off. Anyways one is Chass CC for $7,829 and was last reported 120 days at 11/2010 but it says under comments “Purchased by another lender”. The second is from Midland Funding for $7,274 and I have received court papers saying I owe that as of 10/2016 but I have ignored any calls from anyone. Now I have a “Real” job I want to settle and I don’t want them sueing me for the full amount and garnishing my wages. I have been telling all of them for years that I want to pay them but didn’t have a job to pay them. They stopped calling about 3 years ago. Any other info I can give you? Thank you so much for all your help!
Go through the Q and A with the bot on this site. Once you complete the questions it will email me, and when I see that, I will email you to set up a time to go over all of your questions and concerns on the phone.
Hi,
I have an account with Bank of America and I stopped paying for my credit card when i got shifted to my home country . Now when I login I find that my credit card account is closed. I had received an email last month that if i fail to pay the balance then it would be sent to a collection agency. I want to repay the debt in installments but I cant find any details as to whom and how to pay the debt.
Kindly suggest what needs to be done as I am losing sleep over it.
What is the amount you owe on the BofA account today? When did you stop sending in regular monthly payments?
Hi. Thanks for the reply. $3066. I stopped the payments sometime in may 2016 since i had to find a new job.
Would you be able to pull together around $1,000 in the next few months to settle with them instead of setting up monthly payments?
Hi, sorry for the late reply. Probably not 1000 but can afford 800. but whom do i contact. i havent received any email regarding whom it has been assigned to.
You can call Bank of America and ask them who they sent your account to and they will tell you, and likely give you a toll free number to call and reach the collection agency.
Ok, and will the collection agency be open to negotiation regarding how to pay them in monthly installments?. I live In India now and with my current economic situation I would want to settle it down in the next 6 months .
What do you recommend in terms of how to approach the collection agency? Would they have sued me already for not paying the amount?
I really appreciate your help and am going through the Q and A’s of other people to help me out in understanding these situations.
Thanks.
and also can you tell how much interest would be applied . Would the interest be applied from the time the debt has been charged off?? sorry for pounding you with such questions, but I want to clear off this debt before it gets worse
Thanks
It is highly unlikely (read never) that you will be sued by BofA in India at this time.
The interest accumulates consistent with your existing BofA agreement. You will need to look to that.
I would suggest waiting until you have the money to pay a lump sum in order to settle. If that is a few more months from now, I would wait to call.
Check out this video of what to say and not say to a debt collector.
Hi, Michael!
I just read your article and I would to Thank you for providing collection information in such detail. I’m glad I stumbled upon your page. I’ve been curious about how to deal with collection agencies and charged off accounts. Pretty embarrassing to admit to someone that you allowed your credits cards to go past due and into collections lol. So I have a couple of question I hope you could answer for me?
I had 3 credit cards when I was 18 Norstrom(C.O Amt $1,312), Jc Penny(C.O Amt $614), and Macy’s(C.O Amt $366) back in 2010. Of course knew nothing about credit cards and how to maintain them. Long story short, they all were charged off in late 2011. All in house collections. Since I Don’t show any collections agency’s having the debt. So would they original credits settle an acct or make you pay what you originally owed?? And if you pay it would it show as an paid collections or paid and satisfied?
Also last question would is your advice on medical collections?
Your balances will have ballooned. You will often be negotiating inflated balances, and can get them to come down a good bit based on how long ago you stopped paying.
First things first. What state are you in? DO you have positive things showing on your credit reports now, and if so what? Do you have money at the ready to pay settlement deals you make?
I live in Delaware and I have one credit card with capital one that’s current. And an old act I closed for 20k. Yes I have money to settle! Should I just wait until it falls off which the 7 yr mark period would be 2018? I want to settle for less to nothing lol
You will not be able to settle for next to nothing.
What is the motivation to settle now? Are you going for a home loan in the next year? It may be best to just let these drop from your credit.
I am working to settle a handfull of debts across 9 retail accounts. I know 4 of them are with Comenity Bank. They are 6 months past due. What % will they typically settle for, and does this %age apply to total balance, or principal only?
Thanks
When you are negotiating settlements you are typically starting from the balance owed at that moment, which will usually include the interest and fess that have accumulated.
I target settlement percentages on Comenity accounts at 30 to 40 percent. But that number can move depending on the debt collection agency you may end up dealing with, or if you are having to resolve accounts with a buyer after Comenity sells.
I have 3 account in collection that show as charged off however I have not been able to locate who 2 of the 3 collections to be able to make payments. I know I still owe them so what are my options. For the past year I have been trying to locate a means to contact them. They are Chase CC, $879, SYNCD/WALMART $899 and Target CC 1,100. All three cards total about 3500.
.
When did you stop paying on these accounts?
Target 3/9/2010
Chase last date of pay 11/14/2014
Walmart last date of pay 8/9/2012
Chase still has your account as they stopped selling debt in 2013. You should be able to call them and learn that they have it in house, or the collection agency they have it out with right now.
Synchrony probably sold your debt. You should be able to call them and find out to whom.
Target may have sold your debt. You are approaching the time for Target to age off your credit reports, so doing something with this account now would be situation if it were me (going for a home loan would be an example). You should be able to contact Target and learn who they sold to, if they did.
Post an update with you learn, or what of this you have already done, and the details of what you learned.
I have a Citibank card balance of approx $6k that has been charged off as bad debt since 2014. The original amount of debt was a approx $10k and I have been working with a collection agency, Viking, making a few lump sum payments but always a minimum of $350 monthly payments. The collection agent told me today that CitiBank is “taking my account back” on March 1st and I should settle with Viking for a lump sum of $3k before that happens. The agent wouldn’t explain to me the ramifications of Citi taking back the loan. What does it mean for a bank to take back a loan that had been charged off and sent to collection? Should I pay the $3k to the agency before March 1st? Thank you!
If your intention is to pay anyway, yes, I would resolve it now if it were me, and if the resources to do so were available. But I would shoot for a better outcome than half with Viking Collection Services. You can often negotiate 35% with collection agencies on Citibank accounts.
Based on current trends, the account is going to be sold to a debt buyer. Depending on the debt buyer, you could be sued, or end up paying more for a settlement.
Thank you !
I have a Capital One credit card that was charged off. It is 21000 dollars. Last payment was Aug of 2015. I want to settle this. I had perfect credit until I got breast cancer. It’s in collections but I don’t see with who. What shall I do?
I live in Nevada for a few more weeks.
Do you have roughly 7k today in order to fund a settlement?
My name is Marisol Alfaro. I have an issue with a charged off account and my credit is ruined and I would like to fix it so I can improve on many areas in life. Here is what happened:
In December of 2014, my brother convinced me to use my credit to get an engagement ring for his fiancee at Gordon’s Jewler’s at Almeda Mall. The Gordon’s credit card was a citibank credit card, so they are the original creditors. When we were at the store buying the ring, the staff and my brother understood that I was only using my credit to sign off on it so he could get it and that he would be making the payments, not I. He made a down payment at the store of about $1000 dollars in order to be able to take the ring home. He swore to me he would make the payments and I didn’t know better and didn’t know how bad this could impact my credit. I was 21 and naive. So in January I began to receive calls from Gordon’s telling me that the payments were late and that they weren’t being paid. My brother swore he made the payments, but of course he was lying. I never even received the credit card, I don’t know what he did with it since we both got our mail at the same place at the time. So I was scared and made 2 payments and told my brother he owed me and that he had better make the rest of the payments, he never did. Eventually, the account went into collections. The first collection agency that I recall was United Recovery Systems. They would call me all the time but I would not answer. I am not sure how many debt collection agencies this account has gone through in the past 2 years. The current one is Portfolio Recovery Systems. The balance is $4, 358 and it was opened by Portfolio in September 7, 2016 according to Credit Karma. I want to settle the debt for way less. It was supposed to be my brother’s debt, not mine so I want to pay as less as possible to fix my credit. I need help and advice on how to properly speak to a debt collector so I don’t shoot myself in the foot. I’d love a consultation with you. Thank you.
Portfolio Recovery is a debt buyer. They are who you will have to deal with to resolve the Citibank debt now. You can sometimes settle for 40 percent with PRA.
Here are some resources to review about settling with PRA, and here is a video where I go over Portfolio Recovery negotiations.
Read through and watch back those resources. Then call in for a consult at 800-939-8357, ext 2 if you need to.
I would still like a consultation, I want to be as prepared as possible. Please and thank you.
Hey Micheal,
I know we spoke on the phone and I had asked if debt collectors such as PRA are able to know our salaries. I think you had told me no, they have no way of knowing but after doing some digging I found that there is a website called “the work number” which is owned by Equifax that sells that information to companies. Do you know about this site? Can debt collectors know how much I make using this site? I don’t want them to know how much I make and them think I can pay the full amount. I want to pay the minimum because I was basically screwed into this debt and want to get out of it as easily as possible?
If I remember our conversation correctly, you had changes jobs and took a pay cut? And if you have not applied for credit in anyway, which often requires us to fill in where we work and our salary, PRA would not have access to that information.
But if you have given that information in credit applications in the past, and that information is still accurate, that is how it is found anywhere at all. But I cannot speak to PRA using that Equifax product.
Also, given all the information I’ve given you, if I wanted to hire someone from your team to handle the situation for me, how much would it cost?
Everyone in the network charges 15% of savings, which you pay after the creditors are paid. You would need to call in again to see if we can work together. You have my email to set up a phone time.
I have a charge off from capital one. It was reported to the credit bureaus with a charge off date of April 2016 however the last payment made was June of 2015. I recieved a collection letter in the mail offering a settlement two weeks ago from a law firm. I suspect this is a tactic since the account was passed to a third party collection agency. I was already planning on paying the full amount once I got my tax return. However there were several discrepancies on my credit report as far as the date the a count was charged off. It is different on all three credit reports. Now capital one is reporting very month that it is a charge off and reporting I am over the limit once a week and for the last month twice a week a week to Trans union and experian. Can they report over the limit for every month past the charge off date? I understand they can legally report the charge off every month since I am still liable for this debt. I have worked to rebuild my credit and this is the only thing I have not paid off. Can you give any advice on how to handle this? It has reversed all the progress I have made on my credit report.
Is the settlement offer from an attorney practicing law in your state? That can mean you are about to be sued. And because settling is already your goal, I would look at ways to take them up on the offer, but if you have to wait for the tax refund, you may be able to call and get them to rework the settlement where you pay a little down this month, and maybe in March and April too, with the remainder once you are sure to have received your refund.
I would not get hung up on the credit reporting right yet. I would be reviewing the reports for accuracy very carefully after the paid status gets updated.
I checked last night when I got home. The letter is actually from Client Services based out of Missouri. It says “This communication is from a debt collector. This is an attempt to collect a debt” It does not say if they actually own the debt. They are offering to settle this for $187. I just realized that their offer expired on 2/10/17 I am just curious because Capital One is the only one on my credit report for this account… Can they legally report over the credit limit every few days since this account was charged off last year? They are also reporting a new charge off every month since the account was initially charged off. It is making it look like I have fresh charge offs every month on my reports.
Check out this post about Capital One and credit reports. i have been covering their odd credit reporting behavior for many years.
If it were me, I would resolve the debt first, and then look to manage inaccuracies on the credit reports.
You can call Client Services and negotiate the pay off amount and get them to send you a new letter before you pay it. They are not debt buyers, just the typical contingency debt collection agency.
Thank you for your response. My credit cards that are charged off can the amount owed get bigger? So far the letters that I have received from collection agencies all have the same amount as the charge offs, will the collection agencies add fees and interest over time?
There are scenarios where I still see interest accumulating after charge off. But I see that less and less. There are some court cases that lead to the practice being curbed.
Hi Michael. Last year I had to leave an apartment I was leasing early, due to losing my job. The complex sent me an amount I owed due to breaking the lease of $2500. I was not able to pay this amount to the complex, but recently when I contacted the complex they said they turned the debt over to a company called “Rent Collect”. I contacted them to confirm the amount, which they did. I have at least 40% of the amount. So my question is, how would you go about attempting to settle this debt/how would you approach this to resolve? And have you heard of/dealt with this company before?
You handle negotiations with most debt collectors the same way. Left over debt from an apartment that is that old, and who you do not rent from now, or intend to rent from in the near future, is going to consist of some phone calls where you make a lower offer to start, and follow that up with offer counter offer dialogue and phone calls from there. Check out this video of what to say and not say to a debt collector before you get started.
My current credit score is about 420. I have 8 credit cards that are closed and 7 of these 8 have been charged off. The total amount of my unsecured debt is about 80,000. The ;largest credit cards amount are Bank of America 14K, Chase 16K, Chase 13K , Citibank 7K, Citibank Diamond 10K, I think it has been at least a year since I have made any payments on these cards. My mortgage went into foreclose but I was able to catch up the payments and I am now current. I have a car loan with gm financial that is current with maybe 1 or 2 late payments the loan is 2 years old .
My credit report does not list any collection company’s only that the accounts are closed and charged off. So how can I be sure that if I pay the amount to the collections agency that the bill will showed paid on my credit report , and be a improvement on by score. Also think that some of the accounts have been sold again because i have been contacted by more than one agency on the same card
It is normal to hear from more than one collection agency on newly charged off debts. But that does not mean your account is sold each time. Bank of America has not been selling much debt the last 2 years. Chase stopped selling any debt in 2013, and Citibank tends to sell after you are 12 months late. But they all will send your account to different collection agencies for a period of time. And this is often the best place to negotiate the best savings.
Anyone reporting on your credit has an obligation to furnish only complete, accurate, and up to date information. All of those creditors do a good job at updating your credit reports to show a zero balance owed, and resolved collection, when you follow through with your settlements.
How any of this is going to improve your credit score will vary from one person to the next.
Are you saying that bringing the balance to zero by paying a settlement wont help improve my cr fit score ? I am concern about being able to finance a car in a couple of years
Not overnight, no, but it will help you to begin to improve your credit score. And settling is often an absolute must for certain types of financing, regardless of score.
Hi Michael. I have a few creditors that have been calling me for months. My job and income situation is bad in relationship to my living expenses and what I owe. I do not have the money to pay these accounts in full. Two American Express accounts are about 160 days past due totaling $11,000. A law firm named Zwicker has been calling about that. My other is a $15,000 loan from Lending Club, which is about 170 days behind and I was notified that a company named Velocity has purchased my account. Not sure what that means. Are you familiar with either of these companies? If so, what type of settlement could I expect to negotiate and how long might it take to get to a settlement? Thank you for any insight you can provide.
I am familiar with both of those debt collectors. You will want to be prepared to pay 50% to settle both. If you do one at a time I would deal with Zwicker and Associates first, as they are likely to sue you soon.
Good morning. I live in Michigan. I had a credit card through my credit union that I opened way back in 2002. Several years ago (I don’t remember exact date and of course can’t find any of my paperwork from the Collection Agency) I defaulted on payments and it was sent to CU Recoveries. They sent me letters and made phone calls up until May of 2012, at this time I received a letter stating that the debt had been charged-off as bad debt and profit and loss write-off. On my credit report, there is a $0 balance. I have not heard from CU Recoveries since then, no phone calls and no letters. Yesterday (February 6, 2017) I received a phone call from CU Recoveries telling me that I now owe over $8,000 in interest. The original debt was under $6,000. Do I have any rights? Why did they wait so long to contact me? In my ignorance, I did not realize I would still have to pay that debt and when no one contacting me for the last three years I had forgotten all about it. Now that it’s income tax time and I am getting a substantial return this year, they come out of the woodwork. If I give them my tax return it may just be my undoing. I am two months behind on my mortgage, I have over $30,000 in 401k loans and several other medical bills that have also gone to collections. I’m barely holding on and I don’t know what to do.
Unfortunately, a debt can be viewed as still collectible after the 1099c is issued.
I want to dig into some more details. When did you stop making payments? What state are you in?
I live in Michigan. As far as I can tell, the last payment I made was February of 2013. That is also the date the woman from CU Recoveries gave me on the phone.
You have options to settle debt, or perhaps discharge it in bankruptcy.
I see too few credit unions settle for less than 50% of the balance owed. Assume you need to pull together 50%, and then assume they give you 12 months to pay. Can you swing that?
Hi Michael,
I have an old Amazon/Synchrony debt ($1245) that was charged off because I couldn’t pay after being unemployed for five months. I now have the money to pay off the entire debt, but would rather pay Synchrony instead of Portfolio Recovery Associates. Would Synchrony be able to accept the payment? Or would they have sold off the debt to PRA?
Synchrony regularly sells debt to Portfolio Recovery. Once your account is sold by Synchrony, you typically have to contact the new owner/debt collector to put this behind you.
Why is it that you only want to deal with Synchrony?
Hi! Thanks for the response. I wanted to submit a pay for delete letter with synchrony in order to get the charge off removed from my credit report. If not possible, then I was hoping to have synchrony list the charge off as paid in full and force PRA to remove its entry from my report. This is all in hopes of improving credit score quickly so that I can buy a home.
You can buy a home with paid collections on your credit. Based on the credit reporting policies of today, you will not be able to get Synchrony or PRA to delete the entry in return for money. But PRA will update to zero balance once you resolve it with them (whether you pay in full or negotiate a lower payoff amount with them.
Hello… I am struggling with a few charged off accounts (Walmart, capital one and citi) I want to negotiate and try to resolve this. But I can only afford monthly payments not to pay the full amount which is around 10000. I just got a call from the prosecutors office. What does this mean? Please I need help.
When did you stop paying on these accounts?
What state are you in?
Which account were you called about, and what is the balance owed on that one?
i have a cc that was closed from schools first credit union in 2008 for about 9k and have a judgement against me for 22k from mct financial . is it possible to settle 40% on the initial balance or do they only take settlements usually on the balance plus interest accrued after acct closed? they got 1400 lump sum from my bank acct from a levy recently. what should i attempt to offer? and they are garnishing my wages at about 200 a mo for the last 10 mo or so.
When there is a wage garnishment in place creditors know they will get paid all their money while you have that job, and cannot meet garnishment exemptions. They are reluctant to settle for any savings. When I do see settlements in this situation they are often 80% of today’s balance at best.
What state are you in? When did you last make a payment on that credit union credit card that did not end up as a judgment? You may not have to worry about that one at all if you last paid in 2008. The collection agency pursing that account may not be able to sue or show on your credit reports.
i last paid in about 2008 possibly 2006 however the collection agency recieved a judgement against me and is collecting on a wage garnishment. Original balance at charge off was 9k now with interest is 22k. Im in Ca.
Thanks for the clarity. I understand your situation better. You are going to be dealing with the inflated balance with interest. And that interest is still be charged, so at the rate of $200 a month, you will be paying for many years.
Hi Michael,
I have about $4000 (5 accounts) with Portfolio Recovery Associates, and $2400 with Midland Funding
( 3 accounts). I will receive approximately $1800 in Income tax return and would like to settle. My biggest account is 1300 with Portfolio and 1100 with Midland. The problem I see is I have multiple accounts and I’m not sure the would settle those without addressing the other accounts.
Should I throw and offer to settle all debts at one or the other, or at the bigger debts and see how it goes?
I would want to tackle all the debts with each debt collector at once, and with both if possible.
Can you raise 40 percent to settle with a lump sum on your PRA debts, and then take a 12 month repayment plan with Midland Funding at 40%?
I’m not sure about the Midland Funding payment plan at the moment. My student loans kill me and I’ve used up all my forbearance and such otherwise I could probably swing it.
Do these companies settle for more than 40% or is that pretty much their standard? I was thinking of shooting them an offer of 60% I search for a debt settlement attorney in Montana but couldn’t find one to hear me out.
Thanks so much for you replies and helping people!
I can email you three experienced consumer law attorneys in Montana if you like?
When I say 40%, I mean 60% off. And yes, I see settlements with both of them for that. More with Midland than with PRA, but they happen.
I tried to talk Portfolio Recovery into 60% they are holding firm at 30% off I even tried 50 but they wont until I give them my bank account for security. I said no not until I have something in writing. Then they broke of contact with me and wished me luck with another representative? Sure I’ll take an email for attorneys in Montana thank you!
I will email what I have after posting this reply.
You can record the call where you cover the details of the settlement and save that until the letter comes. PRA will send the letter, but it is still an asinine policy they have. I cannot believe they collect more money allowing their agents to hold that over people head.
I was scammed out of $50,000 thru my credit card. I need to know my options & if you can help me.
D
Can you be more specific with what you mean by scammed?
Hey Michael,
I got a credit Card when I was 18 I was making payments very slowly to wells fargo. One day my account disappeared and I was sent to collections That was 6 years ago and I totally forgot about it, I checked my credit score for the first time in my life today and I owe the collection agency $869.00 what is my best course of action? I can pay this amount but I need advice on how to go about it to improve my credit score in the best way possible, I’m 25 now and no longer in school and I want to be able to get approved Car loans and things like that,
Is Wells Fargo still showing on your credit report, and with a balance owed to them, or is the balance showing as due to Wells Fargo showing zero?
If Wells Fargo shows zero, they sold the debt. And that can change my feedback.
Who is the collection agency?
What state do you live in?
Was it 6 years ago when you stopped paying? Can you get precise with the date?
Wells Fargo shows as Zero. The collection agency is called Greater California Financial. I live in California and the date the collection agency first reported was Aug 11th 2011.
thank you
Your in the drivers seat with negotiations. Wells Fargo sold the debt if they are showing zero owed to them. And you are passed the 4 year SOL to legitimately sue in California. Wells Fargo and the debt collector should come off your credit at the same time whether you settle with the debt collector or not.
Hello Michael,
I am from California and I have a debt of $4,800 from Lending Club but they sold my account to a collection agency named CKS Financial Debt Collection. I just got a letter from them stating that I owe them $5,300. I’ve been unemployed since last year of September 2016. I wanted to settle my debt but I want to negotiate to atleast 50% (much better if more)
Can you give me any tips on what to do first?
You are typically going to start with a hardship story that caused you to stop paying Lending Club, and how that persists today. Your story should be one that supports your inability to make monthly payments (that is what debt collectors are listening for). If you make a low settlement offer because your friend or family member is willing to help, you may want to start at 20% (depends on the situation). Some times I want settlement to be the collectors idea, so you can start with an offer to pay $20 a month, and see if they bring up settlement in the course of that back and forth.
Ultimately, you make an offer and they counter, or they make an offer and you do. It is not common to get an agreement in one phone call, so I may say :I am sure that is a good offer but there is no way I can come up with it. I will ask around for more help, but I am not optimistic”. You can call back in days or weeks and make another offer closer to where they were, and where you expect to be.
You may have to do this several times.
You want to be careful to recognize when a deal is as good as it gets, and when to take an offer to avoid being sued.
I think you can get 50%, and maybe even a bit lower.
I live in nc and have been trying to catch up on years worth of debt. The remaining pieces I have now are past medical bills. I’ve been dealing with optimum outcomes and have paid off several of the lower and arranged a payment plan for others. everytime i think i have them all on track it seems like they come up with another one. DO these agencies dig up things further back if they see your paying the ones they have more recent?
You bet they do. That is more the case when resolving medical debts.
Charge off from lending cub , recently received letter from velocity LLC
What is your goal for resolving the debt now that it is with Velocity Investment LLC?
Just got a letter from collection law firm for unpaid credit card. Says I have to respond within 30 days or judgement will be entered. I cant let that happen. Wells fargo card. 6400 balance. What should I settle for. I know this wont go away until its paid.
Settling with Wells Fargo, when your account is placed with an attorney, for under 50% is not all that common. I would start lower, but be prepared for that or a bit higher in some cases.