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.
Need some personalized help?
If you would like confidential help you can…
- ask a quick question here
- request a general debt consultation here
- get a settlement estimate here
- use the CRN Platform to settle your debts or find dedicated Debt Coach here
Not sure where to start? Click on the big blue “Get Debt Help” button.
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 Michael,
Thank you for this very informative forum and your guidance. I have been working to pay down debt over the past two years that is over 100K in credit card debt originally due to being irresponsible and some true hardships such as a year of job loss after a move.
I have been paying several creditors through monthly payments that are a combination of reduced interest rates, just principal, and another that is a collection agency that is just taking the principal and not interest monthly payments. I have 3 credit card accounts that total about 63K and the monthly arranged payments total about $1000 a month. I feel like I will never see the end of this and want to target these 3 for a negotiated settlement in early 2016. I have a good deal of money in my 401K and want to take a loan out to get this taken care of so that I can rebuild my credit and buy a home. I also figure I am paying myself interest back and the outlook doesn’t look great anyway for returns on my funds.
Here is a summary of the accounts and what I would like to do about each. I would appreciate your feedback if I am being realistic and any adjustments that you think I should make to my approach.
Barclay’s US Visa – Balance $14K, Initial planned offer $3K and target $5k.
The bank agreed to a hardship program a year ago that just ended with my October 2015 payment. At the time of agreement I was at 60 days late and faithfully made the payments but they never reset the clock so I am showing as 60 days late and will be 90 at the end of the month. I do not have a new agreement with them in place. The collections department has started to call and I have not taken these calls. The account is with the bank.
Bank of America – Balance $41K, initial planned offer $8K, and target for 12.5K
This account has been late many times and I am currently paying about a quarter of the minimum payment they want of 800 a month which is just not doable. They have expressed interest in settling the account in the past and said it would start at 70% and they have told my partner they would do 45% on the dollar. This is the account I really want to get to the lowest percent since the balance is so high. I recently received a letter that the account was charged off my payments now all go to principle. I think they are using a collection agency because the person says something else other than Bank of America when they answer.
U.S. Bank – Balance $8.9K, initial planned offer 2K, Target 4K
This is the one I am really annoyed about. I actually had a settlement offer of 5,400 back in the summer when the balance was about 12K. I did not realize that I had to make my monthly payment in the 90 days that led up to the payoff deadline. So I paid 1,500 that went toward the balance and interest/late payments and missed out on the payoff. The debt was charged off in July and I am in a plan where I pay about $300 a month and it’s all principal. The account is still with the bank. I have made all the payments on time since July.
I live in PA and have a home in MD, but most creditors have the PA address.
My partner thinks I should do a bankruptcy but I really think the settlement option is better for me and my credit score. But, I am willing to listen to an expert who thinks differently. My current FIICO is like 450-520 in the different bureaus.
Thank you from the bottom of my heart in advance for any info you can provide. This is an awesome thing you are doing.
Is your job stable? I ask because 401k loans can be accelerated if you stop working for the employer.
Your settlement target with Barclay is realistic, but may not be if you are current with other creditors.
What is the name of the debt collector for BofA? My feedback changes depending on that.
I would look to settle with US Bank, but you would typically have to fall of that payment plan first. You will want to be proactive on this to prevent it from being sold off to a debt buyer like Portfolio Recovery and Associates.
If you can do a chapter 7 bankruptcy where your debts are discharged, and you are not forced to sell items (the trustee can liquidate certain things) that you would rather not, I too think you should look into bankruptcy. Here is are two articles that will help you with that:
https://consumerrecoverynetwork.com/credit-report-score-rating-debt-relief-programs/
https://consumerrecoverynetwork.com/find-bankruptcy-attorney/
If you cannot qualify for chapter 7, and would be forced into a chapter 13 bankruptcy, I would typically like debt settlement for you as an alternative.
My job is stable and I feel good about the risk. I will only be taking 20% of my total 401K account to do this. I know that if I were to lose my job that I would have to pay the entire loan balance back at termination or take the tax hit. I plan to set the payments for 3 years. This will mean 600 a month versus the 900 now and this will resolve on my credit report. I have been told that after 2 years there will be very little impact on my credit score and that within a year I should have a high enough score for a mortgage.
I’m going to call US bank today to see where I would be starting with a payoff amount negotiation.
I took Barclay’s call yesterday to see the initial offer and starting point is 75% on the dollar or low interest payments for 5 years. So I assume I should call every couple of weeks to work them down to my target?
I called the number again on the charge off letter that I received on November 9th and now when I call the voice says Bank of America. I know that it said something else before and I think it was letters like EFI? Has my account been moved back to BOA?
I would like to see if I can get these cards paid off by end of February for the total budget of 22K I have targeted. If I can’t do that then I am willing to go the bankruptcy route.
I have an additional 25K in credit debt on about 8 other cards and those are being paid on time and I feel I can manage those down and have them paid off by end of 2017. I am most concerned about getting rid of the 3 cards I mentioned that total 60k and worry me constantly. If I can handle them I will breath easier and feel I am back on track. I also want to purchase a home in 2017 so I am thinking that if I handle the 3 large cards that are showing a charged off that by then my credit will recover enough for a mortgage. I also own a home and that has always been paid on time.
Feel free to tell me if I”m nuts with my plan.
Calling creditors often when you are not yet 150 days late is often a waste of time.
I suspect your BofA account was with FIA, which is part of BofA. I don’t think it ever went to an outside agency.
If 22k is your make or break number I think you should file bankruptcy. While it is possible to get this all done for that amount, too much has to go in your favor, and I don’t typically see that occur when you are paying some credit cards and not others.
You could use some coaching if you are going to go ahead with settling. We do still offer that for the same 50 dollars a month we always have. Let me know if you are interested and we can set up a consult.
Hi Michael – thank you for the great information you have provided so far. I would be interested in getting some coaching on settling these debts. I think you can see my email address from your comment view. If not, should I go through the Ask Michael form?
Hello,
Ive recently been looking at my credit report on creditkarma.com im not sure what credit card utilization means but it shows up on the home page of my report with a red dot by it and its at 796% which im assuming is really bad the credit card is from Kohls however when I look at the collections part of my report that credit card does not show up I got that card back in 2010. I also have a capital One card and a GE capital retail bank (Jcpenney) card in collection with portfolio recovery for $1640, one with Enhanced recovery group from T-mobile $307, a capital one card with Midland Funding $852, and a Best Buy card with Calvary Portfolio $327. I obtained these card back in 2007-2011 and are all in collections and say charged off. I also have over $36,000 in student loans which im making monthly payments but was delinquent on them when I first stopped going to school back in 2011. I have been paying monthly with automatic payments from my checking account since 2/2013. I have a credit score in the low 500’s however I am in need of a new vehicle and do not was a high interest rate or a high monthly payment. I want to get this debt taken care of ASAP but do not know where to start with paying or if settling is a good option or will just make things worse.
What state do you live in?
What are the dates you last made payments on each account in collection?
I live in CA. I stopped making payment in 2011 when I had lost my job. Capital one cards last payments were 6/2011 and 12/2011, Kohls was april 2011, JcPenney was 6/2011, Best buy was 7/2011, and T mobile was 2/2013.
Is the Capital One account that was last paid December of 2011 the one with Midland Funding? That account and the T mobile are the only ones that could still file a legitimate collection lawsuit (4 years SOL in California). That takes some of the pressure off of negotiating with the debt collectors.
Settling now will improve your credit options to a degree. But how soon are you trying to finance a car? How much money can you pull together to start resolving the collection accounts?
I want to finance a car hopefully in 1/2016 I have about $1000 right now that I can use to pay some debts and I plan to budget what ever I can in the future letting then go to collection has been the worst mistake of my life I cant finance anything I cant even get my own apartment its been terrible.
The improved credit impacts will not be that fast. If you cannot hold off financing the vehicle you may need to refinance it later on when your credit is in better shape (and the collections all resolved).
So I had a Wells Fargo credit card charge off in either 2010 or 2011 at $1580.07, at the time I lost my rental house, then my dad passed away and then in 2013 I had a medical issue that cost me $20k! I’m just now getting back on my feet, I just got a letter from WF saying they will settle for $790.03 or $131.68, both I might be able to swing but still it’s hard to swallow especially around the holidays! I want to improve my credit, is this a good deal or do you think I could settle for less?
You could try calling Wells Fargo and suggesting you could raise 30% of the balance owed and see if they counter lower. I do not see many settlements with Wells Fargo go lower than 40%, and they have been holding tight to 50% settlements with some accounts of late.
Worth a shot. I do recommend lump sum settlements whenever possible.
Hello. I defaulted on a Citibank credit card in 2012 while student teaching, you know working for free. I just received written notification from united recovery systems, LP stating my account had been referred to their office. They say I owe $1747. And unless I notify them within 30 days to dispute the charge they will assume this debt is valid. They have only tried calling me twice since September 8, 2015, and leave no voicemails.
Should I try to settle this debt with them? Do you know anything about their reputation?
I know this is atleast the second debt collection agency this particular debt has been sent to.
If I do end up settling it what do you think is the lowest amount they will accept?
The company who had the debt before them had offered me a settlement of only $549! They had wanted it in three separate payments and I made the first two but evidently never made the third payment, or heard from the agency again. But boy I’m filled with regret not sending that third payment out!
What are the chances this collector will sue if I choose to ignore?
Any advice for this $124,000 student debt teacher, who only makes $42,000/year I’ve made bad life choices!!
The company’s name is United Recovery Systems, LP operating out of Houston, Texas.
United Recovery Systems is a very large contingency debt collection agency. I find them to be fairly easy to work with.
I would target between 30% and 40% if I were settling. There are reasons they may not go that low.
URS is not going to sue you, but the next collector that gets the debt could, which is why settling now could be better.
Are you still teaching? Are your loans federal, private, both?
Luckily, the bulk of mine are federal ($100,000, $60000 unsubsidized, $40000 subsidized) I have about $18,000 originally through chase bank, now at AES and I have another $6000 through a keybank loan now serviced by Great Lakes.
I’m still teaching, I know if I go for 10 years I’ll have the federal forgiven, but a few months into my 3rd year of teaching is leaving me worn! My friend who is a secretary makes $5000 less than I do, and doesn’t work nights and weekends like me! The profession is very discouraging!
It is going to be well worth gutting it out to meet the 10 year requirement for loan forgiveness.
If you are unable to make the payments on the private loans there are options for settling those. I am see more and more private student loan settlements. Post an update if that is the direction you end up needing to go.
Are you on an income based plan for the federal loans?
Thanks for the advice!! And the quick reply!
If settlement offer ends today – first offer proposed by United Collections Bureau, does it immediately go to another one that could sue?
Would I be better off making one payment of the 12 month settlement and then trying to renegotiate when I can get together the funds for 30-40%?
How the collection account moves, and when, is something you can ask United Collections Bureau. You might say something like “I really want to be able to take you up on the offer to settle, but I cannot raise that kind of money right now. I will keep trying. How ling will I be able to contact you about this account?”
Whether the next collector is an attorney or not is not something I can venture a guess about with no background information.
I would rarely recommend agreeing to a settlement that you know you will not follow through with. You are throwing money away if you do.
You are welcome to call me for a consult so I can dig deeper into the details and offer better feedback. Call 800-939-8357, then choose option 2 in order to ring to me.
Hi Michael!
I need some help. I married someone with terrible finances (both credit and handling). I co-signed cards and bought him a brand new car. I had steller credit and am a saver. After having my son in 2008 we went through some financial strains and ended up in bankruptcy. It was filed in early 2009. Pulling my credit report last summer, a lot of the items gave dates on when they would “likely drop” from my report ranging in dates that are from Feb this year, through early next year. I got divorced in Feb 2014. He was to take all debts. He ended up filing a special type of bankruptcy this year because he always goes and buys all these new cars and can’t afford himself…the type of bankruptcy where you pay back? I pulled my credit report to check on things and it put a judgement on my report from him filing?! The sum is low (under $300) and if I paid it could I get it removed? Also, there were a few debts he didn’t include I found on my report.
1. One is a Cap One credit card totaling $1118.00…it is in “charge-off” status. I was reading about trying to get those removed from reports and I tried calling cap one to pay in FULL to settle it being removed completely from my report. They said it’s already in collections and there is nothing they can do. I have the collections info. Will the collections agency remove in lieu of pay? I read a lot about settling for a lot less? I think the line of credit was $750…must have gone up with interest since last pmt was in late 2012/2013 some time. Portfolio recovery is the agency
2. Another is a denist who already sent me to collections. Is there bargaining power to pay in full direct to dentist and have them remove it from my credit or do I have to go through the collections agency? In the hands of Physicians and Dentists collections agency
3. The last is a medical from a couple years back and same situation as above. In the hands of Professional Finance Company
Thank you for your help! My biggest concern isn’t the money or talking the totals down (although it would be a nice perk!), I want them removed as much as possible from my credit report altogether. I am just getting back on my feet after the divorce and want to have my credit cleaned up so I can buy my first house next year.
Thanks again!
Mica
Call me for a phone consult Mica. You have several things that I have more questions about before I can offer actionable feedback. You can reach me at 800-939-8357, choose option 2.
It was good to talk with you Mica. Please post an update to this comment thread as you make progress with the collection accounts.
Im a college student looking to buy my first car but I now have bad credit due to losing my job and defaulting of some credit cards in 2012. I have mostly cleared up my debt except for the largest one. I have been doing some research on how to pay when I found you. I owe $1,326 from best buy/HSBC bank. But now the creditor is CACH LLC but receiving letters through the law office of Richard Clark. I am wondering how I should go about paying and if there is a chance they would settle for less? And once this is paid off how I can go about repairing my credit. Right now I can’t even get approved for a secured card.
You can often settle with Cach LLC or their debt collectors for half the balance owed (sometimes a bit more, or even less).
Once you get things settled this account will get updated as resolved on your credit reports. Check out the page I have dedicated to rebuilding your credit. Read through the comments too, as there are additional tips and suggestions contained throughout.
Hi,
I took a small loan on a GE Money Bank card for jewelry in 2006. I believe it was around $700. I paid each month (missed one or two) then made a final payment. Then I started to get bills for money owed again because they said I didn’t make the final payment.. I had no reciept. Long story short – they charged off account after I sent a seize and desist letter. I hadn’t heard about this account for years and decided to just let that charge off sit on my account because so many years had gone by. Fast forward to a few weeks ago it seems Asset recovery solutions purchased the charged off debt. There is a judgement date of April 2009 on the letter they sent. I don’t know what that is about. They are attempting to collect this debt but have made up an amount over $3000. It’s now 6 years past whatever this judgement is and 9 years from original purchase/agreement with GE Money Bank. I live in NY State. Wondering what the statute of limitations is on a case like this is in NY?! I thought it was 7 years. And its past 7 years from original purchase and past 6 from this judgement date. I don’t have proof of any payments – don’t even bank with same bank and it’s been so long I can’t even remember everything at this point. I appreciate any advice!
It sounds like you cannot recall every being served notice that you were sued? Is Asset Recovery the named plaintiff on the judgment against you? If not them, who is it that sued and got the judgment originally?
What area of New York are you in?
Correct. I have no idea who this judgement was awarded to. I would assume GE because GE Money Bank was the one who “charged off” the account years ago There is no named plaintiff or anything. It just has a judgement date on the letter. I am Located near Buffalo NY.. Not sure if I should just ignore this? Is there a statute of limitations that would apply here?
If this now a judgment in the court record you do not want to ignore it. You will want to request a copy of the judgment from Asset Recovery Solutions. Send your request in writing via certified mail. You can also do a search for your name in your county courts records (or any county you lived in back then).
There are different statutes that limit different things when it comes to unpaid debts. If this is a judgment debt it is good for 20 years in New York.
Hello,
I have two debts I have been working on settling. One with Federated Collection Agency in the amount of $717.00 but as they say, with interest it is $1200.00. We have agreed upon $573.00 verbally, but they refuse to write a settlement letter. Another with a collection agency in whom name is unknown. The total amount is for $1964.00 and we have verbally agreed upon $1000.00, again they refuse to send a settlement letter. What do I do? I feel as though they are trying to rush payment out of me, to duke me in the end. Which has happened to me in the past. Please advise ASAP as my family and I are 6 all together and are financially tired of renting at $1200./month and want our first home! Thank you so very much!
How long ago was it that you last paid on the account with Federated? What state are you in?
I would never recommend you settle a debt with an unnamed collection agency. What is the underlying debt on this one about (who did you originally owe)? Why is it that the collection company remains anonymous?
There are ways to get around not having a settlement letter, but lets work on that after you post answers to those questions.
Hi Michael,
Thanks for a fast response. I am currently in Florida. I have not paid anything to Federated due to not obtaining a settlement letter.
Unnamed collection agency is Collection Service of Athens, I called and asked. Both of these debts originated from two different apartments in two different states due to my husbands job transferring us. I have not yet tried recording calls because i do not have a service on my phone to do so. If this is the route you advise me to take, do you know of an app I can install for an iPhone?
Here is a recommended app for recording calls. I would record the call and take great notes of everything leading up to that if it were me. I have a post up about getting agreements in writing with a bunch or reader participation about your issues. You will read in the comments from folks who simply refuse to go through with paying a debt collector without documentation, and you will read from people who I encouraged to record the calls as an alternative.
You did not say how old the debts are? If you can no longer be sued for the debts because the SOL in your state is passed, it can be easier to hold the line and demand something in writing.
Hi,
Thanks for app info. Will record calls, but prior to that I will read the recommended post. Forgive me for not giving age of debt. Debt with Federated is from February 2011, and debt with Athens is from February 2013. What are the SOL looking like? Thanks again!
Also, debt with Federated is from Orlando, Fl and debt with Athens is from Athens, Ga. That may change different SOL laws. Does the recommended post discuss what I should cover in my conversations with debt collector?
The state where you reside is more often than not the controlling factor in determining the SOL to go by. There are variables that can change that, but not likely for your rental contracts.
That page dedicated to debt settlement documentation is light on the what to say to a debt collector stuff. This page is dedicated to that. There are hundreds of comments to read. I am planning on a 3 part article series about dealing with debt collectors that will largely include stuff to say, and stuff not to say. It will not be up on the site in time for your efforts, but you can subscribe to the RSS feed to get updates of new content.
From what you have shared it is 5 years in Florida, so they could still sue.
Thanks! Will work on this tirelessly. I aim to settle in above named accounts for my husband in efforts to avoid being sued. Horrible when they keep all your first and last month deposit and still do not understand your employment situation. Do you recommend I call today, record and utilize the list you’ve provided, in stating all required “bullets” for a settlement letter, verbally? Hope that makes sense. In essence, I would be going over the “bullet list” verbally, and would like to know if that would cover all basis on a verbal contract recorded?
You could use the bullet list I provide. I also recommend telling them you are recording and why (they will not send a written outline of your agreement).
Hi Michael,
I am so happy I came across this website, your feedback is extremely helpful. Hopefully you may be able to guide me with my situation.
In mid January, I received a $1,385 bill from a Laboratory for services provided in March of 2014. It stated “Your account still has an outstanding balance. Please make payment immediately to avoid further collection activity…” However, that was the first time I had received a bill from them and I thought the charge was erroneous, because I had health insurance.
I ended up receiving a letter from a collections agency a few months later from SKO Brenner American Inc, in NY. It stated I had 30 days to notify their office and dispute the validity of or portion of debt, and if not, they would assume the debt to be valid. However, if I did notify and dispute it within 30 days, they would obtain verification or copy of judgement and mail it to me.
I wasn’t sure what to do, so that same month I called my Health Provider’s office and sent them a copy of both letters and they said they would investigate. When they finally got back to me, they said there was nothing they could do about it.
It is now June and I just received a second letter from the same collections agency stating “This account could’ve been resolved a long time ago, if you had taken the opportunity to respond. Please do so now…” with a form of payment slip.
So, I decided to call United Healthcare, which was my health insurance coverage last year, and I discovered that the bill is wrong like I suspected. The Laboratory billed me the full amount, when in fact my insurance deductible had already been applied. The agent said the Healthcare Provider was responsible to pay the remaining portion and that she would send a copy of ‘Explanation of Benefits’ for the related charges to the Laboratory and to my address. She said I was only responsible to pay $416.48 not $1,385.00.
I don’t know if I should call the Laboratory or if I should write a letter to the collections agency and submit my documents as proof. Although my recently viewed credit report doesn’t list this debt, I don’t know if this debt will be reported in the future. My question, is how can I pay the true portion I owe, without possibly being sued or having this debt go on my credit report?
Thanks,
A.
I would communicate with everyone involved. If the debt collector continues to insist you should pay an erroneous amount of money, send them a dispute letter. Send any letters via certified mail return receipt requested.
Take notes of every communication you have including the date, time, name of people you speak to, what was said by whom, etc.
I do not think SKO Brenner American Inc will sue to collect, and I think you have a good shot at managing the situation now, before it ends up on your credit report. If something does later end up on your credit from SKO Brenner, post an update and lets go from there (part of why I want you to keep great records in case you need that info later).
Ok, I’ll definitely keep record of all communication and hopefully it works out. I’ll keep you posted. Thanks!
I have to say this is the best forum for debt problems. Thank you Michael…
You bet, and spread the word about the site if you find it useful.
Hello,
So, I receive a letter from Hunt & Henriques saying that there is judgement on my debt from capital one bank vs me ( february 1st, 2013)
Now they H&H say the can settle for 4,900 instead of 9,343 total sum.
Should I try to dismiss in court ?
Are you saying you never knew about the lawsuit? What state are you in? Do you even recognize the debt? And if so, when was it that you past made a payment to Capital One (or possibly HSBC)?
Well I may have received that but it has been few years I do not re-call since I moved around. I do recognize the debt though, I know capital one has been used over phone recording and it said that debt has been dropped to clients.
They have not sent me anything for 2 years and not they are sent me letter again.
last payment made June, 2011.
on Credit report it says:
”
Remarks:Charged off as bad debt
Canceled by credit grantor
“
You would need a valid reason to try to get a court judgment voided, vacated or set aside. Not being served is a good reason, but you sound unsure. If you look in the court record, can you see what address the process server said they went to serve you? Is the address one you lived at?
50% settlements with Capital One are good. Can you raise the money to settle this in a lump sum?
state is California. I am sorry for multiple posts
I can refer you to an attorney in California who has had success get judgments set aside for lack of proper service even when the judgments are several years old.
There is a cost to this type of process, and no guarantees.
please do I would like to work with that. Can I get contact information ? or can I private message you ?
I sent you an email with contact information. Please let me know how that all works out.
I have settled on 3 credit cards that had gone to ARS collection services, with your assistance through this site. I settled for 25% on a Chase card, and 48% on a Citibank card, and 43% on a Sears Citibank card.
I have 2 more cards that have been charged off, but have not gone to collections. I was hoping to wait until they went to a collection agency to get a better deal. This is part of a divorce and I will be putting our home for sale soon, which will enable me to settle everything. In the meantime, I am finding that my credit score is too low to get a mortgage, so I could possibly borrow from a relative to settle these last 2 cards until house is sold.
Can you please give me an idea what percentage of the balance I might be able to negotiate on these two cards, which have been charged off, but not yet gone to collections? On a Capital One Mastercard, my current balance is $ 4,953. My last payment was in January, 2014 and the balance at that time was $ 4,518. The second card is an REI Visa from US Bank. The current balance is $ 9600.13 and it was charged off in January, 2015. My last payment was in June, 2014 at which time the balance was $ 9,388. Thank you.
Thanks for moving the discussion Gina. I got your emails too.
Can you confirm when you last spoke to US Bank and Capital One and confirmed that both of your accounts have not yet been placed with collection agencies or sold?
What are the amounts that both indicated were as low as they would go for settlement?
I do have a page up dedicated to settling with Capital One, and another for negotiating settlements with US Bank.
I just do not see many settlements with Capital One go below 50%.
Settling with USbank has a fairly wide range of savings percentages. When the conditions are good, I target under 30%.
Neither account has gone to a collection agency, and neither bank would tell me when it would. I spoke with Capital One about 2 weeks ago. They offered to settle for $ 3,962. They also said that the settlement takes 22 days and it wouldn’t show on my credit report for another 4 months.
I spoke with the US Bank “pay desk” on June 9th. They offered to settle for $ 7,680.
I will read the links. What do you recommend as my next step? Thank you.
You could likely get much better results working with someone in the Network who can negotiate for you. You can call me for a consult at the number I think you have from the email I sent about moving the discussion to this page (in my signature line), or fill out the debt relief consult form and I will call you.
Thank you again, so much, Michael. I was able to settle with Capital One for 50 % and with US Bank (REI VISA) for 42%. Glad to get this all off my plate!
Nice work and congratulations! It feels so good to put collections in the rear view mirror.
Thanks again for the reply and help. Here is my information:
I have two credit card debts and I’m basically wondering for an opinion on what to offer to get the accounts closed out (I don’t quite understand when people mention 40-60%, so getting it in terms of a lump dollar amount to offer makes it easier for me to understand) so I can move on and try to repair my credit. I’m currently disabled in the eyes of the government and have been unemployed for around 3 years now and that’s expected to continue for a very long time. For reference I live in Minnesota, though these aren’t close to SOL.
Credit Card One: Originally from Wells Fargo, now with Portfolio Recovery Associates, LLC. Balance is $2,200. Credit report says date opened is June 2014. They did have Rausch, Sturm, Isreal, Enerson & Hornik, LLC send me a letter about it, however when I called them they said they closed it and it’s not back in the hands of PRA. I guess because I don’t have earned income or assets that I wasn’t worth pursuing in court?
Credit Card Two: Originally from Kwik Trip, Inc based out of Lacrosse Wisconsin. Balance is $780. Credit Report says date opened is March 2014.
Those two as well as outstanding student loan debts (around 32k I believe) are listed on my reports, so they can see that it doesn’t looks pretty.
I would realistically look to negotiate with PRA for somewhere between $800.00 and $1,100.00.
Smaller balance accounts tend not to settle for the best savings. You may find this one harder to negotiate for much savings, but I would stick to a target of $400.00 if you are dealing with a debt collector.
Are all of your student loans federal? If there are private loans, what are the balances owed on those?
Thank you Michael.
The smaller balance is with a collector, though they appear to take your offer and run it past the original creditor first for approval or denial.
The student loans are all federal.
Have you looked at your options to get those federal student loans out of default and into an income contingent program?
Michael
I am 64 and a resident of MS. I am 100% disabled and my only source of income. After my divorce in 2012, I was able to pay off my mobile home and land with the settlement. I have the following credit card debts that will be charged off May 31st as follows:
BOA (FIA)
AMEX $11,808
MC $17,480
DISCOVER
1st Acct $7,668
2nd Acct $2,503
Discover offered me the 60/60 plan BOA said I would not qualify for any of their programs because of the disposable income (or lack thereof) available after my necessities have been paid.
Should I enter into Discover plan and let BOA charge off, or let it all charge off and negotiate with others?
Susan
I am going to encourage you to fill out the consult form so we can connect on the phone, or email me (the address you get comment notifications from is my email address) so that we can coordinate a time to talk.
Hello Mike, I have some questions for you and was hoping you could steer me in the right direction. My credit score continues to decline slowly; it was at 602 last month but is now at 597 despite the fact that my three bills (one bank loan and two credit cards) are being paid on-time. However, I also have four items in collections and I would like to settle them and pay them so I can get them off my report. My hopes are that after doing this, my score will improve over the course of the next year and a half so me and my fiancee can purchase a home,
Here are the collections and their info. This is all from my TransUnion report which I am viewing as I type this.
Cavalry Port – $477. The date says :Opened – 08/28/2012. Placed for collections.” The original creditor was Citibank/RadioShack. That old derogatory account also shows on my report; is there a way to get rid of it or update it if I settle this account?
CBE Group – $72. Date: 9/10/2014. Placed for collection. I believe the original account was KCPL Electric Company, so it’s basically an old electric bill from my last residence.
Berlin-Wheeler MO – $133. Date: 7/29/2014. I believe the original account was with Empire Gas, so yeah, another old utility from my last residence.
Bank of America – $93. This one is listed as “Collection/Charge-Off.” There is no collection agency noted, and this is not listed under “Collections” on my report. However, my credit union ran my report earlier this year and said it was showing as a collection.
Basically, I’m looking at advice as to how much to offer these agencies to get them paid and off my record. I’m sick of seeing my score dropping ever so slowly these last couple of months and I’m sure these have something to do with it.
I would rather try and communicate with these companies via certified mail so that records exist that I have been communicating in case they try something fishy (I don’t trust them one bit). Additionally, paying my debit card or check is 100% out of the question; I only will pay via USPS money order with a return receipt. This might seem a bit overboard, but if one of these companies doesn’t hold up to their end, I’d like to have all the evidence that we settled and I paid and they cashed it in case I need it.
Thank you so much in advance for your help!
Kevin .
I would target the collection debt with Cavalry Portfolio at about 50% (low balances tend to not settle for the best savings). Getting Cavalry to agree to a pay for delete is not likely.
I would offer full payment to the power bill with CBE Group in return for deletion from your credit reports. Where I see pay for delete occurring with any consistency is with utility companies.
I would make the same effort with Berlin-Wheeler.
Call BofA and find out what the debt is about and post an update about what they say it is before trying to do anything with it.
I get your desire to keep everything in writing and pay via USPS money orders, but I do not like that approach for several reasons.
1. Using a bank account (preferably one you set up expressly for dealing with the debt collectors), provides you easy and immediate access to proof of payment should you ever need it. USPS just creates hoops to jump through.
2. Sending a written offer to pay or acknowledgement of debt can reset the SOL to sue in some states, where phone calls may not.
3. If anything goes wrong with legitimate debt collectors these days, you complain to the CFPB and things get resolved PDQ.
You will generally get your settlements negotiated with the collectors, and get the agreements in writing, before you pay them.
Awesome, thank you very much for the quick reply! As to the BoA debt, I know what it is. It’s an old credit card that I had closed and set up monthly payments on to keep from defaulting. I switched to a different bank and updating that account with my new payment information “slipped through the cracks”, as they say. So I have no problem paying it. How should I proceed there; is a pay for delete likely with them?
On that note, concerning my Cavalry account…if I can’t get them to agree to a pay for delete (I will try, but in the event I can’t), what should I push for then? Just to update it as paid off in good standing and no longer in collections? Also, how could I go about getting the original Radio Shack account removed? Could I file a dispute once all is paid with the credit bureaus and hope they delete it?
One other thing…I was considering going by WalMart for example and getting one of those prepaid Visas that are like a gift card but can be used like a normal credit card and using cash to put money on it to pay these balances..would that work ok?
Thanks again!
Kevin
Pay for delete does not happen with BofA. I know some people suggest paying off an account like yours (low balance, billing/payment oversight)and then sending a goodwill letter to BOA to see if they will graciously remove the derogatory, but I do not see that working.
Most often, and certainly in the case of Cavalry, you are looking at:
Negotiating the settlement.
Getting it documented.
Paying.
Checking your credit report in 30 to 60 days to make sure it reflects a paid collection with zero balance owed.
Your credit will recover with time from that point. Is there a specific credit or finance goal you aiming to accomplish in the near future?
You can file disputes and hope for a deletion, but I would again ask why?
I do not like the prepaid cards either, and for the same reason, traceable and easy access to proof of payment. Like I said, it is good to be watching out for your own backside, as you certainly cannot trust debt collectors to. But the worries of only 3 or 4 years ago do not reach to the level they did then. You have not shared anything but established creditor and debt collector names with me.
Hello,
I have two Chase Credit Cards with 22k and 15k on them respectively. I am current with my them and I can’t sleep knowing of this hole that I got into. I live in California and I have spoke to a debt relief agency and they offered a payment plan for 2 years for a total of 20k to get me off the hook and I’m seeing 30% settlements on this thread. I don’t know if I can do 2 years of payments with the agency, but I think I can round up close to 30% in 6 months by borrowing from family and saving. I am in desperate need of some direction.
You can submit this consult request. Once I receive it we can coordinate a time to talk about your situation. You are already headed in the right direction by doing the research into getting this done quicker and for less cost.
Good Afternoon,
I am sure you have answered this, but I cannot find the specifics. I had about $15k in debt on 3 cards from my divorce about 5 years ago. I recently decided to go to law school to make a better life for myself, and I want to settle these debts before I graduate. I settled a $3200 Chase card debt for $530 today. I now have a $9700 debt to ATT Universal Card, and I am being called by ARS National. Is 17% of the total a reasonable number to seek on this one also? I have not made a payment in nearly 4 years. Thank you… (btw, I live in NY if it makes any difference.
17% is not a reasonable expectation to have when settling debt. You did great getting that with Chase,but it could have to do with outside mitigating factors.
I generally target Citibank settlements at between 30 and 40 percent. But I do see people get deals better than that, and that is perhaps more likely with ARS National.
Being in New York means you can still be sued within 6 years from your last payment.
I moved your comment over to this page about settling with ARS National.
i have a collection under my name but it’s not mine i want to dispute , but I don’t know how to do that. should i call Eq,Ep,Trans union .. i also have a charge off from cominety bank should i pay it ..
You can simply send a dispute letter to the bureaus that says the account is not yours and to please remove it from your credit reports. Send your letters certified mail return receipt. I do encourage you to enclose a copy of each ones report and the item at issue highlighted (referring to the included copy and problem account highlighted in your letter).
How long ago was it that you last paid you Comenity card? What state are you in? What credit goals do you have in the next, say 6 to 12 months?
Post a comment reply with answers to those questions and I can be more specific with my feedback about settling with Comenity.
Thanks for answer me .
My charge off is about 8 months old , i just couldn’t make payments cause of financial problems, and I don’t know what to do.
If i try to pay it will that hurt my credit or what’s going to happen?
I have a car loan and a credit card I making payments ontime , i want to rebuild my credit now i making payments ontime it seems that Is working .
If you can afford to pay Comenity you can do that. After 8 months of not paying, I would look to settle for less than is owed in a single lump sum. The damage to your credit reports and scores is already done.
Is there a third party collection agency handling the account for Comenity now, and if so who?
Michael,
32 yr old male, father of two young children who is in full out panic mode over feeling like I’ve forever ruined the lives of my family. Somehow credit card debt has gotten away from us. 2 months without work put us far enough behind that Ive missed payments for 180 days on a citi card with a balance of $12,800.
I’ve been ignoring calls for months, truthfully not realizing it would get to the point of going to collections. Today i called them, as I secured a hefty loan from a family member that would have allowed me to pay the debt off. Only to find out it’s been sent to collections.
So, few questions.
1. Is this mistake going to haunt me for life, or is there light at the end of the tunnel?
2. Do I sit and wait now for collection agency or pay money to Citi? I think i know this answer.
3. How do i go about making sure that once I’ve paid the collection agency off, I don’t see this come on my report again someday? I’ve heard stories of people paying off only to see same show up with another agency.
4. What’s a percentage you can throw at a collection agency for 1 time payment that gets their juices flowing?
5. Will credit stink for 7 years or will it begin to improve throughout those 7 years with good activity elsewhere?
I’m at a loss. Embarrassed, disappointed in myself and full of anxiety over this.
Thank you
1. The light at the end of the tunnel is warm and feels fantastic. You are basically one step away from it (other than paying your family back).
2. I would pay the debt collector. Who did Citibank send it to?
3. The days of debt collectors appearing on your credit reports long after you resolved the account with a prior debt collector are slowly getting more and more behind us. And if something like that were to occur, you have more immediate options with the credit reporting agencies to investigate, and with the CFPB as well. If something like that occurs (it still can, but is less likely), post an update anywhere on this site and lets go from there.
4. The offer you make can be impacted by time, and by who has the account. The debt collector who just gets an account is often not as flexible with how low of a settlement offer they will accept, compared to after they have had the account for a month or two, or are about to lose the account back to Citibank. Having said that, there are also instance where you can get the best deal right out of the gate. It will help to know the collection agency?
5. If all collection accounts are resolved on your credit reports, your credit scores can start to bounce back in a matter of months. I have seen people return to 720’s in under a year, and I have seen it take longer. And you are correct… the ratio of positives and active accounts, to negatives and accounts in collection, does impact the recovery time.
Hi Don,
I just recently settled a lot of old credit card debt, see the post above yours for details, and I’ll explain the process I used.
The hardest part was picking up the 10,000 pound phone the first time, but this website and my phone call with Michael gave me the courage.
The first step is to write down your hardship story. Something bad happened, there were cascading consequences, and you had to stop making payments. Be as detailed as you can. You may have to fax a written hardship letter to document your case with the bank. (Don’t lie, that’s bad karma.)
Side note: If you don’t have a fax machine handy, get an online fax account. Banks live in the stone ages and won’t send or receive any documents over the internet.
The next step is to write down how you have the ability to make a one-time payment, but you don’t have the ability to make future payments. Maybe you are borrowing from a family member or a friend or a retirement account? In any case, you want to be sure they understand that this is a one-time payment without any ability to make future payments.
I called Chase first, using the number listed on my credit report. It took about 3 transfers between departments to get to the right place. After authenticating myself to the agent, I explained my hardship story in painstaking detail. I told the agent that I felt really badly about abandoning the debt, and I wanted to pay “something” to resolve the account. That statement is all you need to say to let them know they have a real fish on the line.
The first level agents only have very limited bargaining guidelines, usually 60-65% of the balance due, so they gave me a big number. I did my best Tom Sawyer impression, “Aw, shucks, I really want to do the right thing, but I can’t get anywhere close to that number.” Then I countered with an offer for a round number at about 21-23%. This lets them know that you are serious, but they don’t have the authority to make the deal. They may offer you a slightly lower amount, but you should always ask to speak to their manager without increasing your offer.
You may have to repeat the process a couple of times to get to the “Floor Manager.” In my experience, this is the person with the authority to make the best possible deal over the phone. (It may be possible to do better in writing, but I was pinched for time.) Once you get the Floor Manager, re-tell your hardship story and restate that you feel badly about abandoning the debt, and tell them you would like to pay “something” to resolve the account. Repeat your lowball offer to the Floor Manager and tell them your Borrowing story. They will realize they are only getting one bite at the apple, and they will usually come way down, to around 45%. From there, it’s all about your negotiating skill and your patience. I settled mine for an average of 33%, but your mileage may vary.
The Floor Manager will likely make their offer contingent upon setting up payment arrangements over the phone. They want your checking account routing and account numbers. It’s ok to agree to that, as long as you have a separate checking account for settlements that doesn’t have much money in it. However, you must insist upon receiving the offer in writing no less than 2 business days before the scheduled transaction. This will give you time to move money into the settlement account after you receive the written offer by mail or fax.
In my experience, this wasn’t nearly as “hairy and scary” as I had feared. The banks would rather have something than nothing, the amount of that something is up to you.
Don’t worry, you haven’t ruined your family’s credit for 7 years. Once you resolve the account, your debt to income ratio will improve, which is almost as important as your credit score.
Good luck!
Johnny
Hi Michael,
I stopped making payments on my credit cards when I was going through a tough divorce about 5 years ago because the alimony and child support payments were strangling my budget. The alimony has finally run its course and I’ve been able to save a decent slush fund to put towards buying a house. I’ve talked to some housing lenders, and the best program for me is the FHA 3% down option; however, the FHA will not touch me until all of my charged off accounts are settled and showing a $0 balance.
The Date of Last Activity on all of these accounts is June 2010, and I have always lived in Florida, where the Statute of Limitations on credit card debt is 4 years. Acknowledging a debt must be in writing and signed in order to reset the SOL clock, so I believe discussing the accounts by phone is safe.
Here is a rundown of the debt owners and balances according to my current credit reports:
1) Midland Funding (Formerly Best Buy/HSBC/Cap1) $4,000
2) Chase $10,500 (I received a 1099-C for this account in 2013)
3) American Express $20,000
4) Bank of America $7,500
5) Unifund (Formerly Citibank) $500
6) Discover $13,500
The grand total amounts to $56,000 and I have almost $15,000 available in my settlement fund, which would require each creditor to settle for about 25% of the amount owed. I need to be able to settle every account, because even one unpaid item will disqualify me with the FHA. Are any of these debt owners obvious deal breakers?
All of this debt is time barred by Florida Law, so I think it would be reasonable to call each creditor and lowball them with offers just below 20%. Do you think that’s feasible?
My other option is to continue renting for two more years until all of these accounts age off of my credit report, but I would prefer to buy a house soon to take advantage of the low interest rates and reasonable market prices. I’m concerned that interest rates and/or house prices will be higher in two years, so I believe it’s worthwhile to invest the $15,000 in debt settlement in order to make it happen soon.
Thanks,
Johnny
As mentioned in our phone consult, some of these accounts settling for as low as 25 percent is not all that likely. And there are other hurdles to clear. I provided a good amount of feedback over the phone, so will leave you to post comments in this string with more questions, concerns, and updates.
Hi Michael,
I thought I’d follow up with you on my progress. I contacted each of my creditors by phone and successfully negotiated these settlements.
1) Midland Funding (Formerly Best Buy/HSBC/Cap1) $4,000 — Settled for a $1,300 one-time payment (32.5%)
2) Chase $10,500 (I received a 1099-C for this account in 2013) — Settled for a $3154 one-time payment (30%) The 1099-C was not a concern at all.
3) American Express $20,000 — Settled for a one-time payment of $7,007 (35%)
4) Bank of America $7,500 — Settled for a one-time payment of $2,960 (40%) This was with FIA Card Services and they wouldn’t budge off of 40%, so they got paid last. 🙂
5) Unifund (Formerly Citibank) $500 — Settled for a one-time payment of $300 (60%)
6) Discover $13,500
When it was all said and done, I paid out $18,201, which was slightly higher than I had budgeted, but certainly within a reasonable range at 33% overall.
I’d like to thank you from the bottom of my heart for running this website and giving me the tools, knowledge, and courage to get out from under that mountain of debt.
Sincerely,
Johnny
6) Discover $13,500 — Settled for a one-time payment of $3,500 (26%)
I am in need of so much help here and i have been reading all your posts.
I have 3 cards that are showing “Charged Off”:
Capital One Charge Off $1900 last payment was June 2013 and Charge off was Feb 2014
Chase Card Charge Off $2721 last payment was May 2013 and Charged off Jan 2014
Target Card (TD Bank) Charged off $2046 as of February 2015 last paid July 2014
I have no received collection notices (yet ) for the first two but Target had me with Alliance for collection but they no longer have my account. Its now with Selip & Stylianou (formerly Cohen & Slamowitz who have been sued successfully for unfair practices).
My concern is that i received a letter from them stating “Our client has authorized us to commence a lawsuit against you, and the legal documents have already been forwarded for filing with the court. There are several payment options that we can offer you to help resolve this matter. If you would like to discuss these options, kindly call us at the number above” The accept payments made to TD Bank.
I heard they are very aggresive and can sue with judgements. I want to settle but limited funds. Maybe i can scrape together $1,000? for settlement but how do i guarantee they dont sue me anyways. Also, they are not showing on my credit report and Target is still showing as charged off (not zero balance as i have read here if they passed the debt onto someone else).
Please advise any information and if I should be going to the other two companies to negotiate payment even if it is already showing charged off. I have 3 children (one disabled) so i had to stop working and my husband is pulling double shifts to make ends meet.
Thank you in advance.
It is possible to settle the Target account with attorney debt collectors like Selip & Stylianou for half the balance owed. But I do often see higher amounts. You will want to stress having to leave your job to take care of your disabled child.
As far as them suing you anyways, it sounds like Selip & Stylianou have already filed with the court, but have not served you yet. Negotiating a settlement with them will likely need to include them dismissing the court case.
You can call Chase and Capital One to find out the name of a debt collector they sent your accounts to (whether hired to collect, or sold the account to). Post an update with who the debt collectors are and lets go from there.
Thank you for the response. If I call them and settle on an amount, do I ask for something in writing first that they agree on the said amount and dismissal of the case if it has already gone that far before I make the payment? What if they demand payment over the phone?
Be sure to review this article about getting the agreement to settle in writing.
Payment over the phone is not really an issue when settling legitimate collection accounts, but I do encourage you to use a special checking account you set up for the purpose of paying the agreements you negotiate.
Hello,
I have been actively reading through the comments and posts on this website as I am trying to find the best possible route for paying certain debts on my report. I currently am looking for advice regarding a few account on my report as follows,
– One is a HSBC Credit card with a reported balance of 596 even though the limit was 300 and i was not over the limit at time of closing, This debt also has been sold to a Collection agency in 2010, Portfolio Recovery. I am looking to settle this debt and get it AT Least, shown Paid and not derogatory on my report. Any advice?
– The second is a debt to Plain Commerce Bank for a credit card with a reported balance of 338 that has only been charged off as of 2009. There is no remarks regarding this account only that its been charged off by grantor.
The statue of limitations in my State, OHIO, is I believe 7 Years. I am actively trying to rebuild my credit and score with a current Vehicle loan and a secured credit card. I am also planning on paying off the remaining collections items (about 6) which pertain to medical bills and are very small amounts, nothing over 150.
What would you recommend my approach be, I am worried that acknowledging these debts could leave then stand on my report longer, But I would love to get things taken off or at least paid with notations reflecting my actions taken against the debts. Also pertaining to the HSBC card that one was sold to a collection agency and shows TWICE on my report once as a negative account from HSBC and another time through the Portfolio Recovery under collections for the same amount. Should I contact the original creditor, or Collection agency to settle this debt?
Thanks in advance for any advice or help you can offer!
With the HSBC card debt collection agency being Portfolio Recovery, I would call and settle with them using a 50 percent target (half of today’s balance)
as being the most realistic. You should start much lower of course, and perhaps succeed with saving a bit more than half.
Try not to get hung up on the doubling of the balance. That will be from several months of late fees back when you first stopped paying, and default interest rates.
PRA owns the debt now so you will need to resolve this with them. It is normal for the original creditor to show a charge off with a zero balance owed once they sell off an account. The debt collector can then show a separate collection item with the balance owed to them. This negative should fall off at the same time as the original creditors entry. Your paying or settling now does not add any time to credit reporting.
Acknowledging an old collection debt is cautioned because it can reset, or add time, for how long you could be sued for collection legitimately. That is something that happens with a written acknowledgement in Ohio, not verbal I believe. In other words, if you call and negotiate a settlement with PRA, get the deal sent to you in writing, and then follow through and pay, you should be okay.
Can you say when the exact date was that you stopped paying the Plains Commerce account? What is the month in 2009 that it shows on your credit reports as charged off? The 7.5 year credit limitations on a debt like this will have started when you stopped paying the account.
Awesome! The problem with the HSBC is they report a balance as well as the collection account so I have two accounts showing that $596 balance.
Also the Plains Commerce Bank account was closed in October 1,2009 after my first missed payment. The last reported date was November 1st,2009
You will need to dispute the HSBC account showing any balance due with the credit bureaus, but I would wait until you settled with PRA if that is what you do.
I would dispute the Plains Commerce account as inaccurate and out of date.I have a suspicion that will work for this one. If not, let me know and we can go from there. Here again,I would wait until after you settle with PRA>
Micheal,
I have for most of my life had Good to Average credit. I had a baby a year ago a few medical bills piled up and were sent to collection they are small sums and can be paid off easily. After paying them will they no longer exist and be negative derogatory information on my credit report? Also about 4 years ago i had an emergency room visit and used a state insurance that paid it in full. 2 years down the line during an audit they realized i had insurance through my employer at that time of that visit and i should have used my employer insurance for that emergency room visit instead of the state insurance. While this was probably true, (for numerous of reasons that don’t matter now) i didn’t and 3 years after that emergency room visit they have sent me the bill to pay in full to the tune of $3,500.00. I cannot pay and i even inquired to see if i could get my employee insurance that i had (and still have) to pay for it but it has been to long and the allotted time lapse has made it not a bill they process. So long story short it is in collections and i don’t plan on paying it in its entirety but don’t want this derogatory claim on my history. what should i do?
Also Macy’s sent me to collection for a missed payment which i contacted them about when i recived a decrease in credit limit notice and late fees. I have had prefect credit with them and a misunderstanding with my bank led to a missed payment. Needless to say they excused the late fee but doe that mean they will reinstate my creditline and take the negative ding off too? The ding also must have raised red flags to other creditors because my home depot the next day decreased my credit line for no reason and i have had perfect credit. This has caused a slew of issue that have made me so frustrated and has overnight turned my credit from average to darn right poor! HELP i want to be proactive and do whatever i need to do to get this right! all of it!
It is unfortunate, but an oversight or small mistake that is not even your fault, can trigger a domino affect to your credit reports.
Is it the state that wants the 3,500 dollars from you, or is the debt collector working for the hospital?
Were any of those smaller medical bills partially covered by insurance?
Medical debts in collection on your credit reports have less of a sting to your credit than even just a year ago. But multiple collections can certainly compound things. Post answers to my questions and lets go from there.
Yes, the domino effect happened almost immediately. After communicating with Macy’s and threatening them with my continued business they opted to remove the late fees bring my balance back to normal without the inflated minimum due. Does this mean they will also work on taking the negative inquiry off the report too? Should i call Home Depot and see if they will reinstate my credit line without re applying like they suggest especially,since i have prefect credit with them. Why would they not take my history with them into consideration? it makes me so mad!
No, it was the hospital that is trying to collect which now is a collection agency “The Outsource GR”. Yes, the small bills are the remainder balances after the insurance paid and they are small enough to pay i just haven’t made it a priority because i figure they are already in collections and i want to make sure when i do pay them-which i am gearing up to do- how they will be listed or if at all. I am in NM by the way.
I am going to ask a 30 year veteran of the medical establishment, who contributes to the site, to respond to your issues. Stay tuned.
Thanks Micheal! I am finally getting the confidence to take this all head on! You tend to want to hide in the shadows hoping it will just go away.
Thanks Michael.
‘So long story short it is in collections and i don’t plan on paying it in its entirety but don’t want this derogatory claim on my history. what should i do?”
If you have no intention of paying this then you will have to live with it on your reports for 7 years past the date you received the care. There isn’t a magic or special method that will get a trade line deleted simply because a consumer doesn’t want to pay the bill. That is precisely one reason credit reports exist. It isn’t a HIPAA violation to report the debt. That it is a medical debt does not confer a special status that can get it deleted without paying.
That said, medical debts are usually easy to do a pay for delete option on them. The key is to negotiate that BEFORE you pay not after. Once you have paid you lose your leverage. That said you cannot force a creditor to do pay for delete. Some have a strict policy on not doing that. In that case the best you can get is a paid collection but that is far better than an unpaid open one when other creditors review your status. The easiest way to get it done is to send a good will letter offering a settlement and enclosing two signed copies of your settlement which includes deleting the trade lines. The stipulation is that if the authorized representative signs and returns one to you that you will pay by money order within 14-21 business days and they will delete within 14-21 business days of being paid. I have used this several times very successfully.
Michael,
I have a few credit cards that have been charged off and sent to collection agencies. I am willing to pay the amount that the collection agencies are requesting but want to make sure that they will be removed from my credit. From what I have read I believe that I should contact the original creditor and make sure I am dealing with the correct collection agency that holds the debt now….is this correct? Once I make the payments to the collection agency how will the debt appear on my credit?…Will it show as a paid/good standing account or will it still be a negative against my credit?
I have also read a few webpages that state that I can negotiate with the collection agencies to have them remove the debt from my credit completely, adding points back to my credit score and putting me in good standing. Is this true?
Generally speaking, it is not common to get debt collectors to agree to delete what they have on your credit reports. Even if you pay in full. And if the collection agency were to agree (they don’t), the agency has absolutely no influence over the original creditor, which is often the underlying negative on your credit anyway.
There are some limited exceptions (when negotiating credit card debts with collection agencies) that I have seen over the years, but so limited as to not be part of any realistic approach that I would suggest.
It is for this reason, that once your credit cards are charged off, and the credit damage is done, I am a fan of negotiating lower lump sum settlements with the debt collectors. You save money, and creditors and collectors will update your credit reports to show the account is resolved. Then you just need time and some smart credit rebuilding moves to improve your scores.
Small balances with debt collectors, like for utility bills, or even medical bills, are some of the only instances where pay for delete has not been a total waste of time for people in my experiences (again, with some very limited exceptions).
When it comes to making sure you are calling the right debt collector in order to settle with or pay, I would recommend calling the original creditors to start. They will tell you who they placed the account with for collection, or who they may have sold your debt to.
Post the names of the debt collectors you will be dealing with, and how long it has been since you paid the original bank, and I can help you with additional feedback for each debt.
Dear Michael,
I am past due with American Express for 31K. I was served a suponea today, and contacted AX to discuss. She offered me charge off amount of 21K and depending what I can put down, that would dictate my terms. My other option was 873.00 for 3 years and the debt would be paid off, no charge off. Well, as you can imagine I can not afford that amount , hence deliquency. I have learned my lesson, am paying off other debt, but am stuck on how much more I should try to negotiate. This was my first call post being sued. I told her I would call back on Thursday. Is being repsonsible for 70% reaseonable. I really have no cash or anyting to liquidate for a “down payment” of good faith. I can come up with monhtly payments though. Thank you!
What would it look like if you were able to defend the suit, and buy 6 months of time? How much money could you pull together in that time frame?
Hopefully someone can help me. I stopped paying on my credit cards in June 2014. I keep receiving letters from collection agencies offering settlements up to 59% payoffs. I did receive a summons from a debt collector from Pattenaude and Felix out of fear I did settle with them out of court.
I then spoke to a bankruptcy lawyer after my file came up in the court records and he wants me to file chapter 7. My concern is I have a fear of losing my house and truck if I file bankruptcy. I am up to date on mortgage and truck payments but apparently they can seize my property after I file. I live in Pennsylvania and I’m wondering if this is true. The attorney will file the bankruptcy for $750 plus court filings. I have approximately $20,000 in credit card debt. He keeps saying I am an excellent candidate. I would like a second opinion on this.
Thank you
How much equity do you have in your home (try to get some comps for your neighborhood from a realtor)?
How much do you owe on your truck, and what does it blue book for?
Your answers will help me be more direct in offering feedback about your concerns.
Also, what was the date you paid the settlement you negotiated with Pattenaude and Felix, and how much was it you paid?
OK I will try to answer these questions the best I can:
I’m not sure of equity however I did just refinance this past April for the amount of $139,000 the assessed property value is $201,000.
I owe $12,942 on my truck -trade in value is $22,861,private buyer would be $25,000
I settled with Patenaude on 12/31/14 for $750 on a balance of $,1,421.34.
I have 2 other credit cards in collections with Patenaude they said they would call in a few weeks to deal with these.
United Recovery wants a payoff of $955 on a balance of $1,365 on a Sears card
MRS Associates wants a payoff of $656 on a balance of $1313 on a Amazon Visa
Capital Management Services wants a payoff of $1510 on a balance of $3684 for a Sear Gold Mastercard
ARS National Services wants a payoff of $960 on a balance of $1915 on a Chase card
My Discover card has recently been sent to Weltman Weinberg & Reis with no payoff option yet for a balance of $4619.93
I do have a GM card through Capital One and I havent heard from them since I stopped paying.
In case it matters I stopped paying my cards because my wife left me and my son. I went from a 2 person income to 1 and figured it was better to continue to pay for my house,truck, and utilities for my son and I then to continue to pay credit cards. I did try to talk to my creditors before I defaulted for some type of help and of course they all said there was nothing they could do.because I was a good paying customer.
I hope that may shed a better light on my situation.Hopefully you can have some advice for me…..
If you are married and filed chapter 7 jointly, you are a bit over the mark for federal bankruptcy exemptions on your home. It would be something on the order of 43k of equity protected. If you are off on the comps by, say 15k, you are really close to being able to keep the home, and shed the unsecured debt in the bankruptcy.
Your truck is certainly at risk with a chapter 7. To the point that it could make sense to sell it and use whats left, after the lien is paid, to settle with all of your unsecured creditors.
That list of creditors and collectors you listed can be overcome without bankruptcy. But without a good chunk of money to start eliminating each account on a priority basis (dealing with the ones likeliest to sue, or who offer the best savings deal), you have to save up each month using your income. Let’s assume for a moment you can settle all the debts that remain (not including a settlement with Capital One – you left that balance out), for roughly 5 thousand dollars. How much money can you put aside for the purpose of funding those settlements each month? Is there any other source of money you can tap to get those settlements completed quicker, and if so, how much?
If chapter 7 meant losing your home, truck, or both, other than settling with these creditors and debt collectors over a short/longer period of time, you could use chapter 13 to protect yourself and pay these debts back either fully or partially over a 5 year period. I only have a little to go on, but so far, I would like settling these debts, and staying out of a chapter 13 bankruptcy, if I were you. You may actually save more money by settling,and be done way faster, and not have a bankruptcy in your history.
Here is some more info. The capital one (gm card) was roughly $5000 when I stopped paying. I haven’t heard a word from the. Just yesterday out of the blue I got a letter that I was being sued by discover card for $4408.18. But the letter came from ” The J Murphy Firm” they are based in Pittsburgh Pennsylvania. They say through court records they know I’m being sued. They want $499 and they say they can have this case dismissed in court if I have them defend. If they lose they say I get %100 percent of my money back. Has anyone heard of them, are they legit. I did find some reviews on the Internet about them and all had positive results. What I’m concerned about is if I win the case with them can I be sued again?
I do have some money saved and am hoping for a decent tax refund. Should I try to negotiate with whoever is suing me for the $4400 or try this firm out?.
I have a healthy amount of respect for 2 consumer law attorneys in Pennsylvania that have extensive experience defending debt collection cases. I would be happy to refer you to either for a no cost initial consult about how to progress with the Discover debt from here. Original creditor lawsuits are generally fought harder, so I am not a fan of the J Murphy Firm approach to solicit clients on this one.
Are you on the Western side of PA?
Getting a collection case dismissed with prejudice would mean they cannot use the court to collect again. If dismissed without prejudice, another collection suit could be filed, but is far less likely.
I would call the J Murphy Firm in PA, or an attorney I can send you contact information for, before determining whether you will look to settle as an alternative.
Discover collection accounts that reach an attorney office, whether suing or not, tend to average 50 percent on the low end (though I have seen some lower with the right circumstances). Perhaps your strategy could end up being answer the complaint, and then time a settlement offer to maximize your savings.
Ok. I haven’t called the attorney you recommend,yet I was waiting for the actual court papers. Well I was just served my papers. I’m being sued by discover bank c/o weltman,Weinberg & reis co.
I was wondering on your opinion on debt relief law firms? I received a letter from Harold Shelley & associates and called them. Are they reputable? Is this a good solution.
I do not have any experience or opinion to share about Harold Shelley and Associates.
Now that you have been served, I would call and consult with one or more attorneys about your next step, and try to do that this week.
Update: I just spoke with Weltman Weinbers and reis they will accept $2985 as a settlement for the discover card with a balance of $4600. I’m hoping this is a good settlement.
That settlement is at the high side of average settlements with Discover Card third party debt collectors.
I tried everything to get them lower. They started at $3700 and I got them down to $2985,they said that is the lowest they could go. But in order for them to drop the lawsuit it has to be paid in full this Friday. Any secret words to get them lower. I told them my other cards are offering me 50%. I just want it to end.
Because your Discover Card is already the subject of a court action, that may be the lowest you will be able to negotiate. Sixty percent settlements with debt collection firms is pretty common with your situation.
If you have the money to resolve the debt, go for it. If you are leaving any money on the table, it is a matter of a couple hundred dollars, if that. That is not worth the aggrevation, especially in late stage collections.
Help please!
I was living with my sister and the light bill was under my name. I moved out and the bill was left to my name. I got a letter from a collection agency asking me to pay a balance. I did not see the letters from the light company until months later. I worked out a payment plan and paid off my account with the collection agency. I have a charge off in my credit report from the light company. I gave the collection agency a call and they said they could send me a letter stating that I paid off the account.
What can I do? Can I write a letter to the credit bureau? I am 25 years and barley have credit, and this charge off is a nightmare to have.
Please advise.
thank you in advance
Laura
Judith
There are instances where you can write into a creditor reporting collections on your credit, and make a good will request. You outline the power bill in your name, that you left that address, but your sister stayed, and she experienced hardships. You paid the bill upon learning of it; had never intended for anything to wind up unpaid; and with only good intentions, now pay the price in building your credit as a young adult.
Good will letters to remove a negative item on your credit report are not something I commonly see result in what you hope they will. But when I see good will letters work, it is often with smaller utility bills.
You can also write the credit bureaus and dispute the collections. If the result of your collection dispute is that it stays, you could file a statement that would get attached to your credit, but I am not a fan of these at all.
Paid collections do not have to hold you back from building your credit. You can still make good progress, and as this resolved account ages, it will become less and less a sting to your credit score.
If you send in letters, good will, or disputes and statements, send them all certified mail return receipt.
I am trying to clean up our credit so we can purchase a home soon. (I hope)
I have two questions:
One, we purchased a dell computer and financed it through them. Payments were good for a while then husband was laid off. This was back in 2006-09. Now on my credit file it shows that Dell is saying it was purchased on 6/2012 and first late 7/12. I know the loan is older than that and we had the loan paid down from 2500 to 16-1700. Can they re-new the date like that? How can I find out the ORIGINAL date purchased and last payment received?
Second, we took a settlement offer in 2013 on a Honda four wheeler that was purchased in 06. We paid the loan down from 11000 to 6000 then laid off. We couldn’t afford at the time to make the payments in 2008 so it went to collections. In 2013 I received an odd call in regards to settlement and wasn’t to certain about the creditably of the company. He gave me his info/company/address/website and everything looked good so I called back and we set up three payments of around 700 leaving 3600 written off but settled. (wish I knew it would put more of a negative mark on my score) My question is can I have this removed since its old debt, but paid in 2013? If so how do I go about doing so?
Do you have any records of the purchase at all? How about files you now were created when you got the computer… what are the earliest file creation dates.
No, accounts should not be reaged arbitrarily. It would not be the credit reporting companies doing that (unless by error). They rely on the firnishers of the information (like Dell) to provide them with accurate and current details.
Is this showing as a collection account by someone other than Dell?
Settling the balance owed with the collector on the Honda 4 wheeler should not be holding down your credit score all that much at this point. And had you not paid the remaining collection account, you may have needed to in order to qualify for a new home loan.
When was it you last made a payment on the four wheeler before you stopped them all together in 2008?
hi michael,
I owe capital one less than a thousand dollars way back 2009. unfortunately, I wasn’t able to pay due to financial difficulty and I lost my job at that moment. After a long run, I never realize that it was already at the collection agency at the later time. Checking my credit score online I found out that my account is already owned by Midland funding LLC. Midland never contacted me regarding this matter and by checking my credit score it shows that I owe midland $3000. I would like to settle my account to clear out my debt because I am being turned down every time I tried to apply for a new credit card. Unfortunately, the amount at Midland is $3001 and I only owe capital one less than a thousand dollars. Interest keeps on building up at Midland, how am I suppose to settle this if they keep on putting interest (Midland). Is there any suggestion that you can give me? Please help. thank you
How much can you pull together to offer the debt collector as a lump sum settlement?
Thank you for replying. I can only offer around 40 to 50%. Do I need to call the original creditor (capital one) and ask them if they can still pull out my account from midland funding since midland funding never contacted me or informed me that they have my account already. I am afraid to contact midland at the moment since I have read a lot of negative things about midland like scam. Do you have any suggestion how to negotiate with them and to be sure that they will not scam me? Are there any other alternatives that you can give since midland never sent me anything. Should I ask them some agreement documents before paying them in full first to make sure that they will not scam me or is there anything else? Should I pay them over the phone or online? Thanks
You cannot get Capital One to pull the account back because they sold the legal rights to your debt to Midland.
Midland regularly settles debts for 40% to 50% of balances owed. The more uncollectable you look to them, the better deal you can often negotiate.
I do prefer negotiating on the phone in order to get to the amount you will pay, then have Midland send you the agreement in writing. Here is more on settlement agreements: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/.
I often prefer setting up the payment over the phone for auto draft, but from a specific set aside account just for paying settlements. If you only have the one account to settle, and already have the agreement in writing, and because you are dealing with Midland Credit Management or Midland Funding (same family of debt collector companies), I would have less concern about paying the settlement from any one specific account.
No body likes a debt collector. You will be hard pressed to mind much more than complaints and scam reviews of them. Some of that stuff is true, but a lot of it is overblown or outdated (speaking about debt collection agencies in general). Midland is one of the better outfits to deal with as far as I am concerned.
Just be cautious in how you deal with this, and do not pay without a recording of what is being agreed to, or everything in writing on their letterhead.
There are many tips throughout the comments of this page, and also in this brief video I made: https://www.youtube.com/watch?v=NpuAUvjtzKo.
Once again thank you very much. I will call midland and will negotiate with them once I completed my funds to negotiate the 50% or less. My question is, is it safe to pay them using my bank account check (by giving the info to them, routing) or should I use a prepaid account to pay them? I am afraid to give my account details and I don’t want any surprises in the future that I have some deductibles in my bank account even though I already paid them in full. Or should I use money order and send it to them instead? Any other suggestion?
And what if I will use the other option paying them by installment basis, should I still need to use my bank account to pay them on installment basis? Is it safe for me? Thank you
I suggest people use an account that you can have ready access to if it comes to needing proof that you paid. For that reason I do not like money orders or cashier checks, unless drawn from your bank. And also why I suggest setting up a different account at your same bank. It sounds like you have some time to set that up.
Avoid installment plans with debt collection agencies whenever possible. I understand that it cannot always be avoided. But here again, using a separate account at your same bank means only those funds in that account, and you can usually just transfer the money from your main account to that special purpose account from your computer at home or work.
Mistakes with legitimate debt collectors can still happen, and I applaud your caution. But there is far less to be concerned about in this area than there was just 2 or 3 years ago.
hi i have an collection account thats closed and its unpaid what would i do with it am confused why is it closed if its unpaid?
Closed accounts just mean you can no longer use them.
What type of account was it? How long ago was it that you last paid on the debt? Do you recognize the account?
I have several accounts between charged off credit cards, repossesed car, collection accounts and a payday type loan that are listed with balances owed. Can you help me determine the best route to go to maximize my credit score and cleaning up negative reporting credit on my report in the shortest most effective way?
I went through a financial harship a few years back where I lost my job and was unable to keep my obligations with creditors that I owed to in addition to being evicted out of my apartment. Below is a detail list of the derogatory accounts, balances owed, original creditor and where they are now. What would be my best route to clear up this mess and does it make sense to settle on the charged off accounts or pay them full?
1. ally financial – reposeesion – balanced owed $0 – last payment 10/18/2012
2. Cap One – Charged off/purchased by another lender – Owed $1,064 – Last pay 06/21/2012 -currently with Calvary CA
3. Cap One – Charged off/purchased by another lender- Owed – $443 – last pay 08/12 – currently with Fair Square CA
4. Cap One – Charged off/purchased by another lender- Owed $1059 – last pay 10/12 – currently with Portfolio CA
5. Chase – Charged off as bad debt/canceled by credit grantor – owed $4,293 – still w/chase
6. AD Astra Rec collection acct – placed for collection – owed $730 – last pay 09/12
7. Penn credit – collection account/electric bill collection – owed $130
8. Cach LLC – placed for collection – I believe this is the Cap One Card above – owed $443
9. Cavalry Port CA – Placed collection – owed $ 1,069
10. FST Nat Coll Agency – Placed collection/Cable bill – owed $538
11. Alliance one CA – placed collection – owed $554
12. Grant &weber – medical collection – owed $2,438 – last detail – 03/12
The first account was an auto repossesion, however the car was worth more than what was owed and I actually got a check back from them for the difference. Is there any way to get this negative mark removed, since it’s satisfied?
Any help would be grealy appreciated
Before I get into specific feedback on each account, it would be good to have some answers to initial questions of my own. The information will help me offer feedback more directly applicable to your goals.
What state do you live in?
How long would it take you to come up with, say 50% of the total money owed?
What credit and finance goals do you have in the next 12 to 36 months (any loans you are considering like student, auto, home)?
The repo is there to stay until it ages off. But that is not necessarily going to hold you back from your credit goals. All of the unresolved debts with the collection agencies will.
Hello there,
Thanks for getting back to me. In regards to your questions: I live in California, I have most of it now, but will have more than 50% within 30 days. While rates are still realitively low, I am wanting to purchase a house within the next 12 months. I know FHA will probably be the route I have to take, but would also like to get decent auto financing rates if possible within the next 12 months. Overall, just want to get my credit rebuilt to prevent from further throwing away money due to high interest loans etc.
Thank you for your time.
With those details in mind, I would secure the FHA loan first, then the car. Getting auto financing with all of these paid and settled collections is not the issue. Your debt to income ratio without a car payment will look better to underwriting on the home. That is, if you can avoid the car loan longer (need dependable transportation to work).
Here are some realistic expectations and targets to aim for when negotiating with the collection agencies. Because many of the accounts are low dollar amounts, it can impact the settlement saving on a percentage basis noticeably. This critical report can help you understand why lower dollar debts are not great settlement targets, or in your case, why negotiating with debt collectors could possible be more difficult (for them to accept the lower percentage deals): https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/.
Settlements with Cavalry Portfolio can vary. You look really uncollectable with all of those charge offs and collection agencies showing on your credit reports. While the Capital One balance is not all that high, I would target 25%-ish with your first offer, but be ready to accept a 40% deal, or to call Cavalry a few days to a week later and up your offer to get to around 40 percent.
Use round dollar figures when you are making offers to the debt collectors. Shy away from speaking in percentages unless the collector uses them.
The debt Fair Square is collecting is smaller. You may need to be prepared with 50 to 60 percent, or even hit a wall with them being obstinate about any settlement. I will have some additional comments in a moment about accounts like this, and what you may consider doing in a later call to them.
Assuming number 4 is Portfolio Recovery Associates/PRA Group, settlement targets at 50 to 60 percent require little effort. If you present a compelling hardship to the collector, you can often do much better than 50%, and here again, all of those collections on your credit (without any fresh positive credit accounts since), suggest a major financial upheaval.
Chase recovery is not all that likely to still have your credit card account with their internal collection team. Call them and find out which collection agency they have it assigned to. If they have it, aim for 30-ish percent, but be prepared to hit 40 percent direct with Chase. They have gotten sticky with that recently (but not always… just saw a 28%-er). Depending on the agency Chase sent your account to, I would aim for the 25% range, and still be okay between there and 40.
I would start off with offering AD Astra Recovery a 25 percentsettlement, but be prepared to go higher in a call shortly after, but depending on what they counter with, if at all.
Penn Credit I would just pay the full balance off. When you call, confirm the full balance on the account before offering anything. If the collection balance as been increased due to fees and such, post an update and lets go from there.
Which cable company is First National Collections Bureau Inc collecting for?
Settling with Alliance One can vary depending on the creditor they are collecting for. Generally I target 35% as a realistic target, but start lower. Who was this debt owed to originally?
Did you have medical insurance at the time you received treatment or service from who ever it is Grant and Weber is collecting for?
A note on timing with a file like yours. Debt collectors have real time access to your credit reports. When you settle debts, your credit reports get updated to that affect. Lets say you delay your settlements by 90 days, where you do some next week, some in January, and some in February. The debt collectors you are talking with in February are going to be seeing a different report and assigning a different collectability score to your account, than the collectors you deal with first, and probably second. For that reason, it is often best to negotiate with as many as you can all at once. You can even play them off of each other by saying things like “look Fair Square Cach LLC, I only have the 200 dollars to offer, and a lot of other debt out there. If you do not want this money, I am pretty sure Portfolio Recovery Associates, or another collector will”.
I understand it is not always possible for people to get this stuff done quickly and all at once. In fact, most people one off their settlements, and there are strategies for that too. But you are close to getting all this done at once, and should try if you can.
You will want to have your talking points down before calling. You have a story about how the debts became unaffordable. Stick to those tough luck talking points. Do not stray into how things are better now. Just that you are trying to get a grip on all of it finally, and have some help, but not much, and want to know what it will take to resolve the debt.
Deals do not have to happen on the first phone call, but make your follow up calls to debt collectors PDQ if you are starting this month, as the end of month strategy I talk about in this video is spot on for you: https://www.youtube.com/watch?v=NpuAUvjtzKo&list=TLOBT7cdS2EPQ.
I owe money to a credit card company that has passed the statute of limitations.
the credit card company turned over the debt to a collection agency.
after the statute of limitations has run the collection agency still sends me letters.
I applied for a new credit card with the orginal credir card company.
the credit card company gave me the card.
can the credit card company and collection agency take my old debt from the first card and place that debt on the new card?
note: the new card has zero percent interest for 12 months.
No, but what is the name of the bank? A few years ago, there were some strange offers to extend new credit to people if they paid off older defaulted debts, but not the really old debts like yours appears to be.
Was there any reference to your prior unpaid account during the process of opening your new credit card?
Hi Michael,
First of all thanks to all the great advice you have giving out.
Here is is my situation. So I have 2 accounts in default for about 6 months. One from US Bank for $6500, they are threatening to sue me and one from Discover for $6800, saying my account is going to be charge off at the end of this month. My Mother in law and my Grandma passes away the same month in July of this year. They were sick and so we were not able to pay since March or April. What do you think I should do? I may have some cash for settlement but not alot since my husband is the only one who works, his wages was cut a few times (he is in the construction industry).Any advice is appreciated, Thanks in advance, Kay
Is US bank collecting, or is it an outside debt collector they are using?
Can you come up with roughly 40% of the combined debts? If not, how much can you pull together?
US Bank is still calling me so I believe they are still trying to collect and yes I think I could come up 40% for both account.
I discuss settling with US Bank on this page: https://consumerrecoverynetwork.com/question/will-us-bank-settle-one-account-while-i-am-current-with-another-credit-card-hope/
And settling with Discover here: https://consumerrecoverynetwork.com/discover-credit-card-settle-dispute-debt-validation/
Have you reviewed the section of the site dedicated to settling with original creditors (accounts not charged off and with debt collection agencies yet)? If not, review that starting here, and click through to the next article I direct you to at the end of each post. That will better prepare you for when you are on the phone negotiating.
Post your questions and concerns as they come up, but in the comments on each particular page.
Thank you so much for your advice, with your encouragement, I was able to negotiate a 40% settlement with Discover. Next up is US Bank. I read the two links you post over and over just to make sure I do it right.
Great, thanks i will keep you updated with my progress. I have watched all 20 of your youtube videos and they have helped alot. I recommend anyone doing debt settlement watch them
Thanks for that feedback Mike. Spread the word about them if you like.
I could use your help. I am currently considering changes to the site design, and also looking at getting back to creating more videos. As someone who has seen them all, what are some things you feel you missed in the videos, and had to come to the site, or off to other sites, in order to fill a gap? What are some things you picked up on, but would like to have seen covered in more detail?
I really appreciate the feedback 🙂
Well i thought your video series had an excellent intro. They were very clear, concise and thorough. I liked the way you staged the whole process briefly. And the best part was the interviews you had with industry experts.
So i guess the things i would just add more of would be more industry experts.
Have people understand that they should remove any emotion from negotiations. It is just business. Don’t let anything rattle you and stick to the plan with an end result in mind.
Stress that they have to have thick skin to wait everything out while also being sensible enough to pull the trigger on a good % offer when it comes up.
I would like to see more company specific processes and percentage targets so that individuals can feel they are progressing closer to a realistic and good settlement. what worked for one bank may not work with another.
A section on “things to NEVER say, do or send them” in the process
Additional details in handling a lawsuit. from summons, court replies and realistic %’s at this point.
Also one last thing that i never saw mentioned anywhere is how to settle debts with Peer to Peer companies. Such as Lending Club, etc. Since they are not a bank what is the process in handling them. % target, timeline?
I hope this helps. You have certainly helped me greatly with all of your current material and forums.
Thanks Mike
Thanks Mike. I will be filling in some of that content. And I do plan on doing some more hangouts with experts in the debt and credit field. I like doing those the most, of course, and am glad people take something away from them.
Lending club settlements are coming in at 40%-ish, of the ones I have seen in recent months. One was a sold loan, which I had not seen before. I will have to talk to some peers about what they may know about settling with Prosper, as I have not seen anything with them recently.
Hi Michael,
Just checking in with an update and a question. Just settled Discover Card for 40% at 130 days late.
My question is Merrick Bank. i’m at 168 days. They will do 50%. Should i do that or will i have a better or worse shot after charge off at 180 days? the balance is 3,000.00
Thanks,
Mike
That is a good settlement on your Discover card.
I would counter Merrick Bank with 40% if it were me, and I had the money, and wanted to avoid charge off. If they do not budge, you will want to weigh what that few hundred dollars means to you compared to keeping the account from charging off, and potentially landing with more aggressive collections. Unless there are better uses for those funds, like settling a better deal on another account in collections, I would probably try to put this one behind me, even if they do not budge.
You may have a better shot after charge off, but you may end up settling for the same, or even higher if the account goes to an attorney.
Hi Michael,
I just got a letter from Velocity Investments. It says they purchased my Lending Club debt for 5,500. Any experience dealing with these guys? it was just an intro letter. My lending club loan is 175 days late and charged off. It was with FMA Alliance for 2 months prior to this.
Thanks
The last Lending Club loan settlement I saw was for 35%.
What is your goal with this account?
Hi Michael,
I would be fine with a 35% lump sum. I’ve just never dealt with a debt buyer yet. and what i read about Velocity is that they will file a lawsuit. I’m just trying to get an idea who i’m dealing with. They haven’t even attempted to call me yet. Just a letter letting me know that they bought the debt and i have 30 days to dispute the validity of the debt otherwise is will be valid. And that i should contact them to make a payment.
I will connect with the specialist that worked that file and confirm, but I think the settlement was not on a purchased lending club loan, but an assignment or contingency collector.
If you can access money to fund a reasonable settlement, you may want to consider this one as your next priority.
Collection Agency: Comenity Bank/ Vctrss
Open date: 9/28/2009
Account Delinquent: May 1,2011
Charged-Off: Nov 2012
Closed Status: Paid and Closed
Hi Michael,
When I pulled up my credit report from Equifax, I found out this agency is still reporting to Equifax that my account is a charge off from the month my account is closed all the way to Sept 2014. Since my account is already closed, shouldn’t they just stop reporting to the credit bureau? Is there any way they stop reporting my card as charge-off every month?
Thanks!
Unfortunately, once an account is past due, and in your case enough months late for the account to charge off (somewhere between 1 and 6 months of non payment, but no longer than), that fact stays on your credit report for typically 7.5 years with only few exceptions.
A single paid collections is not going to be dragging your credit score down too bad. When was it paid off? Are there other collections on your credit reports? What are your credit or finance goals in the next 12 to 24 months?
Hi Michael,
Thanks for your quick reply!
I think I may have asked the wrong question.
Actually, this was already paid as a charge off in Nov 2012 and closed. There were other charged off accounts I had around the same year, and I understand it will stay on my report for 7 years. But this one stood out to me because they are still reporting to the credit bureau as charge-off every month after this account is closed (and still reporting in my payment history up until 09/2014), whereas other accounts just say “not reported”, “no payment history”, or “charge-off on 2011, no further history after 2011.” I’m not asking for anything to be deleted prior to when this account went charged-off, just that they stop reporting in my payment history every month.
I’m trying to switch jobs and I want to make sure there’s no new delinquent/ negative accounts within the past 12-24 months. But if they are still reporting in my payment history from the time I paid to 2014, would that count as if I had a recent charge-off?
Thanks for the clarity. I get where you are coming from better.
Charge off is generally only considered by the credit scoring algo’s once. But updating your credit report with info each month that is being treated as fresh, when in reality the info is stale, could be a problem.
If it were me in your shoes I would not waste any time trying to parse out why they are reporting the way they are. I would jump right to filing a credit reporting complaint with the CFPB. You can do that here. The premise of my complaint would be that the account is getting reported as a fresh charge off monthly.
Post an update with how this progresses for you.
Hi michael,
I have an Amex cc that is about 120 days late for total of 12,200.00. my cards have been canceled and been placed in Amex Legal. Whenever contacting them to work out a settlement, they wouldn’t budge on a 70% offer. Yesterday i just received a legal summons for the debt and 35 days to respond to the courts.
What do you suggest? Ive settled with 4 other banks on other cards already with ease at an average of 35%. Why is amex legal being so tough? Also, can i get them any lower within this 35 days window.
Thanks.
Who is the debt collector suing for AMEX?
Was the account used for a relatively large percentage of its available limit in the months prior to payments stopping? Any cash advances? How new is the account?
AMEX legal
American express centurion bank
Anthony j migliaccio jr &
Joshua j knurr
Based on what you have shared, you may be able to negotiate another 10 to 15 percent off of that.
American Express is not being unusually difficult about settling with you. They have rarely settled for as low as most other credit card banks. Once sued, even less so.
The fact that you are being sued inside of the first several months of nonpayment is not common (well… it was more so several years ago, but not now). That suggests account level motivations, major skip tracing red flags, account holder communications that expedited the decision to place the account for more aggressive collections, or a trend change in collection policies at the bank.
Regardless of any of that, if you want to settle prior to the case progressing forward, you are likely looking at 50% best case scenario, and may need to settle for the 70 percent on the table today. I would realistically counter with 50%, hold that offer with a follow up call in 5 and 10 days, then bump with a 60 percent settlement offer 5 days after that.
If you just do not have the money to get this done, I would work with an attorney to file an answer that would survive summary judgment, and buy several months to raise more money to settle with AMEX.
Thanks Michael,
I am going to first have my attorney file an answer to the court. Just to prevent amex from thinking that have an easy lay-up to win a judgement.
Should i then send my 50% offer to settle in full in writing and follow up with a call? Or do this negiotation over the phone?
AMEX has asked me to fax them a harship letter and 3 years tax returns and bank statements in order for them to “consider” lower than 70%. Should i send them any of this? or could that only bolster their case against me?
Thanks for you help
Sounds good. I would let your attorney do the negotiating if he/she is filing the answer. Ideally I would suggest working with an experienced debt collection defense attorney. You can find one closest to you through the National Association of Consumer Attorneys.
I would not send them any of that information. The time for that, in my opinion, is best when folks are mostly noncollectable, even if a judgment was in place. I have done those document requests, and have seen some absolutely fantastic results out of AMEX directly. But the hardships were beyond sincere; likely to persist; income was often fixed and protected from garnishment; or clearly supported taking far less today, as it was as good as it was going to get for collection.
Thank you for the possible options. Except for sending it certified / return receipt, the letter we sent Amex was almost verbatim what you suggested in your first option. The more than month-long delay to “investigate the matter” and eventual one-line response to call Gatestone (only after a second letter regarding their determination) did not address the dual billing demands in any way and could not have been any more disinterested. I still don’t understand why Amex would continue to send billings and accept payments for an account they say is being handled by someone else. It’s very frustrating and confusing to a customer trying to get things back on track so get demands from both parties simultaneously.
If we were to pursue the second option, to call Zwicker and try to set up a similar payment arrangement, would interest rates and any fees be stated upfront, or could they charge pretty much anything they wanted and not have to provide a way to know what the balance is at any given time, as people have commented on online? Haven’t seen anything positive about dealing with this company, so it’s a bit offputting. We are honestly trying to rectify the situation and just want to be able to deal with someone who doesn’t treat everyone like a crook trying to get out of paying their obligations.
The third option is sounding a bit more promising as far as possibly getting this behind us sooner. It would definitely be a stretch, but it may be possible to come up with half now. What is the expectation that the terms would not change if we do make a lump-sum payment? Would Zwicker provide an honest and upfront payment agreement before any payment was sent, and what would we need to look for to ensure it would be honored? Based on what we’ve read, we would not want to provide a bank account number; it would need to be by check or online electronic payment. What could we expect as far as additional costs to do something like this? And would they or anyone else come try to come after the rest later once an agreed-upon amount was to be reached?
Thank you for your patience with all the questions; it’s so nice to be able to get straight answers somewhere. Looking forward to your response.
I understand the frustration with what looks to be dual collections.
Calling Zwicker and Associates to set up payments could include negotiating the interest away. How they would update you about your balance owed, and payments received is not reliable at all. If AMEX is not going to track that and send billing statements, and if AMEX is not going to require it of the debt collection agencies they hire, than the updates may not occur. There is a push to change that at the federal level currently, but that does not help you today.
I have generally found Zwicker and Associates fairly easy to work with. That goes for when a CRN specialist negotiated settlements with them, or when we coach people through it from the sidelines.
If you were to settle with Zwicker, you would not pay until you have everything that was negotiated and agreed to in writing. Here is a guide of what to look for in settlement agreements: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/.
When it comes time to pay a debt collector, here are my suggestions: https://consumerrecoverynetwork.com/paying-your-credit-card-debt-settlements/ – settling and then paying a debt collector is even more straight forward when it is a one off event (you do not have several collections to negotiate). And in today’s hypersensitive debt collection regulatory environment, any monkey business with payments and agreements is becoming rarer. There is just too much on the line for collection agencies these days. Unless they are an outright scam debt collection company, and Zwicker is not.
You should not expect any additional costs to settle Your AMEX account for less with Zwicker and Associates, not unless you hired someone to negotiate for you. You should not see any later attempts by different debt collectors to try to get you to pay anything else. But mistakes in data systems can happen. That is why you want to keep a copy of the agreement, and proof of payment. It will help you put to rest any later collection claims quickly.
Hi, Michael,
Thank you for the information. When I call to respond to Zwicker’s letter, how should I approach the situation? Should I say right off that I would like to get this behind me as soon as possible and would like to settle? Since we have been current with Amex for seven months now, but they are still reporting us as delinquent, I don’t want to send Amex any more payments. (Would it be a fair assumption that Amex doesn’t have to pay any fees on payments they receive directly, and by continuing to bill a current-paying customer they would be basically cutting out their own collections agency?) I guess it’s neither here nor there at this point, but I am curious how this double-billing is beneficial to Amex otherwise. So we are at the point we just want to be done with this and move on. How does one open this conversation?
Thank you.
It is important that you communicate a hardship. How you go about that is different from one person to the next. And that is what I often suggest leading with, not just hitting them with what can I get this settled for as your opener.
Example:
“I am calling after receiving your letter regarding my account in collection. It has been everything we can do to come up with any payments, and those we do make, just set us back more each month. I am going to be making some hard decisions about finances in the next week, and would like to know what options exist to resolve the account with your office?”
In this way, you are not trying to settle on the first call, are not going into too much detail regarding hardships, and are not negotiating right off the bat. It is a good way to get your feet wet.
Taking this a step further could look something like:
“If it were not for family I have spoke too about my situation, I am fairly certain I would be filing bankruptcy. Thankfully I may get some financial help to avoid that, but only if its affordable, and only if it does not involve payments, as my income is not consistent.”\
My general targets for negotiating settlements with Zwicker and Associates are between 40 and 60 percent of the balance. With your payments being so recently recorded, you may not get there immediately.
Hi, Michael,
The account was “cancelled” as of the April statement; no longer able to use. We do not have any other accounts with Amex.
Thank you
Thanks. Here are some options to consider. Post questions about any of them.
Write a letter to Amex corporate. Explain the situation, and include things like the struggling business, loyal customer for xx many years, getting the account caught up as soon as you could, as that was your intention all along. You continue to make your payments as AMEX is billing, and would appreciate no longer hearing from debt collectors. Send that letter certified return receipt, keeping a copy for your records.
Call Zwicker Associates and explain the situation and that all you can afford is what you are being billed each month. They may take your payments and renew that commitment with you 12 months from now.
Pull together about half of the balance owed on this account really fast, and settle the debt for less than the balance owed, which I wonder if this approach is a language better understood by Zwicker and Associates. I say “wonder” because I think you would spend more time talking about the possible error in being placed with a debt collector like Gatestone, or them, and the continued monthly billing you are paying on time, than by settling and that costing their client AMEX.
Hello, Michael,
Early this year our business took an unexpected drop and we were unable to keep up regular payments on our business Amex card, which we had maintained for 15 years. (We tried making partial payments as much as we could in the meantime.) In early May we were able to pay the $5500 to bring the account current and have been making timely monthly payments ever since. We continued to receive monthly Amex statements with payment amounts and due dates, as usual. In the meantime, the account was sent to Gatestone, and even though we brought the account current, we continued to receive calls and letters, then they tapered off and recently stopped altogether. Now we have received a letter from Zwicker & Associates regarding our “delinquent account.” Calls to Amex bring a recorded message saying they no longer have information or access to our account and we need to call Zwicker. Obviously Amex has “access” to that information since they continue to send monthly statements acknowledging our regular monthly payments paid through their own online autopay function. Our statements show the account as current (cancelled as to any further use, but not past due), with a balance of approximately $10,000. We are making good on our debt to Amex; why are we being pursued for a “delinquent account” when Amex is receiving our payments themselves (at 27% interest). Not sure how to proceed. My understanding is that a collection agency is involved to collect on debts not being paid. How should we respond? Any advice you can provide will be appreciated. Thank you!
Can you say for how long your account had fallen behind without the required payments (even though you may have been sending some amount of money)? In other words, when were you first late, and then when did you make a large enough payment to bring the account current?
Your AMEX account may have been overdue long enough for it to go to Gatestone as an early placement collection agency, and then when you brought it current, it was too late to reverse the collection cycle. It is also possible that your account just slipped through the cracks.
I have seen your situation play out where regular payments that you are already making can continue, or continue through the current debt collector.
If you can provide a clearer impression of timelines for falling behind, and then catching up payments with AMEX directly, I may be able to provide more actionable feedback.
Hi, Michael,
Thank you for taking the time to respond so quickly. Our last regular full and timely payment was in early October 2013 (a little earlier than I remembered), for the Sept statement. So the account was behind during the October 2013 through March 2014 statement periods (with several interim partial payments totaling $1300 during this time). As of mid-March, we received a letter from Gatestone saying our account had been transferred and demanding full payment of the entire balance. However, we continued to also receive monthly billing statements from Amex during the entire time, and still do. When we received the April Amex statement, we were finally able to bring the account current, prior to the stated due date, paying the $5,500 due in early May on Amex’s payment site. At that point we also set up Amex’s autopay function to ensure all future monthly payments would be made from that point forward. In early June, we received another letter from Gatestone saying we “have failed to pay our account” and again demanding full payment of the entire balance, even though this second letter reflected the $5500 payment already made to Amex. We were clearly being pursued by two entities for the same account, and Amex had no problem taking our money directly. We wrote Amex asking to have the Gatestone letters and calls stopped since the account was now current and was being paid regularly off of Amex’s monthly bills. They did not address this at all, with no response until over a month later, saying only that the account was being handled by Gatestone. I don’t understand how Amex can continue to bill us and receive our payments if they no longer have any interest in the account. We can’t be expected to respond to both parties for the same balance, yet that is exactly what was (and is still) happening. When we received the letter from Zwicker just recently, I was prepared to contact them to explain our account was and has been current with Amex for going on seven months now, when I read that if Zwicker sends a letter on behalf of Amex, they intend to sue. Now I’m not sure – do we need an attorney, for an account that Amex clearly knows is no longer delinquent, and is in fact still billing us directly for, yet still claims to have no access to our account information? We are not in a position to pay the full balance, as Zwicker is demanding, and we are current with Amex, per their own bills. We have certainly demonstrated good faith in bringing our account current as soon as we possibly could, with never any intention of defaulting on even a penny of what we owe, and we have honored that. How should this best be addressed? We are grateful for your help.
Couple things to clear up first.
American Express does not sell debts. They are a bit of an oddity amongst creditors their size. That could change of course, but it hasn’t yet. So even though you have been contacted by Gatestone and Zwicker Associates, they are debt collectors for AMEX, not themselves or another purchaser.
When your account goes 6 months delinquent (yours either did, or fell just short of it), banks charge off debts according to GAAP (accepted accounting principles), and OCC guidance. This explains the continued collections pipeline issue you have with Gatestone, then Zwicker getting the account, as that is what would happen with charged off accounts.
You can contact Zwicker and tell them what is happening. My experience with cases like yours is that Zwicker, nor any other collector, really cares about correcting any error (and there may not have been one with your account), they just want to get the contingency fee from getting you to pay them.
Before I suggest a couple of approaches to take, one last question. Is the AMEX account closed, or still available to use today, and do you have any other open accounts with AMEX?
Hi Michael,
I received a settlement offer letter from Blitt and Gaines P.C – over a charge off from capital one.
When I originally called a few days ago my balance was 2,436.00. The settlement letter has $2556.72. I agreed to pay $2000.00. The letter says in receipt of this payment, the account will be considered fully compromised and settled. Is there anything else in writing that I need to get from them in order to ensure that they will not take me to court or sell the remaining debt? I do have a court date but I was never give a written subpoena.
Thanks
Stephanie.
I would want to get Blitt and Gaines to speak to the pending lawsuit being dropped. There are some additional things to look for in a settlement agreement that I outline in this article: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/.
I would have little to no concern that you would be sued later for the portion you did not pay. And little concern for the resale concern too. That kind of thing was never really a huge problem, and definitely not one now. But if something weird does come up later, with a collection agency, or Capital One, post an update.
Hey there, I have citibank visa that had a balance of $5500 that was 90 days past due. I was sent a letter that I had 21 days to contact them or make payment to avoid being sent to collections. I sent them a payment of $3900 which they received and posted within the 21 days. Unfortunately they still sent me to a collection agency for the remaining balance of $1600. Agency is AllianceOne. I am considering a dispute of the account being sent to collections as i have all documentation, however I would like to have my credit damaged as little as possible and a resolution can take up to 90 days. My account is in pre-chargeoff status, should i work out something with Alliance one?
It is okay to work this out with Alliance One. But are you trying to make payment arrangements with them, or are you able to pull together all of the money you need to pay this off?
Its going to be tough for me to come up with the remaining $1600 needed to pay off the balance, $500 is a realistic amount i can come up with. I also recently paid off a discover card with a $10k limit so my credit utilization is fantastic which raised my credit score by 40 points. Citi has been very tough to work with in regards to this account and alliance one doesnt seem to want to plan an agreement. I know that any payments made to alliance will go to citi which i assume means citi should still be able to pull the card out of collections status… not sure what to do. Keeping my credit score close to the 665 it is at now is my goal. I hope to ultimately get it back above 700 next year.
Thanks so much for your reply and help. Once i get myself back to where i want to be, I will share my experience to help others… gotta play it forward.
Your larger earlier payment would appear to have been enough to have brought your account current with Citibank. This would not necessarily mean that the 30, 60 day late pays would be removed, but it would have been common to have your account taken out of an precharge off, or recovery status.
I am sure you could spend some time banking your head against the wall while covering all of this on the phone with Citi, and the collection agency Alliance One. Explaining you made a large one time payment in excess of all required minimums that more than covered all missed payments is easy enough. Try to get to a supervisor as quickly as possible.
I may just skip ahead and file a complaint with the CFPB. There are a couple of angles to take the complaint. But the main reasoning for taking that action is to put your situation in front of a smarter set of eyeballs at Citi and/or the collection agency.
I have a citibank card with a balance of 12527.00 that went to alliance one. I spoke to them yesterday and they demanded I settle with them for 9500.00. I dont have the money and neither does any one I know. I offered 200.00 a month until I can pay more. What can I do?
Are you certain you can afford 200 dollars a month consistently?
Are there any other unpaid debts out there other than the one Alliance One is trying to collect on?
Yes i am taken on two jobs and yes there are more debts but those are 1000 or less I talked to them yesterday and they offered 4950. to settle something i still cant come up with. everytime I aske for more time they require 100.00 deposit. so far i have paid 250 in two days. they also want proof that i am tryingto get the money is that normal? They want me to aks everyone I know and show verification?
That is a bit over the top… for you to show verification that you are trying to borrow money from family and friends. But the 4950.00 is a really good settlement on that size of a Citibank credit card in third part collections. Can you raise that amount of money quickly? If so, it is worth considering.
I would stop throwing any money at this without a plan in place.
If a payment plan is all that can be done, it just is what it is. 200.00 a month is not far from what you could get in a repayment plan with a credit counselor (as it is not all that common to get Alliance One to agree to that long a repayment term, but where that is one of the primary functions of a credit counselor).
If you hit a wall with the payment plan you need and can afford, call and talk to a counselor at 800-939-8357, and press option 1.
Hi Michael,
Your site is great, and has been much help already. Wondering if you have any additional information based on my specifics:
My mother retired at age 82 approximately 6 months ago, at which point I discovered that she had been putting almost all her paychecks toward monthly minimum payments on 13 credit cards that totaled around $60,000 in debt. Now retired, her income is only Social Security and a modest pension; she lives with me in my house and has no assets. Obviously continuing to pay the way she has been would be impossible, so I’ve taken some steps I think in the right direction: I have filed Power of Attorney papers with all the creditors, made personal contact and explained the situation, and stopped paying anything around 5 months ago.
I believe that her specifics make her judgment proof, and probably a good candidate for them to settle with for something. My question is: How much can I reasonably expect them to go down off of the current balance? My only real success at the moment has been Comenity, which owns one of the store cards for $4,000. They offered to settle for $2,300, I countered with $2,000, and they accepted. I thought I maybe could have gotten lower, but this particular card has my sister as a joint account holder, and I thought for that reason it was good to get settled.
With the others, no one has gone lower than 60%, and so I’ve declined settlement so far. Do you think that’s wise? Many will charge off in the next six weeks, so I figure I’ll keep calling in. But what’s a reasonable settlement percentage, would you say, given the circumstances? If it matters, the other banks are Citi, Citizens Bank, Chase, and Bank of America.
Thanks very much for any help you can give!
List all of the creditors and the approximate balances on each account. I can reply with estimates I would shoot for when negotiating with the same set of circumstances.
Is there any reason you can think of for your mother to need financing of any sort going forward?
Hi,
Here are the approximate balances:
Chase – $22,000 (total of 5 separate cards held by Chase)
Capital One – $17,000
Citizens Bank – $12,000
Bank of America – $6,000
Synchrony (collections for QVC Card) – $3,000
CitiBank – $1,700
Kohl’s – $1,500
And no, I don’t expect my mother to need financing going forward. Conceivably, her car could wear out, but then my siblings and I would help her get another one. With the SS and small 401(k) she has, she’s able to pay her regular monthly bills from this point forward without needing credit any longer!
Thanks greatly for your help.
What follows are general estimates like what you can find for the major banks I cover here. Fixed income/no asset situations like your mothers can often result in better settlements, so I will offer both a general target, and a more aggressive negotiation target when I know it can apply.
Chase currently targets pre charge off settlements at roughly 40%. I do see a sprinkling of 30-ish percent settlements still, and those results tend to be with people experiencing long term hardship (medical, fixed income, etc).
Capital One collections at nearly all stages are roughly 50%. I do look forward to some softening from CapOne, but I have been saying that for a long time now. There are instances of lower settlements with Capital One, but those occasions are often with outside collection agencies, or debt buyers.
Citizens bank I target at 35 to 40 percent settlements.
Bank of America I generally target at 40%, but much like Chase, there are many situations where I see 30 percent settlements, and even the random 25% settlement – all pretty much associated with unrecoverable, or long term hardships.
Synchrony would likely be settled with a collection agency down the line, so… not much to estimate until you know where the account lands.
Citibank settlements can be between 35 and 50 percent currently.
Kohls I would target at 35 percent.
Now… assume for a moment that all of this 63k total of debt could be settled for 25 percent. That means coming up with roughly 16k. Now compare the national average cost of a straight chapter 7 bankruptcy (straight meaning no asset), at roughly 1800 dollars (hers may be as low as 1500-ish).
The simplest, quickest, and least involved solution is discharging these debts in bankruptcy. But I am here to offer help and support if you choose to continue settling these accounts.
Thanks for the help. Working on this progressively every few days. Today, had great success with Synchrony (handling QVC) . The debt was just shy of $3000, and I was ready to offer $1250 as a first offer. Before asking me what I would offer (the technique I expected), they offered $1050, or 35%, to settle. A fine outcome, I’d say. The others, I’m still negotiating with, or waiting for them to come down lower.
On the bankruptcy option, we did consult a bankruptcy lawyer at first. But because my mother lives in my house, he explained that the law has recently changed and the courts would look to me to revolve all debts before a bankruptcy filing. Thus, this approach. Thanks for your help, and will keep you appraised so that that can help your view of things as they currently stand in the world of debt collection.
Hi again,
In the past month, I’ve had good success with about half of my mother’s creditors, and am at various stages with the others. I have a specific question about my current status with Chase, which holds 5 separate cards with approximately $22,000 of debt among them.
Chase has been saying no to any settlement the past few months. They said that charge-off will occur next month, and said I had to go through the formality of speaking with a Credit Counseling Agency before they would consider anything else. So I did that, and was told by the Credit Counselor (very helpful independent agency) that my mother’s outstanding minimum monthly balances were $1300/month higher than her fixed income minus expenses. (This I knew!) So they told me to call back Chase and say that Credit Counseling was not viable in the least.
I did that, and asked to speak with a supervisor at Chase. He said that an option might be to document medical hardship and to just have Chase write-off the debt totally as uncollectable. He put in some paperwork and I got in the mail today a request for a documentation of my mother’s monthly expenses and a letter from her doctor saying she can no longer work. Then, the letter says, Chase may move this into a “bad debt” category.
So, question: I would have no problem getting the documentation they request. But is this a good route? Am I missing something? The supervisor says that, this way, my mother will not have to pay anything. But on the internet I have seen warnings that this may just mean the debt is sold to a debt collector and I’ll have problems later on. Here I am willing to settle for 40% or so and I can’t even get Chase to have that conversation like other creditors have had with me.
Your thoughts? Thanks again, by the way, for reading and caring!
John,
I had a similar dealing with chase. 3 cards for approx 15k. They wouldn’t offer any settlement. But then they put me into collections. As soon as that happened i was able to negotiate. ended up settling for for 35% total. So strangely was able to better deal with them after put into a collection agency. settlement took place around day 110 late. hope that helps.
You are not missing anything. I have worked files where there were hardship and fixed income scenarios that resulted in banks completely wiping away the credit card balances. I have also seen those best intentions from a bank still lead to accounts ending up in a sold portfolio, or placed later for collection. Those were mistakes and errors that got fixed, but one instance was an absolute bear.
Just be sure you document any outcome. And also know that anything you do send is just as easily evaluated for how collectable she might be, as it is to document why the balances will be completely written off. In other words, you want to be sure what you provide in this type of scenario is going to back up the hardship.
I know it is weird to have perfectly good money in your hands that you want to send the bank, and Chase’s response is counter intuitive, but it is what it is, and could lead to a better outcome.
Please do post an update with how you progress with Chase.
Hello Michael,
Thank you for having this blog that helped so many people in need.
I am a first time home buyer recently considering buying a home. I have checked my FICO score last week on myfico.com; Equifax 734, Transunion 731, Experian 659.
I have a medical bill from a clinical lab around$100 in feb 2013, plus $38 late fee, it went into collections as $138 in november 2013. I had moved to another address when the clinic bill me so I have never actually receive the bill. I found out I had this collection debt when I recieved a letter from American Capital Enterprises the collection agency in december 13. At the time I did not know the tactic of negotiating before paying the bill. I immediately called american cap ent and paid it off. Today the collection record is still showing on my credit report which is why my experian score is significantly lower than the others. My question is what can i do about it at this point?
Also another negative showing on my report is a deliquency payment. It was a cfna firestone account, the total amount was $1300. I was late on payment once for more than 30 days in 2012. Equifax and transunion showing it was march and experian showing it was april. The late payment was paid off immediately the following month. I paid off the full balance in july 2014 and i made a mistake of closing the account. Is there anything i could do still to get it off the record?
Other than that i have very good records on all my credit cards, car payments. No late paymemts. So im pretty sure these two things mentioned above are the reason for my lower experican score. Please let me know if theres anything i can do about it.
Thank you!
There is not much to do about the two issues you shared, or with Experian. If those collections are showing as resolved on your credit reports, that is what you want.
Your other credit scores are quite good, and the Experian one should not hinder your home buying efforts. Your tri merge credit report that is used often in home lending markets, will often base underwriting on your mid score, so in this case, your TransUnion 731 credit score.
If you do have trouble with the loan based on collection items in your Experian report, post an update comment and lets go from there. And best of success shopping for your new home!
Great! Thank you so much! That is all I need to know.
HI
I have a captial One Credit card that was charged off in 2011. They are reporting every month to the credit bureau that my account is late. Is this legal? Can they continue to report me late on my credit report even though they charged the debt off?
Your late pays and the charge off will continue to report for as long as 7.5 years.
Are you saying that Capital One is showing as a fresh late pay every month? Are there other collection agency accounts and on your credit reports?
They are teporting fresh late pays. When they charged it off they never turned it over to a collection agency. So they have been reporting me late or collections every month after the charge off for the last 4 years
I would file a credit reporting complaint against Capital One with the CFPB here: https://www.consumerfinance.gov/complaint/
Thanks! Very helpful. So just one more clarifying question.
Should goal be get something I know I can swing monthly easily ~$300-350 and then stash surplus cash for few months until I have ~50% of the balance to propose a settlement?
Is there any benefit to do a lengthy payback (3-4 years) over a settlement within the next 4-6 months related to credit report etc (which I realize is already heavily damaged)?
Call AMEX and find out if they charged off your debt already. If not, find out if you agree to a long term repayment plan if they will reage the debt like they will do with credit counseling company repayment plans. If they are not going to reage (where your account does not look late in perpetuity), I would not like it for myself, and would prefer to save up every penny for a settlement so that I reach that goal much quicker.
The flip side is that a settlement means have the debt reflect zero balance on your credit report much quicker. That would make you appear healthier debt to income wise.
Hi –
One quick follow-up — First Source offered what I think is good settlement on first offer – $5417 on $15,500 — however, need to have by end of this month. They sent a letter — is there any wiggle room with them to extend amount of time – I could get to this mid-January but going to take a bit to get cash together.
A settlement with FIrst Source on an American Express account is not going to get much better than that. Not based on today’s trends. Take it if you can. If there is no way possible to accept the offer, call First Source and try to negotiate the deal over 2 or 3 payments. If they cannot budge, ask them how long they will have the account for. If they are set to send the account back to AMEX, and if it lands at Zwicker and Associates, or another attorney that does a lot of collection work for AMEX, you could lose a couple grand in savings.
If this is a no can do, it just is what it is. You never really lose out on a deal you never could have accepted in the first place. It was just as impossible as being able to keep current, so don’t brood on it (not that you were going to).
Hi,
Appreciate past help. Agreed to settlement of four payments to be direct debited on the 28th of four consecutive months. First three went fine and then they direct debited the final payment a day early (never notified me nor did I agree to) and it was returned insufficient funds.
Wrote them a letter and sent to AMEX as well (really wasn’t sure if First Source was really AMEX or what). No reply. Intent was to still honor the original settlement.
Now they’ve sent to Zwicker – from which I gather is First Source connected.
Can anything be done here?
I would file a debt collection complaint with the CFPB. Read that article and gather up the narrative, dates, names of people, and documents in advance. It helps to have all of that outlined in the complaint so that the folks at First Source and American Express can look over their files and decide how they will correct this.
How do I stop Zwicker in the process? Ask for debt validation?
You could send a debt validation request. But not the canned and overdone ones you find online.
You could send something like “Dear Zwicker, I am disputing the validity of the debt as paid and/or that AAMEX through it debt collector First Source, failed to honor the agreement to settle by drafting the final payment earlier than was confirmed. I have file complaints with the CFPB and am waiting to hear more on that. If you would like to correspond with me further about this account please consider this a formal dispute and request that the debt in question be validated”
Something like that anyway….
Hi,
Have a AMEX with $15k balance. October 2013 entered hardship program but April of this year couldn’t make full payment. Called and have monthly to make payment enough to keep out of collections I was told. Last payment early August.
Tonight got collecting call from First Source Advantage for AMEX. Didn’t talk.
Called AMEX was time to make another partial payment and they said account no longer there
Thoughts on options, can’t make full payment. Is there a way to get it back with AMEX or is that even best solution?
.
Now that American Express has placed the account with First Source for collection, you will have to deal with them. You can often set up a lower monthly hardship like payment with debt collectors for AMEX. I do not like this option though, unless it is the only way to keep an account out of the courts.
What is the approximate balance owed to AMEX? What were you able to pay AMEX before? What is it you can afford now?
Balance is $15,134.
Hardship payment when in the AMEX program was $740/month. I can’t do that now, but could do something in the $350 range, maybe more some months.
That high of a payment to AMEX was no hardship plan amount. Your hardship payment would have been something more like 318.00 per month. What type of Amex account is this (Gold, personal, business)?
What are the chances you can put your hands on 8k somehow in the next 3 months? Can you borrow from family/friend, sell a bike or unused item, other creative ideas? Settling this for about half is ideal, and First Source Advantage is authorized to make those kind of settlements for Amex.
It is an AMEX gold.
I’ve gone the route getting rid of unused items to pay down – over last nine months went from $24k to present $15,134.
Between now and December have some extra work that is going to net about $4,000-$5,000 to put toward this but no luck in getting family/friends to loan.
Also, have yet to discuss with FIrst Source beyond answering call at work and requesting that they not call at my employer as not allowed to take these kinds of calls.
How do I approach them about settling or payment plan? Do you just say what can I do to settle or is there a more appropriate approach?
You would need the 8-ish-k to settle. Whether you do that now, or 4 months from now, I still like your chances.
As far as how to get a settlement, or see what kind of payment arrangement they will take, yep, it starts with the call to First Source. Payment plan will be a matter of you impressing upon them what your cash flow monthly can support, and your sticking to your guns with not committing to something you are in any way skeptical you can continue with. Finding that balance and getting it approved is not too difficult. Just do not say anything about your finances that gives any other impression than things are tough (like leave out any optimism for making larger payments in a few months, or come tax refund time, etc).
Settlement negotiations are similar, just focusing on how tough it is to be you monthly with current cash flow, and no prospects for improvement. You cannot commit to a payment, as you have no idea if you will be able to make the next one. You heard about settlements for debts from a website, and are wondering what that looks like for you?
You know Amex will approve a 50% settlement fairly often, so when you are close to having that much in hand, or quick access to that much, is when you would start that dialogue.
Comenity capital/ hsn- 1309 balance
First premier bank- 848 high balance
Merrick bank – 979
They all say charged off with a balances. So is there still a chance I could get the charge off removed if I pay them in full?
All are the original creditors
It is not all that likely you would be able to get those creditors to remove any credit reporting in exchange for money. But that fact, the charge offs on your credit reports, is not necessarily what holds up the home loan. Its the fact that they are unpaid.
In answer to your original questions, it is best to pay off collections and charge offs that show on your credit reports, in order to get approved for a home loan.
The fact that the debts are charged off, but still show a balance owed to the original lenders, suggests they did not sell the debts off to bad debt buying agencies. But the accounts are still likely placed with debt collectors. You can call each bank and ask who your accounts have been sent to for collections. Post the names of those collectors here, or use the search box above to find pages I already have dedicated to settling with them.
Because you will not likely be able to pay for deleting from your credit report, settling the collections for less will get the same result.
Have you already tried to get pre approval from a mortgage broker, or bank loan officer? If not, and you want to settle these accounts for the best savings, do that first.
Can you estimate when you last paid on these debts?
Hi Michael
Is it best to pay off charged off accounts? Trying to get ready to purchase a home.
When were the last payments made?
How many accounts are there?
How many and which of the original creditors are reporting the account charged off, but with a zero balance owed to them?
Hi Michael,
I hope you’re still answering questions from this post, but I cannot get any definitive answers from anyone on my particular issue.
Are collection agencies allowed to report incorrect account numbers to the credit bureaus?
I have a CA that’s reporting a charged off bank card from 6 and a half years ago with a different account number. All of the info is the same. I called the bank’s recovery department to ask who the account was sold to and it was a CA that’s no longer in business.
Another site I visited said that when CAs own a debt they can give it whatever account number they want. It doesn’t have to be the original one. Is this true?
It doesn’t sound legal.
It is not their file number that is holding back your credit. Have you disputed the file numbers accuracy as a way to get the account removed?
I cannot give you a reference to some case precedent, or policy related quote regarding the treatment of unique account numbers used by debt owners, but it is fairly common.
Is there some type of financing you are working on that suggests you deal with this now, rather than wait for this to fall off of your credit reports soon?
Thanks for your quick response Michael.
My finances went bust in 2008. I decided to pull all 3 credit reports a week ago to see what they looked like. They’re not as bad as I thought they were going to be. The largest debts are set to drop from Experian in November of this year and 1/2015 for the other two. I disputed with all three bureaus, but only TU allowed me to remove the charged off account and they said the CA voluntarily removed their info from my report. Equifax didn’t do anything, but ask the CA if it was my account and since they said yes and left it on there. They didn’t have to show them proof or anything. I have no idea what’s going to happen with Experian, but since both accounts will be falling off in November I’m not going to sweat about it.
I was more concerned that that CA was reporting an incorrect account number. When I ask this same question to all three credit bureaus, the people have no idea if this is okay or not. All they say is that the CA should be reporting accurate info. Yeah, duh, I get that, but why list the OC and all other reporting information as correct, except the account number?
I thought you would know if this was illegal or not. I was thinking about calling them to see if this is the actual account number they have in their files for this debt, but I keep reading how you shouldn’t talk to them over the phone and keep everything in writing. I know for a fact that the account number they’re using for the debt is wrong. I just wanted to know if they could legally report a different one to the CRAs.
If it is illegal, I am not aware of a good precedent case you could use as a reference.
I can tell you that there were public comments submitted to the CFPB about this very thing earlier this year. The CFPB is looking at using their rule making authority to reign in debt collection abuses. Part of the formal process the CFPB follows involves opening a comment process along the way. Some comment submissions pointed out the inability for consumers to recognize collection accounts as there own when dealing with debt collectors generally, and when information does not match up with original creditors shown on credit reports specifically. It would be great if the CFPB’s final rule (which I expect sometime next year), required a method to tie all credit reporting and collection activity together. Requiring the original account number be maintained across all records would certainly make sense.
Hello so I am kinda young and I need help. I lost my job so I wasn’t able to pay off my debit. S things are better now so I have contacted this company’s and they want to settle capital one I owe 500 which was my lmiti and Jared I owe 145 it’s been a year if I pay off these debit will I be able to restore my credit? Thank u
It will take some time to bring your credit scores up. Paying the delinquent debts in collection is step in the right direction. You may need to build credit too.
Do you have any other debt collectors on your credit reports?
Do you have any accounts that you are current with that show on your credit reports?
I am fortunate enough to pay off all 4 of my accounts that were recently forwarded to collection agencies. So far, I only show kohl’s collection agency reporting to the credit bureaus. From your experience from people that you helped before, do you know if Amex, Macys, and Walmart collection agencies will report also?
Thanking you in advance. ….Jennete
If they are only contingency debt collectors for those credit cards, you will likely only have to deal with the creditors updating their credit reporting to show paid or settled. If the accounts get sold off to a debt buyer, rather than placed for collections with an agency, Walmart and Macy’s would show zero balance owed and charged off, while the debt buyer will likely report a new collection trade line (AMEX Does not sell debt currently, so no debt buyer will get that one).
Hi Michael,
Best Buy $550.00
CAP $ 2,800
Dis $2,500
A. Tay $1,800
Macy $300.00
Sears $1,000
Credit Un $1,600
All trying to collect – plans with Disc & Ann T
Estimates for settling would be:
Best Buy 40% depending on who is either collecting, or the debt buyer that bought your account (if any).
Capital One 50%.
Discover between 40 and 60 percent settlements, but you do have to have missed payments again.
Ann Taylor 40%, and here too you would need to fall behind.
Macy’s is a stretch to settle because the balance is so low, estimate 50%, but be prepared to go higher. You can read more about settling low balance accounts here: https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/.
Sears 50%, but also depends on the collection agency.
What is the name of the credit Union?
Thanks Michael,
Just read the article. Quick question, if I were to try and pay off the debt- any suggestions on where to start with regarding to multiple debt collectors as well as R&R?
Much appreciated.
Settling with Capital One once they sue is something I target at 60% or higher, and you will want the money in one lump sum payment. If you post each of the other accounts individually with the balance as of today, and who was last trying to collect, I can post an estimate of settlement targets for each.
Thank you very much. I will look over the article.
HI Michael,
I’m in NY
Thanks for the amazing post of information. I was out of work and had a baby (2nd child) – Its been about 15 months since I stopped making payments on the cards due to no income. I recently began working and I’m trying to get back on my feet but I’m receiving letters/lots of calls from several debt collectors and I’m hestitant to start handing out my acct info as they all ask for “a good faith payment” and then a large monthly payment as I don’t have large sums of money to give as I’m just getting back on my feet. Some cards have gone from one agency to another and in some cases both are still stating they own the debt and want to collect.
I’ve reached out to some of the main companies and they either don’t know who owns it or give me names of one of the two stating they own it – I’m Confused! Who do I try to deal with- who do I trust to pay off the debt. Also there are about two I’ve reached out two – One direct (Discover) $80.00 monlty (2,500.00) & (A. Taylor – creditor Comenity) 135.00 monthly on $1800.00 balance – I understand I cant make such large payments to all and survive financially – I’m trying to do right and I don’t want to end up in a bad place. I’ve had issues with Cap One – I received 1 creditor in writing requesting payment – then someone came to my home, gave papers to a neighbor stating I was being sued and had 30 days to appear in court – I had reached out to the first company then stopped moving forward with them due to the law firm (Rubin & Rothman) which gave papers to the neighbor) which has extremely negative reviews online warning not to deal with them directly – tons of post!! They have began calling – several times – all types of hours – never leaving messages – sent mail to my home and whited out the return address – then I received a letter from what appeared to be from the court stating that Cap One filed against me.
I have about 5 other cards – creditors reaching out balances from $250- $3900.00)
Some have suggested I file others say try to pay it off – My score was preety good – I’d like to start rebuilding – any advise would be great.
Capital One is the priority. How much is Rubin and Rothman suing for? How much room do you have in your monthly budget other than the payments you are making to Discover and on your Ann Taylor account with Comenity?
Post those answers, and the combined total of all your debts (including those named in your comment), and I will help you draw some comparisons, affordability and time lines.
Thanks for the response –
R&R $4,050.00. Total debt including R&R is about $12,500 including all cards. I can try to give up another $250.00 a month and survive financially.
Assume a chapter 7 bankruptcy would wipe out all of the debts for a total cost of 1600.00 (that is start to finish – all inclusive). Now read through this article about how bankruptcy and settlement compare when it comes to how long before you can get approved for credit products again: https://consumerrecoverynetwork.com/credit-report-score-rating-debt-relief-programs/.
Unless you are going for student loans in the next couple years, bankruptcy would offer faster and more thorough relief than debt settlement.
Hi Michael
Please let me know if you received my response as I do not see it and replied earlier.
Thank you
You posted using a couple of different email addresses. The comment system will recognize only one as you, and hold for moderation anything else.
Michael,
I am in shambles over in my house. I have payments of credit cards that I cannot pay, I lawyer suing me for a personal garuntee on a business transaction that I cannot pay, Hospital bills,Taxes, and student loans. And I do not know what to do.
Credit Cards:
CITI: Active: 900
Citi: Active 2000
Chase (Collections): 5200
American Express (Collections) 6000
Master Card (collections): 300
Macys: 300
B of A (collections): 70000
Sears: 900
Taxes (joint w/husband) 3,000
Hospital Bill from child: 5000
Merchant Service legal: 5000
Do I go into settling these things, but the problem is I do not even know what I can settle with.. Should I talk to the collectors, or ignore them??
Molly – It is far better to have a plan, or even a sketch of a plan in place, before calling creditors and debt collectors. I can help you with the sketch right here in the comments.
Are you working with a tax professional? Is the issue state, federal, or property?
Were any of the medical costs covered by insurance (even a penny)? When were the costs incurred?
What amount of money can you pull together all at once to start settling debt today?
What amount of money can you consistently set aside each month to save up and settle more debt, one collection account at a time?
Is your current household income stable? Do you expect it to stay that way?
How much is the lawsuit for, and were you served? Have you answered the summons and complaint?
Do you own a home?
Hi Michael,
Thanks for the clear and thorough responses you post to consumers looking for advice. I have successfully negotiated 10 of the 11 default accounts after I lost my job in 2008 and was illegible for unemployment because I was self-employed. Since I started cleaning up my credit in 2011, it is people like you who have helped me get this far so thank you.
Here are the facts of my *final* negotiation before I can close out this chapter in my life and make buying a house a reality. My wife and I want to buy in the next 30 days (or pushing it out further, if I have to due to this final mess) and the pre-approval process flagged this collection issue today, but I have known about it for several years.
1. Original debt (credit card) was with Bank of America with a max of $10,000 credit limit.
2. I made my last payment on January 2009. BOA added late fees and interest taking the debt up to $11,300.
3. BOA sold the debt to Calvary Portfolio Services in 2012 at the original amount of $11,300 as is listed in my credit report. BOA has it listed as Charge-Off.
4. Calvary (collection agency) has been hard to work with in the past so I sent them many Debt Validation Letters (last one was in 2013) to see if that would get them to stop. They provided me with the last bill BOA sent me in September 2009. Calvary is now showing the amount on my credit report as $17,500, which goes up every month.
I checked the Statue of Limitations for California (4 years), which I think should make this a Time Barred Loan. I have not been sued by Calvary and my credit does not show a judgement against me, just a negative collection item. The comments in my credit report state “Consumer disputes this account information.” Because I never signed the agreement with Calvary, I tried to fight it via the credit report agencies, but had no success.
So my question is how do I go about negotiation with Calvary? They have historically been the hardest and most stubborn… I have always avoided the collection agencies and went directly to the original lender, but that is not available to me this time around.
Can I negotiate on the original amount of $11,300?
If not, then given the age and SOL, would 15% of the current balance owed of $17,500 even be realistic?
I was going to offer them 25% of the original amount, or $2,800 and hold at $3,500. The problem is that the more I give them, the less I have to put on a house down payment and if I go beyond $5,000, I won’t be able to put enough down to buy a house.
If I cannot negotiate beyond $5K, I was going to try to add threats of the SOL expiring and threatening to sue them (reading your links to CFPB and CA Fair Debt Buyer Practices Act).
Today, I called BOA to confirm it had been sold and they told me there is nothing that they can do. The previous 10 negotiations were all with the original creditors, which always went fine at a 30% of the original amount. In addition, I am put off by the balanced owned as reported by Calvary of $17,500, which makes negotiating on that amount at 30% beyond my reach. What would your advice be?
Thank you in advance. I have learned a ton from your website and the DIY credit repair community over the years and hopefully I can wrap up the credit building process this week…
Best,
Luis
I would probably start off by offering Cavalry 2k to settle the debt. I would point out that you are aware the debt is passed the SOL to sue, but are still trying to do the right thing, and within your means, after your finances fell apart a few years back. If the offer is rejected, I would probably increase the offer to Calvary in 500 dollar increments, and in 2 to 3 week intervals. This would obviously impact your home buying goals, so you could shorten the time you make your next offer, or respond to their counter offer. I have done settlements where offer and counteroffers were made multiple times, in a single day, and got the deal done in the same day. That too is a possibility, but less common when you are trying to negotiate such a low settlement with Calvary. A front line debt collector may not have the authority to approve a settlement that low, which means more eyeballs on your file, and more collectability scoring. If they can see that you are home loan shopping, they may get stubborn real fast.
Hi Michael,
If I use that strategy, do you think there is any risk that the debt gets purchased by another company down the road? Or that Calvary will try to trick me into making a settlement only to extend the SOL?
After some more research, they are breaking the FDCPA law and I can file a complaint against them on the BBB and CFPB and the CA State Attorney General Office. I saw complaints against Calvary on BBB and the records were deleted off the credit report. The arguments I would press for are:
1. Ask them why they are pursuing a time barred loan since they have zero legal recourse. They basically have to tell the truth and say that there is no legal recourse, otherwise they breach FDCP section 807 (15 USC 1692e) sub-point #5 – “threat to take any action that cannot legally be taken or that is not intended to be taken.”
2. Ask them why the DVL they provided only included a copy of the last statement form BOA with an amount of $11,300, while they are asking for $17,000. No breakdown of the fees has been provided. They should be in breach of FDCP section 808 (15 USC 1692f) sub-point #1 “The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”
3. Demand that they produce the original signature on file as I have already contested that this is not my debt and the last copy of the BOA bill doesn’t include a complete itemized deduction of all charges, original signature, or a copy that the debt was legally transferred from BOA to Calvary. On the BBB site, Calvary was unable to furnish all 3 of the above and the person’s item on the record was deleted.
So if I do try to settle for $2K with $500 increments like you state, would that not end up hurting my credit because I would have another charge-off that is not several years old?
Would Calvary then send me a 1099 for the amount of $17,500 – $x,xxx settled? That would be a huge tax bill for me, especially as the original debt amount was $11,300…
Thanks again, Michael.
Best,
Luis
Luis – Based on what you have shared so far, your disputes about Cavalry on your credit reports hit a dead end. I am skeptical they are going to remove it when you file a complaint with the BBB, or the CFPB. You recognize the debt as from your original creditor, and they do not have to show you a signature on a contract with Cavalry. And you are just not entitled to the stuff you are asking for in your disputes and validation requests. At least not today, or in the general use of those consumer protections, or outside of a court action where all of that becomes discoverable.
Your angle on the amounts being reported as owed is something to maybe try to finesse a dispute about, but probably with the CFPB, not the BBB.
Settling older debts in collections, and having that fact update to your credit reports, can bring some freshness to the old negatives (even though you are doing something the lending and credit world would view as a positive), and may drop the score temporarily. But your stated goal about getting a home loan through in the very near future means you will likely have to settle these, or get removed with your continued dispute efforts. Home loans are getting approved with recent paid collections fairly consistently today.
Yes, you should expect the 1099c from the debt collector after settling. And because you are in the market for a home, I would assume you are more than likely solvent, and would have to count that as income and pay some amount of tax. See this report for more on the issue: https://consumerrecoverynetwork.com/debt-forgiveness-taxes-settled-credit-card/
Okay, thanks, Michael! I appreciate your advice.
Hi Michael,
Just wanted to give you and the other readers an update. I ended up submitting 3 complaints:
1. Better Business Bureau (BBB)
2. Consumer Financial Protection Bureau (CFPB)
3. California State Attorney’s Office
I also sent Cavalry a “cease and desist” letter stating it was beyond SOL after submitting the 3 complaints outlined above.
The California State Attorney’s office forwarded my request to the NYC BBB and Cavalry responded to that complaint by stating that they did nothing wrong, but in good faith, they would remove the item from my credit entirely.
I worded the complaint very closely to what others on the BBB used and focused on the amount argument. I wasn’t overly specific but the thing was that Cavalry made so many errors that I had solid ammunition. I used my Google Number on the DVL that I sent and they left recording messages without stating that they were a debt collector. I downloaded these as MP4 and adding them to the Certified Mail Return Receipt scans and PDF of the DVL to show my case.
Somehow it worked and I”ve been approved to buy a house! My credit score just went over 700 and I have to say, the process worked. It was hard. It took time. I had many doubts, but I refused to capitulate my credit future to these bozos who clearly did not want to settle for anything less than 90% of the original amount + interest that put it beyond my financial means.
Thanks again and I wish all readers the same positive outcome. Don’t give up!
Best,
Luis
Nicely done Luis! Thank you for posting the update and best of success to you in your new place!
Good day. Happy to call your office as well, but a few questions.
I have two charge offs from Chase Bank – DOFD on both was 6/2008-scheduled to drop from my account in 6/2015. I have the names of the CA they belong to, but neither is reporting on my credit report.
I would like to settle both accounts. (Chase has both on my credit report as closed, zero balance and 150/180 days late) When I pay the collection agency, there will be nothing to update on their end as they have not posted on my credit report. However, would they update the accounts(s) and then place them on my report? Would there be any way to get Chase to change their reporting on my credit report to settled? – though a rep at Chase told me the way they have reported is the way the account was at closing. (I would then try to goodwill them off)
I’m mainly trying to pay this debt so that it won’t haunt me in the future. Not looking for any mortgages/loans now, but possibly in the next 3 years or so.
Your advice is most greatly appreciated!
What state are you in Lakitia?
If the time limit for you to be sued for collection on these accounts has passed, there is little benefit to settling at this point, and when you have no major credit or financing goals prior to the collections reaching a point where they can no longer hurt your credit.
There is some risk that the collections would appear on your credit reports once settled with the debt collectors, and even though those same collections do not appear on them now.
Thanks Mr. Bovee.
I’m in NY – the SOL is 6 years, so I am already passed that.
In your opinion, is there any way to get the debt off of my credit report? I’m guessing the only option is to wait out the next 11 months for the collections to fall off. They’re my only 2 ‘bad’ accounts and I just really want a clean report.
My biggest concern is that when I do go for a mortgage in a few years, the lender will pull a factual report showing that I have debt due.
Again, your help is sincerely appreciated!
Paid collections in New York are handled a little differently. So while you are passed collectors using the courts to collect, you would also be passed the point where paid collections can hurt your credit too.
No, I do not think there is a method, that has a high chance of working, to get the unpaid collections accounts off early. What are the total balances?
As long as these collections were not judgments, and based on even today’s tighter lending standards, I do not see you running into trouble over the accounts if they no longer appear on the tri merge reports the lenders will likely use.
How can I negotiate a deal without restarting the SOL clock? Also, I am having an issue where that same creditor is reporting twice on my equifax bureau. I was able to dispute and remove with the others but it seems to only stick on Equifax. The account number is different on both accounts on the cbr. I have tried a million times (not kidding) disputing the account that shouldn’t be reporting. What are my next steps. I contacted Equifax and they told me to contact the creditor. When I asked them I have a right to the info they used to verify the data they said to talk to the creditor.
Concerns about restarting the SOL for a legitimate debt collection lawsuit are a bit overdone. I just do not see that happen to any degree that would warrant how much the concern gets discussed online. Who is the creditor/debt collector you are dealing with? What percentage of the current balance owed are you prepared to pay to settle with the collection agency?
What were the written responses you received from Equifax? Did you make a written request into how they investigated your initial dispute? Did you copy the furnisher (collection agency) with your dispute? If not, do not do that now if you intend to negotiate the account (though they may already have earlier credit bureau disputes logged in their CMS).
Thanks for the quick reply so here it goes!
I can tell you right now the type of loan was a promissory note.
Who is the creditor/debt collector you are dealing with?
Key Education Resources is the original creditor. On the equifax the correct reporting is indeed: Key Education Resources. However the incorrect reporting on the Equifax states “Knight College Resources.” When look harder you can seem to find that it is Key Bank. After all is said and done, the collector at this point is Mercantile Adjustment Bureau. From what I know they are outside the SOL and I simply told them to only contact me only via letter if they want to talk. I have yet to hear from Mercantile since, because it seems the debt they bought was zombie debt.
What percentage of the current balance owed are you prepared to pay to settle with the collection agency?
Approx current balance owed is about 23k and honestly Ill never give them anything beyond 3-4k for it.
What were the written responses you received from Equifax.
Verbatim from Equifax:
We have researched the credit account. Account # 102**** The results are: We have verified that this item has been reported correctly. Additional information has been provided from the original source regarding this item. If you have additional questions about this item please contact: Knight College Resource GR, 745 Atlantic Ave, Boston MA 02111−2735
Did you make a written request into how they investigated your initial dispute?
No but I believe that is the next step.
Did you copy the furnisher (collection agency) with your dispute?
No I didnt. This is me worrying about sol. In fact, since the account number showing is completely wrong, Ive been handling it as its not mine, because ultimately, and in a court of law I can say. I never had an account with Key Bank or Knight College Resources under and account starting under this “102” number.
There is no doubt that the collection agency should not be reporting the account twice (as I understand at this point, they report with an accurate loan number, and again with an inaccurate).
Was this student loan in anyway subsidized by the government?
Thank you for the quick response.
Was this student loan in anyway subsidized by the government?
No it wasn’t.
If it was me, and I am confident that the SOL is indeed passed, I would send a written credit reporting dispute to the debt collector, and copy Equifax. Send certified mail return receipt.
If that does not result in the additional collection being removed, post an update. I would then likely file a formal complaint with the CFPB using a good outline and chronology of events and correspondence.
Thanks for the input!
I will get right on it!
But one last question. Regardless on what happens on the CBR lets say they correct it and remove the inaccurate record. How would I talk a deal with the collection agency after the fact?
I am skeptical you would be able to negotiate a deal with the debt collector for your target amount referenced in your comment above.
Generally speaking, you will reach out by phone and talk to them about your financial hardship, and the willingness to do something to resolve the debt. If the debt is passed the SOL, has been sold, and you have time on your side (no pending financing goals like home loan approval), you may have to wear them down with monthly offers for a bit.
One of the last customer files I worked had a different CRN specialist to start with, who had made several offers for 12-ish months, then I picked it up and made 4 offers in 6 months, before the deal finally got done. Not that this is typical, it’s not, but I point this file out for illustration of the benefit of time being on your side when collectors have really old debts.
Thanks again! Wouldnt almost any conversation restart the SOL? Even a “good faith” payment?
Lastly, I believe Mercantile, doesn’t purchase debt. They are simply a 3rd party collector. Does this change anything in relation to what is happening at this point?
Certainly a payment would, or short of that, a written acknowledgment, or written promise to pay. Ideally you will want to get feedback from an experienced consumer law attorney, with debt defense experience in your state, about case law history in your courts RE resetting the SOL.
If Key still owns the debt it can create a situation where settling requires more money than negotiating with a debt buyer who cannot sue.
Hello Michael.
I wanted to follow up with you on this. I received my results back today and they still left the duplicate incorrect reporting. I sent the information via fax to Equifax. I sent no information to the 3rd party. I am about to submit a formal complaint to the CFPB as you recommended. I am almost thinking lawsuit at this point. What are your thoughts?
Thank you!
I would file the CFPB complaint.
There is often little benefit to the expense of filing an FCRA lawsuit unless you can show damages (you applied for credit and were denied, or paid higher prices than would have been the case otherwise, employment issues resulted etc). But talking to an experienced FCRA attorney in your area makes sense. Most will offer an initial consult at no charge. Are you in Boston?
I am in Delaware.
Oddly enough, I asked for them to set up a login. But they wont email me with the link to create my profile. Seesh, why does this have to be so hard?
I sent you an email with contact details to two attorneys. The first one in the email, Jaworski, has credit reporting consumer law listed as a practice focus. The second attorney did not list same, but does deal with debt collectors on behalf of consumer clients.
Delaware could really use some more consumer advocates.
Michael,
I’d like to ask for thoughts on my credit situation. In a nutshell, I opened a number of accts (mostly right after hitting 18) to put myself through school, and maintained perfect payment history and great credit for approx 9-10 years. Suddenly, I lost my employment around the end of 2011, and eventually went into default/collections on all 8 of my accounts about 6 months later, for an original balance of about $15K. I’m just now back on my feet with some savings (about $6K) and about 2 years into the credit reporting period (so I have about 5 years more on each acct). I anticipate decent income indefinitely.
From what I’ve read, if I settle or even pay my debts in full/as agreed, my credit score won’t go up and furthermore, the accounts become refreshed for reporting purposes and the 7 year clock would restart when I make the full payment on each account. I have no plans to buy a home, finance a car (I can buy with cash), or apply for any loan in the next 5 years. Given that my dismal score cannot be repaired until the accounts age off anyway, is there any incentive for me to address these accounts, even in settlement? Obviously I could be sued, but then I could simply settle and pay at that point as needed (making sure to avoid judgment).
Is there anything I’m missing in this analysis? Your thoughts are appreciated, as I dive into this process.
If it were me, and given the limited information you shared, I would settle all of the collection accounts now. Here is why:
I want to eliminate the risks of being sued. Yes, you can settle when an attorney contacts you, or files a suit, but those settlements can often cost more… sometimes double.
I want to eliminate the stress of collection agencies having the potential to sue, and looking over my shoulder for that to occur.
Even though it is unlikely that all 8 accounts would sue (you can post a reply detailing the balances, original creditors and who is collecting now and I can list your accounts in the priority I would approach them), settling all means you are on a quicker credit reporting recovery track. You mentioned that credit scoring is not bothering you overly much, but that is now, not 12 months from now.
Settling with a collection agency now will not reset the 7 year credit reporting clock. The credit reports will get updated to show you no longer owe any money on the account, and that is what you want, but the collection accounts should still come off at the same time the original creditors reporting will. If that does not occur, you can correct that.
What state are you in?
So to clarify–if for example, I come to an agreement to settle a $2500 debt defaulting Jan 2012 with Bank of America for $1500 today, the acct becomes “Settled” or some variation on my credit report and it still would come off mid 2019? There wouldn’t be a new report (the settlement) that would stay on for 7 years from today (until 2021)?
I live in California now, but the accounts were opened while I lived in MI and MA (although my last payments were made from CA). Presumably the SOL would still be CA’s 4 years, but I understand SOL issues can get tricky depending on the bank involved.
I also have tax debt of about $19K right now (I worked entirely as a contractor from 2008-2011 and didn’t set aside $ for taxes to get by for a few years). It was originally $30K so I’ve made some progress since, but I am a bit concerned about making all these settlements and adding more to my IRS debt. I also have considerable loans from college and grad school to content with.
I go in and out of periods of employment presently (which makes doing regular payment plans difficult), but I appear to earn too much at year’s end to be eligible for bankruptcy, not to mention the bulk of debt isn’t dischargeable (student loans).
I’ll have to do some research to clarify the amounts and creditors, but as far as OC’s off the top of my head, there’s Capital One, Bank of America, American Express, GE Money Bank and Care Credit (also GE I think).
Correct. The accounts would drop off mid 2019.
Assume the SOL for debt collectors to sue of 4 years in California.
I would prioritize the IRS and student debts first, just as you have done. If you are able to add money to savings, while meeting a set repayment with the IRS, and making timely payments on the student loans, but do not have stable income, I might wait to settle the debts, and in a one off manner you originally suggested (wait until you hear from an in state attorney or are sued to negotiate each settlement). This approach will drag on the credit recovery time (worth pointing out even though you mentioned it is not a large concern for you).
American Express and Capital One sue as original creditors. AMEX does not sell debts, Capital One had not been selling much, but appears to be more and more. These creditors are the higher risk. GE Money uses both outside collection agencies, and sells to debt buyers. These debt buyers would be who are more prone to sue for collection. Bank of America uses outside debt collectors and sells charged off credit cards. Your risk is more from aggressive collections from a company buying your BofA account.
Hi Michael,
I have found this site and this thread in particular very helpful with learning how to settle a charged off account.
My wife and I are in the process of getting pre-approved for the purchase of our first house. When we first started dating I was hitting rock bottom with my credit and finances and had numerous accounts past due and heading to collections. I was able to settle a few and regain control over the rest except for two. One was the remaining balance on an eye surgery (which is now paid) and the other was a Best Buy account. We only need to settle this account to get pre-approved.
The charge-off amount for the BB account was approx $2600 or so in August of 2011. It has since ballooned to around $3350 with interest being tacked on by the debt collector. I believe it has been through two collectors thus far, Asset Recovery Solutions and is now with The Bureaus Incorporated.
I sent them a settlement letter for around $670 (around 20% of the higher total) and got nowhere in negotiations. After doing more research I realize that this amount would not cut it given the age and amount of the account. I am planning on trying to offer them around 40% which would be around $1300 and is close to 50% of the actual charged off amount.
Is it feasible to think this may get us moving towards a settlement? Should I start lower?
Thanks in advance.
Sincerely
Josh
If it were me I would start at about 1k, but would be financially prepared for the 13 to 14 hundred, as that is more realistic.
One thing that could cause Bureaus Inc to hold out for more would be that your credit reports could now reflect someone who has bounced back financially (your other collection agency settlements being updated to show paid and zero balance owed).
Why are you sending the collection agency written settlement offers, as opposed to negotiating the initial details over the phone?
Hi Michael,
Thanks for the response.
In hindsight I’m unsure why I attempted to settle initially via a written letter. I was under the impression that written correspondence might be more effective, this proved to be false.
I have talked to them twice since sending the letter and the first time I ended the conversation frustrated having gotten nowhere. The second time which was tonight proved to be equally as frustrating. I offered $1100 citing that my situation had changed but she essentially scoffed at this. They will not budge from a settlement lower than 90% of the inflated amount. They don’t even try to negotiate, they just want to get off the phone it seems.
In that second conversation I asked if they had purchased the debt or if it was assigned. She indicated they don’t purchase debt. The original creditor does NOT show a zero balance for the original account, which from what I’ve read indicates they are still in possession of the debt? Is that possible?
I’m really at a loss and am frustrated that I don’t seem to be getting anywhere with The Bureaus.
I really appreciate the response and I look forward to anymore advice you can offer.
Thanks again
Josh
It is completely possible. Not all debts get sold. Some creditors, like American Express, have never sold debt (maybe one small portfolio a decade ago); others like Discover Card have an on/off history of selling charged off accounts; while big sellers of debt like BofA and others, do not sell all debt, but retains some for collection through contingency collectors, which is what you have here.
Can you tell approximately how long it is Bureaus Inc has been calling or sending collection notices? If time is not pressing you to get this done, I would try the end of month, or end of assignment negotiation strategies I talk about in this video.
Thanks again for the response, I meant to answer you yesterday but got tied up at work.
I probably first started getting contacted by The Bureaus in late 2011. They have contacted me under the name Asset Recovery Solutions as well. Time is a factor but I was discussing this with my wife last night and we are willing to wait until the end of the month if it means this will be easier to settle.
I also just watched your video and I did get a better understanding of how assignment accounts work.
It says that the account with the bureaus has been opened since September of 2011. I am obviously way past the normal time windows so I don’t really know how to proceed in negotiations. I don’t even know why they still have the account assigned to them.
Would it be worth trying to talk to HSBC directly? (Would they even talk to me?) I was thinking of offering the original charge off amount in return for getting the account deleted. Is it worth a try or would that be a waste of time?
Thanks again.
Sincerely
Josh
HSBC will likely not dishonor any collection contract they have with the debt collector. And you probably have a zero percent chance of HSBC agreeing to remove their reporting. On top of zero probability, raising credit reporting requests and concerns in negotiation with anyone collecting tends to telegraph a need/want on your part. This could lead to their holding out for more money to settle, or holding out in general.
I am not sure why Bureaus Inc would have an account placed with them for that amount of time. Perhaps the “been opened since” is incorrect, or mirroring creditor reporting, or their keeping the account is legitimate (but an oddity).
Once again, thanks for the response.
I can confirm that it has only been The Bureaus and sometimes contact from Asset Recovery reaching out to me since September 2011. I just received another letter from them requesting the inflated amount with a copy of the last Best Buy invoice before it was charged off.
What would you advise me to do at this point? We have the money to settle but I want to get it as low as possible since I don’t see a way to improve my credit score by handing over more money. I’m guessing I look very collectible at this point and they are attempting to get even more than the original charge off amount. Would offering something like $2000 be too high of a starting point? How do I attempt to offer that after having just offered $1100 last week? I don’t want to keep going up to meet them, I feel like I need to find that “magic number” in my next attempt to at least get them talking settlement.
Thank you for all of your insight and help so far.
Sincerely
Josh
I would start back at this with an offer of 35 percent of today’s balance, and be prepared for a counter offer that you can relay how impossible it would be to accept, but will see what you can do. Wait a day or three, call back and offer something in the middle of where you were, and where they countered. Then stick to your amount for a while (if there is nothing overly time sensitive that you have going).
I thank you for all of your responses so far.
It’s unfortunate for me that none of these tactics appear to be working at all.
I followed your guidelines and I just offered $1900 (slightly less than right in the middle of my original and their settlement) and they just won’t budge from the $3015 amount. I just don’t understand why they won’t even try to close this debt out. Apparently time is on their side and settling my particular account is not a high priority.
Is there anything I am missing?
Sincerely
Josh
It could be as simple as they see credit report activity suggesting you are more collectable, like perhaps the applications or credit pulls from know mortgage lenders. That will cause debt collectors to get really sticky with how low they will go in a settlement, and in some instances, whether they will settle at all.
You may just have to wait them out to get to the savings you need. They do have time on their side when you have a goal in mind.
Hi Michael,
I’m on my Early stage of preparation to hopefully buy a house late this year or early spring 2015. Upon checking my credit score, the hard truth of having my salary cut in half almost 2 years ago and plain neglect on contacting my creditors to settle for a lower monthly payment, I just let go on paying them. They are mostly now transferred to a collection agency. I was able to negotiate my kohls and Wal-Mart balances today with a letter of confirmation of my settlement payment of 40%. I still have Macy’s and Amex to settle.
I want to know what and when will it appear on my credit report that I have settled and has a zero balance? And if it doesn’t appear paid in full when I pull up my account in November, what do I need to do to reflect it on my credit report.
Thank you in advance for taking your time to read and hopefully answer my question.
Jennete
Give it a months time after your payments to debt collectors for the settlements have cleared. Check your credit reports to see that each is reflecting a zero balance owed. Post an update if that did not occur, and lets go from there.
If you have not read over the details of getting settlement letters for the debt collectors, or recordings of the verbal agreements etc., read through this article and the comments section too: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/
Thank you so much for your quick reply. I didn’t make my payments until I received the letter of confirmation that my balance is paid in full with the settlement amount. I also strategically called at the end of the month to renegotiate and stuck with my plan to keep telling them I didn’t want monthly payment because my budget doesn’t allow me. It works!
Thank you again for your quick reply.
I have 3 collections that I need to take card of asap 2 are with Mechants credit I’m guessing some medical bills one for 464.00 and one for 75.00. I also have 1028 with national account services from a Wachovia bank. I am set to close on a house in early july and every penny is tight what is realistic to settle these debts for
Settling smaller balances in collection is not often done with the best savings. See this report: https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/
You may be able to settle the larger ones for 50% or less, but anything less than a couple hundred it is realistic to prepare to pay the full amount.
Do not mention that you have credit goals, or any goals. Just that you are finally back to work or something, and want to repair the past.
How old are the debts?
awesome posts… thank you for all these useful info.
Problem:
Upaid credit card went from chase to united recovery… chase offered settlement of 3500$ to 8K debt…(delayed it too long and they gave it to united recovery)
Question: how do I proceed with collections to get similar settlement I’d be happy to settle the debt for way lower.
Thank you
You should not have much trouble calling United Recovery and getting them to agree to settle for the same amount Chase offered before. You could perhaps even negotiate a lower payoff (500 to 800).
Are you ready to pay URS the amount they are willing to accept as payment in full in a single lump sum?
Yes I am, but would rather split into 2 payments of $1500 or so, any words of advise as I speak to them ?
My previous experience: they say say pay in full or we will wage garnish, I am not sure how to negotiate …
Thank you again
tom – You would probably benefit from some one on one coaching CRN has always been known for. Call 800-99-8357 for a consult about how you can work with a pro to get this settlement with United Recovery done well.
Hi Michael,
I called in but I couldn’t detail my credit issues enough to get more help. My husband passed away in March. I was unable to work for a couple of years due to caregiving for him. We have approx. 30,000 in debt between Discover, Citibank, and Chase. A couple of the cards were in my husbands name only with me as authorized user. I am left with no money, no job, but I own our condo outright. Discover closed his account and the balance is 6,000. They turned it over to DCM collections and they have called and sent a letter. I told them I have no ability to pay at this time. They said they will check back in 30 days. I am current with monthly payments on the others but probably not for long.
I am very worried about them suing and liens against my home. I am looking for a job and hope to find one soon, but that could be a wait. How long do think it may take before they sue? Any guidance you can offer would be appreciated…I am very overwhelmed.
Sorry for you loss DB. Before I respond with more detailed feedback, it would help to know the following:
Which accounts were just in your husbands name (with you as authorized user)?
What state do you live in?
Thank you for your reply and sympathy…
In husband’s name -Discover 6,000, Chase 3,000 We live in Illinois
I have still been paying on his Chase because they have not contacted me about his passing yet.
I did a free consult with a bankruptcy attorney he said Chapter 7 would not be for me. If needed I could do 13 when I have steady income. Maybe I will consider credit counseling for the others in the future.
( I was having trouble with the reply button- please edit or move as needed..thank you)
It sounds like the attorney you spoke with pointed out the condo you own outright would prevent the chapter 7 route.
Of the 3 creditors you listed, Discover is the most likely to sue. You could settle with them at this stage of collections for maybe 40% of the balance (through the collection agency Discover placed the account with). What possibilities are there for you to pull that amount together?
Are you using the other accounts? Can you afford between 550 and 620 a month for the payments on all accounts?
Posting for DB the response I received via email:
“You are correct, that is exactly what the attorney said. Unfortunately we exhausted our savings, so I don’t have funds for a settlement, although I would like that option. I am afraid I am going to have to wait for employment to commit to any payment plans. Is that what a payment for a credit counseling plan may look like? I feel like my back is against the wall and I do not know what the next step will be.
Thank you so much for your help.”
DB – That is what a payment plan working with a credit counseling agency could look like. The fixed lower monthly payment plans will range between 1.7 and 2.5 percent of your combined balances accepted into the plan. Your situation/hardship is one that would likely have a shot at qualifying for the lowest rate. Have you called an agency to get a quote yet?
I purchased furniture from the room store several years ago but had opened a card to fiance it. I canceled the card but have been getting billed the high interest rates the bill is now over double what I owed initially for the furniture. The roomstore has since gone out of business. I am now getting calls an letters from John C Bonewicz attorney at law. What are my options and will it be easy to give them a target and try and settle at that? I need to get rid of this! Please let me know what are some of the best options
Settling a debt like this is one of your better options. How much is the collection company saying is owed today? What amount of money can you pool together in a single lump sum in order to set a target for settling the debt?
Have you determined whether you can still legitimately be sued by a debt collector? When did you last make a payment on this account? What state are you in?
Hi , i just received a Letter from ARA Collections stating that i owe almost $3,ooo for a credit card that was issued to my name back in 2000, the gentlemen i spoke to told me its not on my Credit report because the Statute of limitations has exceeded and that it will be re-applied to the credit bureaus, im recently trying to buy a Home and this is the last thing i need right now, any feedback on the road i should take would be much appreciated , the Original debt was $1000 and now its $2,894.74….. please help
Frank – Having that collection account reappear on your credit report is the last thing you need right now. The debt collector that threatened that would happen (I assume if you did not pay), is probably full of it. I do not think you have anything to be concerned with. If something does come up, post an update and lets go from there.
Hi. I don’t know where to go to get help but I had opened an account with Maurice’s (Comenity Bank) in August of 2012 and paid the first three months, after a while I just stopped paying, stopped shopping and had a balance of less than 200.oo. Here I am two years later still trying to get ahold of somebody so I can start paying it off. I can’t get through to anyone but I’m pretty sure the account is in delinquency. What do I do? How bad do you think my situation is?
BL – If you only have this one account in collections, you are not in all that bad of shape. The balance is going to have ballooned from late fees and probably default interest.
Have you tried the banks customer service for help locating your account, or at least the last know debt collector for the debt if they sold it off to one?
Is there a debt collection agency showing on your credit reports as a trade line, or as an inquiry?
I am working on buying a home and hired a credit repair person. I have a BofA account that the last payment was made in 4/2009 and then I quit paying on it. It is showing a past due amount of $217 with a balance of $7000. After disputing the charges Transunion and Experian took it off my report but equifax has not. I am hoping Equifax does take it off, but if not should I settle the account and if so how much in a lump sum payment could I settle for? It is showing as charged off. I also have a wells fargo account that is showing a past due of $2100 that was sold to a collection agency. All three bureaus have taken the collection company off my credit reports, but Equifax is the only bureau still showing the account as past due. If this account was already sold to a collection agency but that agency has been removed from my credit reports do I still settle with Wells? And if so for how much? Why is it that two bureaus removed all of these accounts but not Equifax? Thanks in advance for any guidance you can provide.
JB – A general target for settling BofA and Wells Fargo credit card debts with debt collectors this far along is roughly 40%. If you can tell me which agency is collecting now, I may be able to better target settlement amounts using current trends. Also, what state are you in?
As far as the credit reporting disputes, there are a few possibilities for why you see what you do. Did you send disputes only to the bureaus, or the them and the furnishers (debt collection companies)?
Hi,
I have a medical bill that just went to collections with Focus Fin. Services for $1500. The creditor called me yesterday and said I have to pay it off in full by the end of the month. I can’t afford that. I asked if I can make payments and they said they can take a payment but I still have to have it paid off by the end of the month. what do I do?
You can only do what you can afford to do. DO NOT succumb to the typical debt collector pressure tactics.
How much money can you pool together immediately?
How much can you confidently budget for monthly (you know for sure you have that much you can pay every month without fail)?
Hi,
I am trying to clean up my credit. I didn’t do research before hand and may have messed up. I had dish network that went into collections with Afni. My debt is 313.00. They offered a settlement of 3 pmts of 74.00. I made one payment but didn’t realize i should have negotiated to have it removed. Is there anything I can do now? I have more debt to clean up but have not tried to negotiate anything yet.
I would not get hung up on it Carrie. The account being updated as paid, or zero balance owed after the settlement payments are complete, is going to work in your favor. Maybe not as much as a deletion, which is unlikely to happen anyway, but necessary.
How many collection accounts do you have on your credit reports right now? How old are the debts?
I am curious if the New York State 5 year purge rule would apply for my husband. We have an unpaid collection account with First Premier Credit Card. We were first delinquent in 8/2010. For some inexplicable reason they did not charge it off until January 2014. They also reported 90 days late. This dropped our score by 35 points. It was originally only 300, but it is now showing 550. They are willing to settle it for 350. They are not willing to delete it. However, I read that charged off accounts are purged in New York State after 5 years if they are paid. I am confused however if it is 5 years after the account was charged off, or 5 years from first delinquency?
Based on what you shared, it would appear that the 5 year credit reporting on paid collection accounts for New York residents would apply. Are there late pays showing up in 2010 and beyond?
Michael, I have a very strange situation with my AMEX Platinum Account. Back in 2012, I asked to be placed on their hardship program, which lowered the interest rate to zero for 6 months and then a different rate for 6 more, with the understanding if I paid off the balance the card would get reinstated. This was by automatic draft each month of approx. $1000. At the end of 12 months the automatic drafts stopped, and I received no statements from AMEX. I still could not pay the full balance remaining of $26k and AMEX set up a minimum payment of $250 monthly. The last payment I made was in December of 2013 over the phone. I called to make the January payment over the phone and was told the account had been transferred to Nationwide Credit and to call them. It was after hours and no answer – and no letters from AMEX or NCI. Now, NCI is calling me to work out a payment plan saying that AMEX cannot report payment, or non-payment to credit bureaus due to the age of the debt. I subscribe to Experian and pulled all three reports and AMEX is noted as closed with -0- balance, paid as agreed on two bureaus, and the others says no reporting. All three of my scores are in the 720-735 range. NCI says if I pay the balance in full over time that AMEX will reinstate the card, or they are offering a reduced settlement, that if worked out, I will have to pay income tax on the discounted balance. My question – what should I do? There is nothing negative on my credit report at all. Can NCI or AMEX move forward and get a judgement, and if I am able to work out a settlement, either one sum or over time, will that payment trigger something on credit reporting? HELP!!
Trey – The credit reporting that is happening now does not sound accurate. Whether you decide to save money and settle the AMEX account with the Nationwide Credit, pay in full over time, or do nothing, I think it likely the credit report will get updated. My focus, were I in your shoes, would be to weigh the dollar benefit with my credit goals over the next 12 to 24 months. What financing goals do you have in the near term?
I have a credit debt that was sent into collections over 7 years ago. However the collection agency informed me that everytime the account is transferred to a new collection agency the Statues of Limitations restarts. Is there anyway besides paying the debt that I can fix this?
Jasmine – What is the name of the debt collection agency and specific collector working there that told you this? It is not true. Reselling a debt does not reset the clock.
NTL RECOVERY AGENCY
2491 PAXTON STREET
HARRISBURG, PA 17111
Phone#: 8007734503
Account Number
There is no specific collector both times I called I got a diffeerent represenative. How can I fix this? i would like to clear up my credit by the end of the year.
So National Recovery is showing up on your credit report? Who was the original creditor, and when was the last payment made on this account? The reporting time line can go 7.5 years.
Are there other accounts that are negative on your credit reports?
What state are you in?
Do you have the day and approximate time the call took place where you were told every time the debt moves somewhere else the SOL starts over?
Yes National Recovery is Showinrb up on all of my credit reports.
The original creditor was Chase Bank it is for a credit card. The account was open in 2006 closed in 2006 and was reopened in 2009 due to a payment that was received.
I am currently deployed but I am station in Georgia but the credit was established in Wisconsin. If I am correct I believe the Statues of Limitations are 6 years.
Yes I have 8 negative accounts using on my Tranunion credit report but 6 of the 8are paid and closed. The other one I am literally paying tomorrow and then there is this one.
I called today prior to posting this question.
Jasmine – The payment made in 2009 may have reaged the SOL for the purposes of filing a legitimate collection lawsuit (NOT the fact that an account moves from one debt collector to another). But that is a state law concern you can raise with an experienced consumer law attorney – the type you would find here.
The account originally went negative in 2006, and I suppose if that was October or later, their could be a few weeks to a couple months left for when National Recovery will be removed from your credit reports. But my impression is that they are telling you whatever they want (even if its not true), so perhaps they just do whatever they want too. Can you verify when your credit reports say that the entry from National will age off? Would you be willing to pursue a complaint against them, consult with a consumer attorney about any FDCPA violations, etc? Are you just looking to resolve this account and move on?
Yes one of my reports state that it is expected to be removed from my credit 09/2015. Which would be correct but I was curious because National Recovery stated it starts over from the day they received the account.
I am more than willing to pursue a complaint against them, it’s not fair that they blatantly lie.
Quick Question: Is there any way to remove closed negative accounts off your credit report?
Jasmine – Removing negatives regarding closed credit cards, or collection agency entries, that are showing accurate, complete, and current info, is not all that likely. Some would suggest repeated disputes with the credit bureaus, but that is not all that effective. Can you identify any problems with the credit reporting entries from the debt collectors?
Post the name of a nearby larger city and I will email you contact info to an experienced consumer law attorney you can consult with.
I just want a clean credit report. I have paid off all of the negative and collection entries with the exception of National Recovery. My ultimate goal is to achieve a higher credit score.
Jasmine – You will achieve a higher credit score incrementally. Do you have good trade lines established too? Check out the credit report card at credit.com for great tips and tools to improve your credit profile.
Hi Michael,
I tried to read some of the above postings to see if I could get some advise without having to bother you with another question….
Well I applied and received a credit card with NY & Company back around July/August of 2013…. I had a limit of $200 which I used in probably the first 2 months. I had attempted to make a payment, but for some reason they declined my check. Since then I had lost my job and didn’t hear from them up until about 6 months ago. They constantly call, but I have not answered because I simply do not have the funds to pay. Now my once $200 credit card bill is now almost trippled.. I received a call today and the lady with Comenity said for me to contact her before the end of the day, with my attorney’s information. I fear being sued and this going to court, but I have no other option because I do not have any money comming in currently. I know this is my fault. But you do you think that they are mentioning lawyers just to scare me? I do not know what to do.
Ashley – It is not all that unusual for collection accounts with this small a balance to wind up in court. That said, I would not expect that to happen here, at least not yet. So, I do think the reference to wanting to contact “your” attorney is more a collection ploy at this stage. What state do you live in?
Hi Michael,
Thank you for what you’re doing, this has been very helpful. Can you help me out?
I incured $3000 to car insurance company for property damage ( It’s her car and I am 22 yrs. old in Texas, i was uninsured but my mom thought I did) .
I was afraid and was offered $2000 settlement,signed in writing faxed to me, by assigned collection agency. But I changed mine and offered $1200 faxed to this case worker. She called and said it is not acceptable. My questions are:
1. Is it my advantage to send for validate letter, however, i know i do woe this debt ?
2. I heard that I can offer $500 and settle for $750. Is this realistic target?
3. When she calls me these days,better talk or ignore calls for a while?
4. since debt is only 3 months. old, should I ignore calls and wait a month and offer her $500?
5. Mychanging minds to offer lower every time work againest me ?
6. How to ask what is creditor’s acceptance limit?
Thanks again.
Susan
1. A validation letter is not all that useful here in my opinion.
2. Not sure where you heard that, but while negotiating a debt is very real and happens every day, offers that low getting approved are not that common.
3. I cannot comment on whether to take the calls without knowing more.
4. I would need to know more to qualify my feedback, but waiting a month to make another offer is strategically sound in many settlement strategies. That said, it is also a way to pass up a workable deal and have the account passed off to more aggressive collectors, or for it to land in court with the current creditor/collector.
5. Changing your mind to offer lower will indeed work against you in many negotiations. I do not know if that is the case here, but suspect it might be.
6. Who is the creditor?
Hi Michael,
I am working very hard on cleaning up my credit as I have a baby on the way and would like to provide a stable home for him/her. My credit is an absolute mess since I have neglected it for many years (due to a combination of irresponsibility and financial hardship). I have a number of accounts in collections most are school loans and medical bills listed on my credit report so I must thank you in advance for taking the time to look through this. I’ve since applied with the US Dept of Education to consolidate my loans in which my application is still being processed.
AES/SUNTRUST
Account type: Installment
Balance: $7374
Status: Past due
Action taken: Sent a goodwill letter to AES asking them to remove or change the status of the loan.
AES/SUNTRUST
Account type: Installment
Balance: $7158
Status: Past due
Action taken: Sent a goodwill letter to AES asking them to remove or change the status of the loan.
AES/SUNTRUST
Account type: Installment
Balance: $6881
Status: Past due
Action taken: Sent a goodwill letter to AES asking them to remove or change the status of the loan.
CENTRAL FINANCIAL CONTROL
Account type: Collection – Medical
Balance: $673
Status: Closed- placed for collection
Action taken: The collection agency has closed down due to a number of lawsuits and has been transferred to another agency. I filed a dispute with all 3 credit bureaus to remove this from my account.
CENTRAL FINANCIAL CONTROL
Account type: Collection – Medical
Balance: $1172
Status: Closed- placed for collection
Action taken: The collection agency has closed down due to a number of lawsuits and has been transferred to another agency. I filed a dispute with all 3 credit bureaus to remove this from my account.
CMRE
Account type: Collection – Medical
Balance: $3311
Status: open
Action taken: I’m working with them to pay off the balance. The balance listed is the total but on my credit reports there are 10 separate accounts for various amounts. I am paying the smaller accounts ($50-60) first and I have yet to discuss a payment plan or settled amount after these have smaller bills have been paid. No agreement has been made as to weather they will be deleting this off my report or not.
DEPT OF ED/SALLIE MAE
Account type: Installment
Balance: $1219
Status: transferred
Action taken: Consolidated but was wondering if this can be removed from my account with a GW letter?
FINANCIAL DEBT RECOVERY
Account type: Collection – Medical
Balance: $454
Status: Placed for collection
Action taken: I have no idea what this is? I tried to call the number listed on the credit report but it is disconnected so I sent a letter asking them for verification of the debt and have yet to receive a response.
SEQUOIA FINANCIAL SERVICES
Account type: Collection
Balance: $362
Status: Placed for collection
Action taken: I was unaware of this debt until I called and found out that it is from an old gym membership which said that I did not properly cancel my membership and had to pay a balance of $270 which has turned into $362 from interest. I have never received a letter or bill from them. The gym has since been sold to another gym and no longer exists. I asked the collection agency over the phone to send me a verification of the debt and have not heard from them. I also sent a letter asking them to verify the debt but have yet to receive a response.
WEST ASSET MANAGEMENT
Account type: Collection – Medical
Balance: $5667
Status: Placed for collection
Action taken: I recently agreed to an income-based payment plan that consists of $269 for my first payment and $100 thereafter. My account will be re-assessed in 6 months in which I can either negotiate a settlement or continue with a payment plan. I have not received any agreement terms of weather this will being my account to current standing or not.
ACS/CA B&T
Account type: School loan
Balance: $6936
Status: transferred
Action taken: This is another school loan collection agency and has since been transferred. I called and asked if they can change the status of my account but they denied my request. Do you think sending a goodwill will help?
Thanks again for taking the time to take a look at my scenario. I really hope to get on track in the next few years.
Jenni – Because your stated goal is to improve your credit reports, it would help me to know how long it has been since all of these accounts were last paid. Also, settling the collections and getting the credit reporting to show a resolved account, and zero balance owed, can be done one at a time, or with a rapid fire approach. Assume all of your non student loan debts can be negotiated for 50% of the balance owed today. Over what period of time would it take to come up with that money? The answer here is also going to impact my feedback.
Hi Michael,
Thank you for your response. I honestly have not started making payments on any of the medical bills until this month. These medical collections cases were opened anywhere between 2008-2013. I paid off a few of the small ones and I will start paying for the larger ones in considerable monthly payments. If I were to come up with the money with a negotiated 50% of the balance owed on those bills, I would be able to come up with the money in the next 10 months.
Jenni – Before you make any more headway I would urge you to call in for a consult with a settlement specialist. Jumping at payment options today could be setting you up to pay more, or be unable to maximize savings later. Call 800 939-8357 when you have some time to talk all of this over.
Hi Michael,
I am finally in a position to tackle my debt but would like to achieve saving some money on the interest that has accrued over a couple of years. I’m not exactly sure how to go about this process as there seems to be a couple of options out there. Below is a list of debt I have on my credit report and their current standing. Please let me know tactic you think is best:
[EDITED FOR DUPLICATION]
I also have a few tax liens on my report one of which state as being “released.” Do you know if this can be removed from my report and if so how?
William – I can offer some solid feedback about settling for the best savings on those accounts you listed. It would really help if I knew how long it has been since you last paid on them, and also who it is you last heard from about collecting (debt collection agency, or debt buyer name). The age of a debt, and who is collecting, can often impact the savings and options.
The tax liens are state or federal?
Michael ,
Please see updated info below:
CAPITAL ONE
Condition: Derogatory
Current Balance: $1408
Original Balance: $1000
Status: Collection/Charge-off as bad debt
Last payment: 09/19/2012
Collector: unknown- I have not received a letter from a collector for this debt. It may be because I moved within the last year or so.
CITI
Condition: Derogatory
Current Balance: $9585
Original Balance: $6000
Status: Collection/Charge-off as bad debt
Last payment:10/12/2012
Collector: United Collection Bureau- offering a settlement of $4026 in full which I cannot afford. Do these types of collectors offer reduced settlements with payment options?
DISCOVER
Condition: Derogatory
Current Balance: $2278
Original Balance: $5789
Status: Collection/Charge-off as bad debt
Last payment: 02/01/2013
Collector: CIR, Law Offices- settlement offer of $1252 paid in full which I cannot afford.
CAPITAL ONE
Condition: Derogatory
Current Balance: $2393
Original Balance: $2000
Status: Collection/Charge-off as bad debt
Last payment: 09/18/2012
Collector: Portfolio Recovery Associates offering 3 payment options: to settle for $1650 paid in full (savings of $707), 6 month payment plan @ $295/mo (savings of $589) OR 12 month payment plan @ $157 (savings of $471)
TAX LIENS
Type: State tax
Date filed: 03/03/2008
For tax year: 2006
Status: weekly wage garnishment of $60 with a total of $240/mo. being paid every month + state tax refund garnishment since 2011. This should have been released by now but status on CR still says FILED.
Type: tax lien (as stated on my CR)
Date filed: 01/22/2009
Date released: 04/23/2010
For tax year: 2006-07
Status: weekly wage garnishment of $60 with $240/mo. being paid every month + state tax refund garnishment since 2011. CR states that this has been released but is still shows on my CR. Is there a way to remove this?
Type: Federal tax (there are 3 of these filed for various amounts)
Date filed: 03/04/2010
For tax year: 2009
Status: trying to work out a payment plan + federal tax return garnishment since 2011. Trying to find updated record of balance due but have not received anything from the IRS for a while.
Thanks William. I am going to edit the prior post as it is duplicate.
I would target the Capital One settlement at 50% of today’s balance. If not settling for a lower balance pay off, you may be able to set up affordable monthly payments, but likely with nor reduction of fees and interest.
The Citibank account now with UCB I would counter offer 3k-ish if in a position to settle. If not settling, what does it look like to pay 60% over 12 months?
The Capital One account with PRA represents the flexibility Portfolio Recovery has, but will the 12 month plan work into your budget? You can counter with a lower amount, and perhaps longer terms, but can then expect the savings to diminish too.
I would encourage you to settle the Discover account in a lump sum if at all possible, and would prioritize the credit card debts for settling this one first.
You have referenced the offers made to date as being unaffordable. I am not a huge fan of starting monthly payments for full balances on debts this old, but understand why you would want to do that. What room is there in your monthly budget to tackle the aggregate amounts of the collection debts?
I cannot offer the feedback you will want on the tax debts. But removing them is not all that likely, while having them reflect paid and released is the norm once you have completed them. Did you work with a tax professional at all on these?
I am attempting to settle a number of charge offs. The collection agencies are horrible. Have you delt with Global?
Global who? More background and details will help too. What is the original debt from? When was this last paid? What approach are you taking with debt collectors when you speak with them?
Hello,
I have 2 accounts from the same company that were charged-off last year…I believe it was around October. The accounts went into collections shortly after that. I’m now dealing with 2 separate collection agencies. Neither company calls me. I think I have only heard from them via phone once our twice and only received one letter from each. I owe a little over $1000 on one and a little under $2000 on the other. I’m concerned about these accounts because I have no way of paying them off or settling them because I have been unemployed since September of last year. I had made the last payment to the original creditor in September when I still had funds to spare. So I guess my questions are…what do you recommend? Can an account that shows in my credit report as being charged-off also be shown as in collections? I’m just sort of lost at this point because I know I owe the money but I have no way to pay it and I have no one to help me out nor do I want someone else paying off my debt. Thank you for any help you can provide!
Melissa – You can end up with a charge off on your credit report from your original lender, AND another collection account being reported for the same account too. It is a crappy system really. If you do end up with another collection item showing up, and it is the result of your lender selling the debt off, then the creditor should show a zero balance owed to them from that point forward. That does not always happen correctly, so keep an eye on that.
As far as what to do? Probably nothing. At least that is what I would do if I were in your shoes. Offering a debt collection agency any payment when you cannot afford to is just a waste. I would wait until you have a plan in place to settle with the debt collector, or your income situation improves to the point you can budget a payment. When you are ready to deal with the collections, post an update with the names of the debt collectors you last heard from, or who sent notices in the mail, and lets go from there.
Hi
My query relates to demographics and discriminatory debt collection practices.
BTW, I’m reading your blog from far away in Australia. Despite the obvious statutory and regulatory differences here, it seems that the principles are broadly the same. So, thanks for providing such a great public service and making it available for the whole world to see!
Anyway, I was wondering if you were aware of any anecdotal, statistical or other evidence, which supports the gist of contentions to the effect that:
a) Female debtors tend to get less favourable settlement outcomes from debt collection processes; and
b) That this is because of imbalances in power and morality, arising in part from aggressive conduct on the part of debt collectors, who treat different demographic categories of debtors differently and act on their assumption that females can be bullied into less fair outcomes because they ‘care’ more about settling debts and maintaining a good credit history.
I would also be curious to hear about any evidence which suggests that other vulnerable and/or disadvantaged ‘minorities’ also fare worse than white anglo males.
Thanks,
Kyle
Kyle – What I have to offer in response to your comment is mostly empirical. I have worked with thousands of people over many years, and that experience would not support what you posit.
I see female debtors able to negotiate better deals for themselves than their male counterpart. This is perhaps more the case when the situation warrants debt collectors make exceptions to the floor limits their agency or client may set.
I do not see a bully aspect in my file work, at least, none that would reach to any remarkable level.
I should point out that my perspective, while certainly influenced by hands on negotiations, is more from one on one coaching consumers to communicate and settle with debt collectors on their own. Most consumers I have worked with are well informed and prepared to target and negotiate each of their debts. Collection tactics are, at least from my view, less effective when used against someone who is prepared.
I cannot offer much in the way of minorities being disadvantaged in the debt negotiation and settlement process. Here again this is likely due to the results favoring the prepared. I would say, however, that there is a marked disadvantage when there is a language barrier that cannot easily be overcome.
Interestingly, my professional experience suggests that female debt collectors are more aggressive in collection efforts, and also possessing of a more abrupt communication style.
Hi Michael, Please pardon my bad spelling. This will take me a moment to explain my situation but it is the only way I know how to let you see the full picture. I have became disabled. My Social Security attorney has informed me that it could take 2 up to 6 years before S.S. payments would begin. Lots of ifs on the social security front for me. Any help or sugestions would be great. This is the deal. I am a self employed auctioneer and have run my own auction service for the past 30 years. Approx. a year and a 1/2 ago I was diagnosed with spine-a-bifida which most people know when they are born. In my case it was discovered 50 years into my life. I cannot do the things that I need to do in my business anymore. Most of the time if I don’t do it. It don’t get done. Loss of most of my income. I live in Kansas. I am in financial trouble with 3 credit card companies that I have started talking with negotiations in hopes to get out of this pit I am in. I am approx. 3 months behind in payments with the c.c. companies. I have not agreed to anything other than I had to with Discover. (Or so I was told that was my only option at this time.) I have been doing business with these credit card companys for the last 20+ years. When I became ill I begin putting Hospital, Doctor visits & Meds on all three of my credit cards because I had no money. I really need some help or opions on what to do. In my talking with them I am afraid that I will make a bad choice or say the wrong thing to them. Making things worse instead of better.
The first card is an At&t Universal Master Card with a balance of approx. $9,000. About two weeks ago I called them AGAIN and told them that I had become disabled and that I could not make the monthly minimum payments. which were $166.79 with 11.90% interest before I got behind. Times it by 3 plus late fees. When I told them of my situation for the 3rd time they offered me the following deal. Make a monthly payment of $142.00 for 60 months with no interest and no penalties for early pay off. But if I miss one payment or do not follow threw with it. It will revert back to the way it was plus all of the late fees. In other words everything would be lost. I called them back today and told them that i could only afford $82 a month for 60 months. They said that was not an option. I have not took thier offer yet. Should I? So that’s the way it stands.
The next card is a Discover with a $11,423 balance at 12.24% interest and minimum payment do of $455.00 which includes $226.00 past due amount. I called them today and told them that I could only afford a monthly payment of $98.00. They then told me my only option is to enroll in a 6 month temporary hardship program with them. That makes my payments $172.00 a month with a 9.99% interest rate for the next 6 months. Same deal if I default my account will go back to square one plus all the back charges. I have enrolled in this program because they made it sound like my only option. I tried getting them to lower or drop the interest rate but they said no. I told the agent that all I had was $98.00 to put on the account. She would not take the $98 because she said that would make my account in default already. She then moved the payment due date up to March 11th, 2014 and she told me to call her the 1st of March to let her know how things were going and if I had the full amount they are requesting. That’s the way that stands of now.
The 3rd credit card is a Capital one visa business card that is in my business name. I have called them twice and told them what was going on with my health. They just told me to do the best I can for now. Which has been nothing. I have not called them for the 3rd time yet. The balance on this card is $2,546.05 at a whopping 29.40% interest and a $174.00 minimum payment due as of January 04, 2014. What should I do from here on all 3 cards? I’m at witts end and sick of each one of thier 10 to 15 computor generated debt collection calls a day. I’m on the do not call list but it seems like all that done was give more of the telemarketers my number to call. I’m sorry this has taken so long to describe. Thank You very much for your time and response. A.J. My Phone: (removed by admin). Everyone else has my phone number so you just as well have it too. The big difference is I hope you can help me.
Best Wishes.
A.J. – Thanks for all of the details in your comment. It helps me get right to it in my feedback.
Citibank is offering you the best deal they can with the 60 month no interest payments. They are required to not allow payment plans like this not exceed 60 months in their design. There are no exceptions in these type of situations. 82 dollars a month payment would require a forgiveness of some of the balance, and then amortize that over a long payment term, and Citibank (like virtually all credit card lenders) does not offer that directly to their card members in this stage of collection (or at any stage right now). There are some flexibilities of payments and amounts after the account charges off, but you will be exploring those options with debt collection agencies.
The person at Discover did not do you any favors unless you can afford to make that payment for 6 months and have a light at the end of the tunnel you can see that soon. From what you shared, that is not the case. Discover, like other banks, will generally only extend some form of payment/billing flexibility once, or twice, if keeping the account open and current, or in order to reage, or pay the balance off on good terms. I would prefer you call and cancel any payment if possible. More on this below.
Is the Capital One business card in only the business name, or did you personally guarantee the card too?
Bottom line: Can you afford about 400 dollars a month to pay these credit cards off over the course of 4 to 5 years? If you are confident that you will have this amount every month starting now, than a nonprofit credit counseling service is what I suggest. Call 888-317-8770 for a free consult and exact quote of what you monthly payments can be if you qualify.
If you cannot afford those monthly payments with confidence, you should be looking at filing bankruptcy, or settling these debts as an alternative to that. Have you looked into bankruptcy? Have you read through any of the debt settlement guides I have on the site?
Putting your phone number up there for the world to see is:
A small sign of defeatism. And there is no need for that, as you will resolve this stuff.
Could lead to scammers calling you under the guise of helping, and some of um are pretty good at fooling people.
I deleted the number, but thank you for trust in posting it.
Hi Michael,
Thank you for all this helpful information.
I am in the process of making initial contact with 5 creditors to settle my debts. My last payments to all my creditors were on time in December of 2012. I unexpectedly lost my job January 2013 and was not receiving enough from Unemployment to continue to pay my debts, which at the time totaled $19,600. I managed to save $4K for the purpose of negotiating settlements. Unemployment was not extended for my Tier in California as of December 28th, 2013, but I recently found part time minimum-wage work, which is bringing in about a third of what I received on Unemployment. I’d like to settle as soon as possible since I don’t foresee being able to hold onto my savings with my limited income and I’m getting more threatening letters re lawsuits. I am single, have no assets and I am continuing to look for more work. (Prior to losing my job, I had a great credit history.)
I realize this now this may be too detailed for a comment, so please edit or advise as necessary!
Here is a list of current balances (and balance when I stopped paying), original creditors, agencies now handling the debts, offers I’ve made and they’ve countered.
$4609 ($4110)
Chase: MRS Associates – Haven’t contacted Chase yet.
$4081 ($3545)
MBNA: Portfolio Recovery Systems bought the debt and made sure to let me know my account is in Litigation Department and the clock is ticking for it to go to court until I make a formal settlement agreement- Offered $700; they counter $2637 (64%); I offered another $100; she said her boss offered $2285 (55.9%) but can’t receive a counter for less than 50% ($2040), I said I might be able to come up with another $400 (Total of $1400 [34.5%]), but realistically I don’t know where that will come from. She convinced me to make a good faith payment of $100 to help in my negotiations (I’m kicking myself for giving her my savings acct#). She is calling me back tomorrow to let me know if the Vice President accepted her proposal (I didn’t agree to it as a counter, she was just going to test the waters, so to speak) which would be $2040 settlement to be paid with the $1400 down and $640 for 6 months (also unrealistic on my current income, esp considering the other debts I’m trying to negotiate)
$7183 ($6639)
Discover: Krista L White & Associates – Offered $1000. Her mgr countered with $3600 (50%), first payment of $1000 then $2600 over 6 payments which I won’t be able to do with my current income. I was planning to counter with $1436 (20%)
$4845.25 ($3907)
Discover: Van Ru Credit Corporation – Offered $700 + $250 paycheck coming this week. She said they never settle for this low, but due to the circumstances she would submit my offer of $970 (20%) to Discover and I’ll hear back from them in 24-72 hrs.
$1,735 ($1400)
Citibank: United Recovery Systems – haven’t spoken with Citi yet
I’d really like to avoid bankruptcy, if possible.
Thanks for any suggestions you can offer!
J
Joanna – I understand the desire to avoid bankruptcy, and perhaps you can, but do you mind sharing why you prefer settling over chapter 7?
You are doing a pretty good job on your negotiations with the debt collectors.
You have Discover in range with where they tend to settle, but they do go lower. I reviewed a Discover settlement for 25% earlier this week. But those lower offers do tend to be for accounts older than yours (have been in collection longer).
United Recovery Systems may be able to settle for as low as 30%, but holding out for that low can often also mean missing out on a deal not much more than that. You can call URS (or Citibank for that matter), and ask for how much longer they will have the account placed. URS may be at its most negotiable in the week to two prior to the account getting yanked.
As you have already kicked yourself for giving Portfolio Recovery the 100 dollar “good faith negotiation” payment, I wont do it too… well, maybe a little. PRA probably got you to reage the SOL to collect through the courts with that move. That and they wanted the hundred bucks. They do go lower than what is on the table when their data suggests they should. From what you shared, they would have your collect-ability score as not good. Try to hold out for 30%, or even lower. And lay on the hardship/cannot afford groceries angle more.
MRS Associates collecting for Chase is something I have targeted at between 30 and 40%.
I have more feedback to offer, but want to wait to read your response to my first question above.
Thank you Michael!
Your first question is a good one because it made me realize I don’t really understand the ins and outs of why it would be worse. Most of my debt is from Medical Bills and living expenses when I was underemployed. I would like to try and come up with something to try to honor my agreements and pay my creditors., if it’s not all for nothing. I understand once my accounts charged-off my credit score went in the can, but I’m not concerned with having good credit at the moment. Do you have a cc settlement vs. Chapter 7 page? The only thing I can think of is that I never finished my BA and would like to go back to school at some point. Eliminating this debt is a big factor in when that could be possible. If I have a public record of Bankruptcy, does that affect Financial Aid that you know of?
I actually haven’t made the payment to PR yet, its due to go through Monday–should I cancel it? And I will do what you suggested–there is really no way I could come up with what she’s supposedly asking the VP to accept. And thanks for all the other info!
J
Joanna – I should write a better, and more specific, chapter 7 bankruptcy vs debt settlement comparison, but this piece will do the trick for our discussion. The focus is credit reporting and credit scores, but fair access to new credit products is covered too.
My experience is that the first priority (in the decision making process about which debt relief option is the right choice) should be based on income and expenses today and that can be projected in the next 6, then 12, and finally 24 months. You are well into that time period, and had you filed chapter 7 this time last year, would be about half way through most of the recovery period for access to new loans.
The exception to the 24 months recovery time happens to be the only major concern you raised – student loans. There are SOP for some student aid that would prevent qualification if bankruptcy were filed in the prior 3 years. Do you think you would go back to finish your BA in the next 3 years?
The roughly 23k math is pretty straight forward based on what you have shared.
Chapter 7 cost roughly 1500 start to finish (maybe a couple hundred more depending on where you live). You have some cash in reserve. All debts referenced in out comment exchange are the type discharged in a chapter 7. You could be debt free (relative) in 90 days or so. All collection efforts will cease (or directed to your attorney) once you file.
Debt settlement will require more than the 4k you have in reserve today. Probably twice as much, at least in my experience, and that is with exceptions from some of the creditors and debt collectors you are dealing with. How long would it take to raise another 4k? The answer will be the measure you use for completion of a settlement plan for the debts.
Thoughts?
This is all very interesting! After reading through your response and the comparison article you linked, Chapter 7 seems like the obvious move. I wanted to do due diligence with the creditors and see what I could realistically settle for, and now I think I’m in a bigger mess than I was two days ago. Haggling is not a strong point of mine!
PR (very pushy and impatient) laughed when I expressed my desire to avoid filing chapter 7. I couldn’t afford what they offered, so I said I wanted to cancel my $100 “good faith” payment and a manager came on and offered $1750 (42.9%) and is “giving me” until Monday to decide if I want to go ahead with the $700 down and $105/month for 10 months or call them back with the bankruptcy lawyer’s information because they’re not ever going to give me that good of an offer again. They have by far been the least pleasant to deal with and while their tactics got me locked into hastily agreeing to something, it’s going to backfire because now I’m locked into something I can’t renegotiate and I can’t fulfill…
MRS offered to settle for $1843 (40%) and said if I decide on Ch 7 to call them.
UR negotiated a settlement with them for $613.96 (35%) first payment of $500 to go through this Monday.
Still waiting to hear back from Van Ru if Disc accepted my 20% offer ($969.05)
And couldn’t get a hold of the lady at KLW to up my offer to 20% ($1436)
After looking over everything and considering the difficulty I’ve had finding full time employment, I am going to go ahead and use the money I’ve saved for filing for Chapter 7 and living expenses. I have a friend who went through Bankruptcy and specifically said it didn’t have a negative impact on her schooling and financial aide, so if it ends up delaying my schooling for a bit, that’s ok. If I had more stable income, I would keep trying to settle, but you helped me to see it’s not realistic under the current circumstances.
Thank you so much for helping me think through this. It has been so stressful, confusing and overwhelming!
Do you recommend any particular Bankruptcy lawyers in Los Angeles? Maybe I’ll give you a call tomorrow!
Joanna
Joanne – It is interesting that you had the worst experience, out of all collection agencies, with Portfolio Recovery Assoc. Let me know when you pull the trigger on the bankruptcy – I can send them a link to this comment exchange – they do not return my calls 🙂 but they do care about feedback like that.
You can connect with a bankruptcy attorney in the Los Angeles area at 877-278-8117.
Thanks again for all your help Michael.
I decided to go ahead with the Chapter 7 bankruptcy, hearing scheduled for 1 month from now!
Just to clarify, the initial woman I spoke with at PRA was very pleasant, patient, compassionate and helpful, her manager was the impatient pushy one.
J
Thanks for posting the update about your decision Joanna. And thanks also for offering all of your debt collector specific feedback. Other readers will benefit from your comments.
Best of success to you!
Hello, I have 3200$ in medical bills that went to collections from 2008. It is from an emergency room visit when I was unemployed. This is the only thing I have in collection. I have not attempted contacting them, as I do not have that amount of money to pay it off. I was curious to know what my options are, or the best route to go to take care of this. Would a settlement be possible and if so what is the average percentage I should pay for this type of collection? I would appreciate any help or advice. Thank you in advance.
Jamie – What amounts to target when settling debts can vary depending on a host of things. I can better reply to you if I knew the answers to the follow questions:
What state you live in?
Were all of these debt incurred in 2008 and/or the last time anything was paid toward the bills in 2008 (no payments to hospital or collection agency since)?
What are the names of the debt collection companies?
I live in Iowa and that is where the emergency room visit was. The visit may have been December 2007 or January 2008 I do not remember for sure. I made small payments for about 6 months, but as I stated I was unemployed because of health issues for awhile. There were three other bills one for $700 and two for a little over $500 a piece that went to collection and I paid them off in full a few months after they went to collection. I did not have the large sum of money for $3200. The last payment on this account would have been before it was sent to collection in mid 2008. The name that shows on my credit statement is General Service Bureau, Inc in Omaha, Ne. Money is pretty tight for me and I do not foresee that changing any time soon. I would really like any information or tools to help me take care of this and clear my credit without paying more than I can afford. Thank you for your time.
Jamie – Setting up a monthly payment plan with debt collectors is not difficult. You may have to convince them that the amount you say you can afford cannot be increased, but that is typically not too difficult. Settling is another story if you cannot offer a lump sum. You can negotiate a payoff amount and split that amount into monthly payments, but the more months you need to pay, the less likely a collection agency is going to be to give the reduction. There are frequent exceptions to this, but it is a foundational element of dealing with debt collectors.
Having said that, what can you afford to offer as a settlement, and if not settling, what can you budget for monthly?
I have an account in collection with best buys the collection agency made an agreement with me to pay 180.00 a month. best buy wants me to pay late payments of 345.00 so that my balance will be what the collection agency inital said it was. am i suppose to pay at two places i very confused and doesn’t seem that is going to my outstanding total. the collection agency is ars national security.
Lisa – Is Best Buy contacting you directly to collect the late payments, or is it another debt collector (not ARS)? If another debt collection agency, who, and have they made only phone calls, or sent written collection notices?
Hello! I just found this blog/chat.
I can’t seem to find out any info on my issue. We’re applying for a mortgage and I have one collection I need to pay off. I contacted the collection agent listed on my credit report (only one report) and she was wonderful to deal with. However, she told me that the account had been transferred (sold I’m assuming) to a different collection agency, S&K Financial. She gave me a phone number for them. When I tried calling, it does a half ring and goes straight to voice mail. The voice mail message says the name of the business, a very quickly spoken name that I cannot understand and to leave a message. I did not leave a message being that this felt very ‘fishy’. I attempted looking up the phone number I was given, the business name, etc., and could not find any information. I want an address for this place so I don’t have the only option of phone communication!
I need to get this collection taken care of asap (I have the funds) but I don’t know how to proceed!
I am going to talk to my financial adviser this afternoon, but any tips would be wonderful.
Thank you
Tina – S&K Financial debt collections offers their address as 610 West Lovers Lane, Arlington TX 76010. They publish khair@skfllc.com as their contact email. Settling with really small collection agencies or debt buyers is generally the same as any other negotiation. This new collection agency is not showing on your credit report? Which debt collectors are reporting?
National Account Services out of MN is reporting on the credit report, last report date was sometime in 2010. When I called them to resolve the issue (they were very nice to talk to) they informed me that the account had been sold to this S&K Financial. I talked to our mortgage lender yesterday and we agreed to do an email correspondence with this company, with the lender CC’d in everything. I have not heard back from S&K yet. Thank you for the address- If I do not hear back via email by tomorrow I will be mailing a certified letter. I just don’t know what to do if I cannot contact this collector to pay off this debt! I would think they’d be jumping all over the chance to get some money… And I don’t want to lose the opportunity we have with this house!
And no; this S&K is not showing up on any of my credit reports- at all. So I’m also worried that if I pay this off that it will be reported and then I’ll have even more collection reports on my records. Or it’ll never show as being paid, since NAS is still the listing agency- no transfer or closed listed next to it in the record.
If National Account Services is not owed any money, and they are not because they told you they sold the debt, than NAS should not be reporting a collection account due to them.
It sounds like S and K Financial is an agency that buys up debts that are really old (often passed the SOL to sue in order to collect, or even to legitimately place on credit reports). What type of account was this originally, and who was the initial lender? When did you last make a payment on this account?
I would dispute the National Account Services balance owed off and talk to your mortgage lender/loan officer about this further. Is the NAS collection agency balance owed reporting skewing your DTI qualifications; or is it the fact there is an unresolved debt on your credit; or both, that is holding you back?
Right now we’re sitting at approved on the condition that collections are paid, so unresolved debt. It was a US Bank checking account originally, I believe 2009- slated to come off my report in 2016. I didn’t think it was beyond the time limit (MN is 6-7 years).
I submitted a dispute with Trans Union (only CR that has this on it) online, (yes I know paper would be better but since I didn’t have any documents/proof…) I’m just hoping it doesn’t take 30+ days to fix this.
Would it be a good idea to call up the NAS business again to ask that they send a verified letter saying they no longer have the account? I’m not sure what the bank will do if they saw the debt then poof, it’s gone from my report without any payment…
Thank you for what you’re doing, this has been very helpful.
Tina – Banks typically would not balk at changes to your credit reports like this. Errors are fairly common, and are often found when going through the home loan process. I would encourage you to write a dispute to National Account Service about the credit report accuracy. They can fix it on their end too.
It does not appear your debt is as old as I had thought, but that does not change the credit reporting aspects we are discussing. I would still encourage you to resolve the debt too.
Update: !!
I submitted the dispute online with Trans Union last wednesday/thursday (?) and it was resolved and deleted from my credit report by saturday morning. I still have not heard from S&K- but if I do, I’m going to make darn sure to verify that they can collect. After reading through the FDCPA and FCRA laws, it seems that they were in violation of a few of them… Mortgage lender is moving ahead, appraisal on the house will be done by the 12th. Wish us luck!
Thank you for your time and information 🙂 It’s been very helpful.
Thanks for posting the update Tina, and good luck with the home!
Just for clarity, nothing you shared suggests to me that S&K Financial has violated anything. They are not furnishing any information to the credit reporting bureaus, and have made no attempts to collect a debt from you. If you do have later questions or concerns, do not hesitate to post them.
Have you had any experience with COMENITY ? (it used to be called “World Financial”) It seems that they own half of my delinquent debt (even though there are several different cc’s) and I am wondering if I should (or could) negotiate one lump sum for ALL of the debt all at once, with Comenity? OR is this even possible? OR Do I have to negotiate each card separately, even though I am technically dealing with the same company for each cc?
Tracey – It is not only possible to negotiate discounts on multiple debts with the same debt collection agency, but is often the best approach to take. You will want to plan ahead and have realistic expectations depending on the situation.
How many different accounts does Comenity have?
What are the rough balances?
What types of debts are these?
How much are you prepared to pay to settle all of the collections?
We had a credit card through Chase with a balance of 19k that has been charged off. I have gotten multiple calls but have not answered any. This last year has been our worst financially. We are barely making it month to month. My husband works full time but I am in the process of looking for a job. We have som other medical bills in collections that amount to a few hundred dollars. I am in a payment agreement with Discover that we have so far stuck to. We have no retirement to pull money from and I am terrified my husband’s wages will be garnished. What do you think we might be able to offer the collection ageny?
Mary – Your wages cannot be garnished without you being sued and a judgment entered in the court first. That is not a good place to be, and you can nearly always resolve a debt for a better savings, or payments, prior to your collection reaching such a critical stage.
As far as what a collection agency will accept:
Who is the collection agency?
How long do you estimate this collection company has had the account?
How many months has it been since Chase was last paid?
LTD Financial Svcs has the debt now probably since Aug. We last paid in Jan of 2013. I attempted to make a $900 payment to Chase on their automated payment line in March but it was not accepted because it was less than the minimum due. A representative would not speak to me because the card is in my husband’s name. I was VERY frustrated and that money ended up going towards other bills.
Thanks. Can you raise roughly 40% of the balance owed? How long would it take to pool together that amount?
At this point that seems like an impossible amount. We are struggling to make our monthly payments with me not working. We are hoping to put our taxes towards it which is usually around $3k total.
Mary – 3k is not a realistic settlement amount on a 19k balance. Twice that would stand a good chance.
Settling credit card bills with collectors can sometimes be negotiated for a dramatic savings (fixed income, unemployed, medical hardships, etc). But just the fact you are making monthly payments to Discover on time, is going to cause your file to be viewed as more collectable, and not one that would typically qualify for settling for the best discount.
Can you add to the 3k tax refund you are expecting over the course of the next few months? How long will it take to come up with even 30% of the balance?
I have been sued for citibank debt around $10K. summons was not served properly and i filed motion to quash service. During that time, court issued judgment when bank attorney file MFSJ by mistake. After i spoke to other attorney, he got order vacated from court. But judgement stays in the public records of county on clerks site. It also gets recorded again with certification even after vacating.
I settled the case by paying 50%, bank filed voluntary dismiss without prejudice.
Question: Why the judgement was certified even after court ordered vacated. should i contact other attorney to get judgement vacat filed or i should do it myself in the court, i do not know much how?
2. Can it harm some way even if it stays there as it is.
3. When i settled the case should be dismissed with prejudice, how to get that done?
Michael – is there a reason my posts were deleted?
Thanks,
Jay
Jay – First time posters automatically have the first post held in moderation due to comment spam. Once you have your first post approved, as long as you use the same email address and IP, all later comments automatically publish.
Michael,
I’m pretty sure my post above covers all of my concerns and you will be able to address my actual questions, but in your response if you could make sure to list any and all potential negative consequences of letting my debt reach the “charge off” stage I’d really appreciate it.
Thanks again,
Jay
Let me know if you have additional questions. I know you are on a time crunch here, and I may not see any additional comments after 8pm eastern today.
Hi Michael,
Today is literally the 180th day on a AMEX credit card account that I’ve been unable to pay over the past 6 months. It’s currently with a collection agency not with AMEX directly. I’ve been able to get the collection agency down to a 25% settlement on a $32K balance but my uncle is only willing to help me if I get them down to 20% or lower (he went through this a few years back and thinks I can get it). My question is how important should it be for me to get this handled today? After it’s “charged off” at the 181st day (i.e. tomorrow – Friday) will that really hurt my credit that much more since I haven’t been able to make a payment in 6 months anyway? And after it hits the “charge off” stage would I be more likely to get sued? It doesn’t sound like credit card companies are really suing borrowers in this fashion due to time, cost, and lack of success in ultimately collecting via this route? I’ve also been unable to pay one other credit card that has about a $10k balance (Bank of America) so my credit is already pretty dinged. My other question is with respect to my future settlement attempts if I’m unable to settle today? Will I typically be able to negotiate my best settlement offer “pre” charge off or will I have more negotiating power “post” charge off? I’m up against a time crunch here so hopefully you’re able to get back to me relatively quickly. Thanks so much and hope to hear from you soon!
Best,
Jay
Jay – Getting an American Express account negotiated down to 25% of the balance this early is not common. You did a great job getting to this point. Holding out for another 5% savings is not a good idea in my opinion.
The main benefits to settling before charge off are:
Its predictable. Once accounts charge off credit card banks do one of three things – Assign to a debt collector, sell to a debt buyer, or place with an attorney for collection with or without authorization to sue. You cannot often know which of these 3 buckets your account will be dropped into. So settling at the early opportunity is preventative.AMEX is not known for selling debt, so settling now avoids multiple collection agency assignments, or attorney collections.
Settling with the creditor directly, depending on who it is, can often mean getting the best savings. Amex places accounts with contingency collectors like you are probably dealing with now, and settling with this type of collection agency may involve a higher deal than is on the table now. But AMEX also places accounts with legal collections and those settlements can be much more expensive.
Avoiding a charge off on your credit report is ideal if you can swing it, but the damage from being reported 1 to 5 months late is already done. But you would prevent an additional negative item from being reported by a collection agency later.
It would not be correct to say creditors are not suing people due to time, cost, and lack of success. Some accounts are collected through the courts that are less than 1k. There are creditors, like Chase, who stopped collection lawsuits due to regulatory and documentation concerns. But Amex can and does sue.
My opinion is that you have a great, and probably the best settlement on the table now, and should take advantage of it if possible.
HI Michael,
I have an unsecured business line of credit with Citibank that I owe 40K . I have had the loan for 12 years or so, have paid it off a couple of times when business was better, but have now ran it up again and unable to pay down. I have been paying only the interest for the last 4 years, but now fallen behind with that 3 months. I also have a personal credit card with Citibank that I owe 41K which I have also fallen behind and now 2 months late. My plan is to ask to settle on these two accts.
Both Citibank departments have been calling and leaving messages, I have not picked up the phone or returned any calls. I am terrified to do so.
I am getting very nervous and feeling guilty. I have always been an upstanding responsible person, I have just fallen into some bad financial times.
Should I call them at this point ? Is it too soon? What do I say?
We can pull about 20K out from my husbands mutual funds to make an offer to settle, but I don’t think that is enough for both anyway. Also, is it harder to settle on a unsecured BLOC than it is on a personal CC..?? At this point, I am not concerned about my credit report, I just want to get this behind me.
thank you so very much for your guidance!
Mary – 20k would not be enough to settle both accounts given trends with Citibank today. But there may be ways to navigate the negotiation process if you felt confident you could raise an additional 20k over the course of the next 6 to 12 months. You would likely be settling one account with Citi, and one with a collection company. What possibilities are there for raising the additional money?
I would not say LOC’s are harder to settle with Citi. But how you go about it, and the timing, can be different than negotiating credit cards. If the business is a going concern there are additional things to weigh.
Some questions:
Do you have any other accounts with Citibank (personal checking/savings or business accounts)?
What state do you live in?
Have you spent any time looking into bankruptcy yet – business or personal?
Michael,
Thank you for your quick reply…I am impressed! 🙂
I live in California, and yes, in addition to the 20k from my husbands mutual funds, I believe I could separately come up with close to 20K in 12 months. We are trying to sell our motor home (personal worth 10k) and have cut up our credit cards and only doing cash (so we don’t continue down the same debt road again).
I was originally considering hiring a debt consolidation company, but after realizing they would be taking my money before my debt was paid, I started doing my own homework (and then I found you!)
So my plan is to put $$ aside each month with a completely different bank (so I can’t get to it) and save it up for settling.
So how do you recommend I navigate the process?
Can you clarify what you mean by “given the trends with Citibank today”..?
Which do you suggest I contact/pay first?
(I would prefer the BLOC, since I am still in business with small projects and do not want to file bankruptcy)
How do you suggest I go about it and what are the additional things to weigh/consider?
I do have business accts with Citi that I will be closing and getting new accts at a different bank. ( Citi already took what I had left in my business acct, about $1,ooo, the first month I was late on the BLOC)
We have also closed our Citibank personal accts in fear they would do the same to those. Our 3 other credit cards are joint with husband (target, kohls, amex) low balances and current and I have cut them up.
I won’t have any of the mutual funds money to offer a settlement to either for about a month, but in the meantime, do you suggest I call one of them first? Now?
and let the other go behind a bit longer before calling them? ( but I won’t have that $$ for another 12/mo)
Thank you so much for answering my questions 🙂
By nature, I am a rule-follower, so I have been losing A LOT of sleep over this….
Mary – The business line of credit and the business checking likely have a crossover in the agreement. Citi having dipped into the account is not surprising. But another reason to switch banks is so that your balances in checking and savings cannot be viewed. If I can see you have 20k in my checking account, I am not going to be all that sympathetic when it comes to accepting half of a loan balance as a settlement on another account with me. I would not close the accounts necessarily, but would keep a minimal balance. You are headed in the right direction with setting up a dedicated account to pay your settlements. Here is some more information on that topic: https://consumerrecoverynetwork.com/paying-your-credit-card-debt-settlements/
You mentioned having other accounts you are paying on, but not using. This can create a concern when it comes to negotiating with Citibank. Read this article to raise your awareness about how creditors may view your file when negotiating their account, while you are paying others: https://consumerrecoverynetwork.com/keep-credit-card-open-when-settling-debt/
By trends I am referring to how Citibank handles settlements today, and what they are willing to accept and when. A realistic expectation would be settling for roughly 50% of the balance at the time you negotiate the deal. There are some nuances to this estimate, and some reasons why accounts with them will settle a tad lower, or higher, and even reasons Citibank would tag a file for aggressive collection (like filing a lawsuit). You can negotiate a payoff at any stage of collection, so no cause for alarm. But you do need to know the realities and how to navigate them while setting yourself up for success.
In order to prepare yourself for the process, I would encourage you to begin reading through the debt settlement sections of the debt relief guides on this site. Start here: https://consumerrecoverynetwork.com/credit-card-customer-service-turned-bill-collector/
I only have limited info to go off of, but I would also target the line of credit first. Rather than respond in this comment reply with how to proceed with that, and offer additional things to consider, read the links I have provided. Most the general information you want is contained in those articles. The how to’s and what to’s in your unique situation can be better addressed once you narrow your focus and questions after having read through the additional material. I welcome you to participate with questions in the comments on all of those pages. There is also a specific page about settling with Citibank.
I do indeed recommend you begin talking with Citi and conveying your hardship and inability to pay. But read through those links first. I have given you quite a bit of reading to do, but all of it is pertinent to your situation. Most of it is common sense once you understand how banks deal with delinquent accounts. You then apply what you learn to your situation based on your financial abilities now, and in the near future.
A little about following the rules: You are following the rules. Dealing with the inability to pay debts incurred is part of the debt and credit based economy we live in. That is even more part of the nature of things for small business owners. Banks follow a set of rules too. Once you understand those rules, and the risk/reward/timing elements, you should stop losing sleep over this. Well, at least not as much sleep.
I look forward to hearing more from you throughout the comments.
Whew…thank you for all this information! I will read and take it all in and reply back! Have a great Day Michael..!
Thank you so much for your response. We have currently set up payment arrangements with CBE and UCB collections agencies, thankfully with little to know money down. Kevin Z. Shine, which is the attorney handling this account, is requiring a 987.00 down payment before negotiating a monthly. We owe around $3,000. I explained to them that we are willing to pay additional payments aside from the monthly, but that we could a guarantee a sure $100 monthly. We don’t have excess cash to pay a lump down payment, (especially with one income), much less even dream of considering attorney fees.
Thanks for moving the discussion over to this page. Who are United Collection Bureau Inc and CBE Group collecting for? I want to determine if there is any wiggle room in the arrangements you have set up with them. And are you making payments on the full balances owed?
The quickest way to deal with the Cach (Square Two) debt with the debt collector attorney is to settle it in a lump sum. That would also eliminate the risk of being sued. If your back were up against a wall and you were being sued, what amount of money could you raise? If no shot at settling, you would press for the monthly payments. What if you got them to accept half of that amount down? Could you swing that?
We can afford $700 a month, perhaps more depending on cuts we can make. We have $1,200 in savings to put towards the 4k so we’re hoping continued conversation will lead to them accepting payment. I will speak to them again and let you know what they say.
My husband owed a local bank 3k on a credit card, and in february when he went to make a payment they told him they were sending the account to collections as he was not making full payment every month. They would not tell us what agency it was sent to and to wait to hear from the agency to be told what to do next. The agency sent us a letter today, which was postmarked two weeks ago. He called and was told the account is being sent to litigation this Friday unless paid in full and was told they would not accept scheduled payments. Is there any way to negotiate or explain that we had not been contacted until today?
Colette – Unfortunately, explaining how you were told by the bank to wait to hear from a debt collector will not have any affect. You certainly can negotiate a settlement, or some type of monthly payment term, but you may not be able to do that with the collection agency now. You would do that with the collection attorney instead.
What is the name of the collection agency?
The name is Benchmark Recovery llc, they told us they cannot make a pay plan or settlement. The account had been delinquent since February 26th 2013 and was sent to them at that time. What are positive steps to take based on the fact they said it is going to court? We are completely willing to pay in full but can’t come up with the full sum, or a credit card to pay it immediately.
Colette – Benchmark Recovery is both a collection agency, providing creditors contingency collection services, and also a debt buyer. It would be good to know which capacity of debt collector they are acting on. You can find out by calling the bank and asking if the account was sold or simply placed for collection. Knowing that can create a difference in how you proceed in your efforts from here.
Alright, they said they are merely collecting it. Thank you for your help so far.
Thanks. Small local and regional banks (especially credit unions) can be difficult to settle with, or get affordable payment arrangements from. You could continue to reach out to Benchmark Recovery this week and explain to them with all sincerity:
“I cannot pay this debt off all at once. If that were possible I would have never fallen behind. I understand you have to follow your own policies for collection, and that this could mean sending this to an attorney for collection. Whether I set up affordable payments with you now, or with court supervision, I can only afford xxx dollars a month. Nothing is going to change my limitations due to unfortunate financial setbacks.”
How much can you come up with to pay?
If you cannot offer a settlement and need payments to be arranged, but the collection agency is not going to work with you, it just is what it is. You can indeed set up payments later, but they may be through a consent or stipulation. Obviously something to avoid if you can, but not the end of the world if you don’t.
I’m here, I would give you all the names of the collection agency as soon as I got my copy of all my credit report from the 3 credit bureau .
If I pay all negotiated amount on all my bad debt how long would it take me to be free from bad debt.?
If I hire your company to negotiate on our behalf can you explain the process and steps that we should expect from you.
Thanks
Thanks for moving the discussion about settling with collection agencies over to this page Perliza. Please do post the debt collectors you are dealing with, the amounts owed on each of the accounts, and when the last payments were made on each account in a follow up comment. I can offer feedback about settlement targets, and how long this will take once you do that.
I can explain the process and the steps to take to settle these debts, and without the need to hire anyone. This way you save money on fees. If after that you do want to have someone else involved, I will connect you with a CRN specialist. Sound good?
Hi Michael, it showed in my credit report that I have 5 in the collections. 1)diversified $321.
2) NCO $277. 3) portfolio recovery $ 887. 4). Receivables management $155. 5) sentry inc. $343. Since the amount is really not big, I would really want to clear this. The problem is when I called them, they want me to pay already over the phone. I have asked them if they can send me the agreement letter first before I pay but they said I have to pay over the phone and they will send letter after they received my payment. My question is, is it safe for me to pay over the phone, with a debit card or my personal checking acct. thats the only mode of payment they want me to do. my husband had a bad experienced paying with his personal ck before. and how would I know they won’t sell my acct to another credit collections? Also i have noticed, these credits collections has been there for more than 5 years, how did they got these updated to 2012? Pls advices. Really appreciate all the help I can get. Thank a lot.
Perliza – Debt collection agencies like NCO and Sentry Credit regularly send out settlement letters. Portfolio Recovery Associates is a fairly decent debt collector to negotiate with, and they offer fair deals, but really are terrible about sending documentation. I suspect that will change as a result of the fair debt buyer practices act that will take effect in California at the beginning of 2014 (CA is huge population so systems that have to be met there makes sense to apply elsewhere). But to date, PRA documentation policies compared to other collection agencies are silly. There are a couple collection companies that get referred to as “Receivables Management”. One is easy to work with and regularly documents their agreements, while the other is not. Do you have an address for the one you are dealing with, or even a phone number?
I generally would recommend that you set up a different account to fund payments to collection agencies. My concerns that lead to this suggestion are not what they once were, as there are less reports of payment problems than several years back, but there is nothing wrong with exercising caution in this regard. See this report for more about paying a debt collector.
As far as how they are showing on your credit report, which report are you looking at? Is there a date listed for when each negative collection account will be removed or fall off of the report? Some reports are a little confusing for the date they show as last activity that is not the date of default.
Mike…we had a communication thread as recently as Sat. 9/21. However, I can’t find that thread anywhere…anymore on your site. I asked a question on 9/22 and was just trying to check the answer today 9/24 but…can’t find the thread?
Curt – That prior thread can be found here. That page is about settling accounts with stores and brands. This is a good page to continue the discussion, as you are dealing with debt collection agencies for the most part.
You can get all comment thread activity sent to you via email so that you can track them. Just check the box to receive emails before you submit your new comment on any specific page of the site.
Ah ha…thank you!
Hi Michael:
I have a question regarding a wholesale store called Directbuy who requires membership. The membership was financed and I was making monthly payments and due to financial difficulties, I stopped making payments and my account was charged off and ended with collection agency that keeps calling to get the outstanding balance $3200. Do you have any recommendation on how to deal with situation. Can I settle with them, what kind of strategy I should use and the lowest potential settlement that I can expect.
Thanks
Sal
Sal – You can settle with the collection agency. Without details of your full situation I would target under 50% for the settlement amount. Your settlement could be a good deal lower if you look noncollectable on paper (credit report in poor condition with no unsecured accounts being kept current), or somewhat higher if you do not have other debts in collection.
Call the agency and keep your conversation limited to what makes it tough to be you financially. Do not delve into anything other than that. Let them know you want to do something to resolve the debt, but have extremely limited funds. You may be able to pool together a lump sum of money (use a round dollar figure), if they would consider settling for that amount.
What is the name of the collection agency?
Thanks so much for your reply! Here’s more information regarding what/who I’m working with:
1) Brylane Home (original and current creditor) $740.00 owed (reported first in 2010)
2) Medical bills (hospital and current creditor) $1200 (but only $400 worth on my credit report to date
3) Chase Bank Credit Card (now with another company- Midland Funding) Credit limit was $500 but high balance is 1K
4) Comenity Bank/Brylane Home again for original balance of $150 but high balance is $527…I tried disputing this bc I didn’t have two accounts with them but I didn’t get anywhere
5) TXU Energy now with Convergent- they are working with TXU to relinquish the deposit they never returned or applied to my balance (for ending the contract early) Balance $530 to date
6) Firestone $1463.00
7) Walmart (now with Midland Funding) and listed on my report twice- orig balance was $500 but high balance is 996.
8) Target (now with Midland Funding) and listed on my report twice- orig balance was $500 and now high balance shows as “NA” on both entries
9) I have two others listed with Midland but it doesn’t show me the original creditor and the amounts show as “NA”
10) I have a small bank card fee I owe to Chase but I don’t see it on my reports (amount was $100.00)
As you can see, I have many different small problems that I should have managed a long time ago. Many of my accounts are with Midland. Do you think they might be willing to negotiate all of them at once?
Thanks for moving the discussion over here for collections accounts.
1. Store Credit will vary on what they will accept. If all collections are in house (never sending to a debt collector), 50% can be a realistic target, though the lower dollar balance can often mean settling at a higher amount.
2. Hospital and medical service providers can be one of the rare instances that you can negotiate a payment for removal on your credit. Not always, but it may be worth a shot. Also, in house billing (and sometimes outside collection agencies), are often pretty fair about monthly payments you can afford rather than settling. If savings through settlement is your ultimate motivation, target 50% to 80%. There are also opportunities to get them to write some or all of the bills down completely depending on the type of hospital, and the type of treatment, as well as their qualifications based on patient income.
3. See below.
4. You may just want to fold this account into your discussions. Sticking to your guns about it never existing, but folding it into the conversation. Ultimately, if they are just stubborn about it, you want to resolve the other and circle back and file a couple of meaningful complaints. But hold back on that for now until you see how things go on the other, and bringing this one into the discussion.
5. How much was the deposit? Power company may be another example where you can argue for deletion. Just depends on the scenario. Something like arguing you thought the deposit was going to cover the termination…. It was all just a misunderstanding…. You are willing to pay in full, but should not have the credit report penalty. Worth a shot because it works from time to time.
6. When did you get the tires/service? Did you make payments? When did you last pay?
7. See below.
8. See below
9. Call Midland and ask for clarity when discussing the other accounts. There may be some duplication in reporting, or they can tell you who the original debts were with and you can compare that with accounts you opened in the past and fell behind with.
10. I would pay the 100.00.
Midland will work with you on all of the accounts at once if they can. A realistic target to settle if you can afford to make a single payment will be between 40% and 50%. They, like many of the larger debt collection agencies, use some scoring methods for how collectable you are viewed, and what you tell them your financial situation is like. If your situation and their scoring suggest they accept less than that, they will. It can also suggest they hold a line at a higher percentage.
They did for me, I had a target and T-mobile bill. The settlement amounts were reasonable I guess.