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
Short answer
Yes. Settling a credit card debt after charge off, once a collection agency is contacting you, is always an option. Sending the account to a collection agency is the most common thing a creditor does with a newly charged off balance, and that agency can negotiate within the limits your original creditor sets.
Key points on this page
- Charge off comes after the first stage of collection calls from your original creditor, which can last six months.
- Creditors have 3 options when they charge off a defaulted account. Placing it with a collection agency is the most popular one.
- Most of this work is done on contingency, so the agency only gets paid if you pay. Your account may sit with one agency for a limited window.
- The agency can only agree to what your original creditor allows, or to what it can go back and get approved.
- You cannot re-age a charged off account. The credit reporting damage was done by your bank, and the collector has no control over it, whatever they suggest on the phone.
- You will have to pick up the telephone to learn your real options. A debt validation request at this stage is often counterproductive to a settlement goal.
Yes, settling a credit card debt after it has been charged off and a debt collection agency is contacting you for payment is always an option. Below is an edited version of an article we published that explains “Charge Off” and what typically happens with your unpaid accounts after they are considered seriously delinquent and the unpaid balance is assigned to an outside debt collector. Settling the debt may be just the opportunity you need to move on with your finances and restore your credit.
For your unpaid credit card to reach charge off, you will have already been through many collection calls from your original creditor. The first stage of collection calls can last six months.
Creditors have 3 options available when they charge off defaulted credit card debt. The most popular option with newly charged off accounts is to send the debt to a collection agency.
Credit Card Debt Sent to Collection Agencies are Mostly Done on Contingency
The amount of time your account remains with an assignee debt collection agency will vary. Let’s assume that the agency that has your unpaid credit card bill will only have the ability to collect from you for 90 days.
The typical debt collector working for your creditor has two ways they attempt to get you to pay; your phone and your mailbox. There are other ways to collect, such as:
- Collection calls to your job,
- Debt collector calls to family members and friends (this does happen – it sucks and is embarrassing).
Lets focus on the most general efforts used by the debt collector who is collecting on your account just after charge off. When a debt collector gets assigned your account, you will often start getting collection calls (at a high volume). You should also get a collection notice in the mail within a week of the agency having contacted you by phone.
You do not have to pick up the collection calls if you are not ready to negotiate a settlement with the agency. My suggestions for speaking to a third party debt collector are not the same as picking up, or making calls out, to your original credit card lender. And you do not necessarily need to send a debt validation request in response to the collection notices you receive in the mail. That is often counter productive to your settlement goals.
Settling an Account with a Collection Agency
Some important details to consider:
- You will have to pick up the telephone in order to learn about your options with the account. I typically recommend that you not limit yourself to written communications with collection agencies.
- You will be speaking to someone who has been trained to push your buttons using the most effective and proven methods for collecting unpaid debt.
- The agency can only work out arrangements for payments that your original creditor allows them to, or where the debt collector can go back to your creditor and get approval.
- You will not be able to re-age the account when settling charged off accounts with debt collectors (the credit report damage is done by your credit card bank, the debt collector will have no control over that).
- Avoid some of the nut job advice on the internet about handling this stage of collection.
- In some ways, you have more payment term options you can negotiate with a collection agency than you would be able to with your bank.
- The collection agency only gets paid if they can get you to pay them (that may not always be the case, but contingency debt collection is the most common model currently).
Charged Off Debt Get Reported to the Credit Reporting Agencies
When this derogatory credit reporting happens the damage to your credit is done. You do not get to re-age charged off accounts. The credit damage from not paying a charge off account can then only get worse if you are sued, followed by getting a judgment against you. The judgment then shows up in the public record section of your credit report. Also, another debt collection trade line may later show up on your credit reports, and this would be considered additional damage.
A debt collector may comment how you should be concerned with your credit report and credit score after the account they are collecting on gets charged off, but this is just a collection tactic. Collection agencies will have no ability to change how the original credit card issuer reports to Equifax, TransUnion or Experian that your account was charged off.
There are tactics and timing I share on this site, and when you want to work with me one on one, that will better prepare you for dealing with outside debt collectors. You can optimize your results by knowing:
- How to negotiate a settlement deal that is timed with internal goals the collection agency has, and even that an individual debt collector may have.
- When to pass on an offer to settle that is too high without being concerned your particular debt collection agency will sue.
- What your bank will allow the collector to do (how low a settlement can get and what payment terms are common).
- The tricks and tactics that will be used to get you to pay more than you may have needed to.
- Collection abuse tactics.
If you are struggling with several credit card debts that are past the charge off stage, you should learn about your options and identify resources for handling the accounts before they end up in more advanced stages of collection which can include being sued.
It is important that your next step to deal with your now charged off debt be the step you take to put the debt to rest before the situation can deteriorate further. If you are serious about resolving unpaid debts and want to develop a workable plan, getting started is easy. Just post more about your situation in the comments below, and lets go from there.
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About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I am 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.