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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- 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
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About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi 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%)