Should we pay a settlement offer from a collection agency when the debt they are trying to collect on was charged off in 2009?
My wife just received a settlement offer from a collection agency on 11/27/2012 but according to her credit report that debt was charged off in 2009. Can the collection agency still come after her? Should we just work with them and make payment arrangements or are they grasping at straws and we should just ignore it?
Should we pay a settlement offer from a credit collector when the debt they are trying to collect on was charged off in 2009?
—Chris
A debt that was charged off in 2009 just means the original creditor followed the Generally Accepted Accounting Principles (GAAP), in order to account for the loss on their books. The account is still out there and collectable. You can be sued on unpaid debts after charge off, so settling is a good idea when it makes sense for you financially. A collection agency making an offer you did not solicit often means there is room to negotiate an even better outcome.
Settling with a Collection Agency When They Send You Debt Settlement Offer in the Mail
If the offer you receive to settle an old collection account for less than the balance owed is a good one, and the debt is still inside the statute of limitations to sue you, you should definitely consider taking advantage of it. Here are some things to consider:
- Do you have the cash available to fund the offer up front?
Since the collection agency made an offer unprovoked, it stands to reason there is room to negotiated the payoff amount lower if you do not have the financial resources to take the offer as is.
- Is the offer from a collection agency working for the original creditor or are they working for, or is the offer from, a debt buyer?
Depending on who is collecting, and who the debt is owned by, your ability to get a better deal through negotiations can change.
- Is the offer being made by a debt buyer with a reputation for suing in order to collect?
Sometimes it is better to make every effort to settle a debt now, while there is an offer on the table, when the collection agency or debt buyer has a history of using the courts in order to collect. Court enforced collections after a judgment are not ever a good experience, so avoiding that is a key consideration.
In order to help you better evaluate the offer to settle the debt you received please answer the following questions using the comment box below:
- Who was the original credit card lender?
- Who is the offer from and who does the settlement offer letter say they are collecting for if other than themselves?
- What is the balance of the debt and what are they offering as settlement?
- What state do you live in?
What amount of money can you come up with resolve the debt? If not enough to meet the offer, how much time would you need to raise more?
If you would like to learn more about what charge off means to you when it comes to debt collection and debt settlement, read this post: https://consumerrecoverynetwork.com/charge-off-and-credit-card-debt-what-it-means-to-you/
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.
How am I find an attorney to help me negotiate a settlement?
Can you tell me more about the situation you are in? Who is the creditor or debt collector? Are you being sued?
My husband owes a debt from 9 years ago. The judgement is in GA. we reside in FL. They did a voluntary dismissal about 6 months ago. Then an attorney sent us a letter asking for a payment settlement. I know the state of Fl requires the judgement to be made domestic to FL. In addition, as head of household he is allowed to earn 750 per week before wages can be garnished. We are retired, we don’t earn that much. The judgement is not domestic to FL yet. GA. allows up to 10 years to collect a debt if it is revived after 7 and before the 10th year is out. I don’t know if the debt collector is representing the creditor or if they bought the debt. Our home is homesteaded and can’t be touched. We have money in IRA that we will need at a later date to live on. My vehicle is in my name and has always been in my name. I am not on the judgement or the credit card. In addition, they have tacked on an additional 1/3 to the balance owed. Then they are reducing it to settle. Basically the offer is about 25% less than what we originally owed. We have to be careful with what money we have in the IRA. It is not a great deal and needs to carry us through retirement. I realize it was his debt. He did lose his job during the recession and he was in his early 60’s at the time and unable to find employment. So he took his retirement. It was the only thing we could do. Over the past 9 years our credit has repaired itself. I looked up to find out if a collector is mandated by law to report to credit agencies, and read that they are not allowed. So what I want to offer is 1/2 of the original balance and an oath that they will not report the settlement to the credit bureaus, as this will lower his score again.
So in summary:
The judgement is 9 1/2 years old in Georgia.
We live in Florida
The debt has a voluntary dismissal
The amount they claim he owes is 1/3 higher than what the ending balance was.
Our home is homesteaded in Florida and has full protection
We have 2 meaningful assets besides the home:
1) a 2017 Vehicle that is paid for but in my name only and it has never been in his name.
2) IRA, both a roll over from a 401K and a Roth IRA
First, are they legally allowed to make this judgement domestic to Florida after it has been Voluntarily dismissed at the 9 1/2 year mark in Georgia?
Can they legally increase the amount owed?
Are they mandated by law to report a settlement to the credit bureau if we settled?
Is my vehicle, that is in my name only, at risk of being seized if the debt and judgement is not in my name?
Are the IRA’s at risk of being garnished?
Is my bank account that only has social security checks deposited in the account protected? I have a direct deposit from SSA so the bank account will reflect no other money from another source is in that account.
Since it is not my judgement, could they take any money out of my account to begin with? My spouses name is not on the account.
My spouse does work a part time job and earns approximately 800 per month gross so his account does have money sources mixed.
Talk to an experienced debt collection consumer law attorney in your state about several of these questions.
IRA’s are typically protected.
Your bank account without his name and social associated would not be flagged.
They cannot report anything to the credit bureaus at this point, as the debt is more than 7 years old.
They cannot try to take a vehicle that is not his.
His account is protected if he keeps it to social security. I would cash other checks, or take the money out, as it lands, if it were me.
My husband owe money to money mart for $2000. Now he receiving letters for non payment,and it was turnover to Cbv collection,and the letter heading is from TPH insolvency investigator and asking for $ 4,350 and letter says that they are filing bankruptcy that will cause seizure and liquidation of our property. My husband doesnt have that kind of money, and I am trying to make remedy to settle it,but I dont have that kind of money either,esp.at this crises pandemic not working. I phoned money mart to settle an agreement but refused to talk to me, and they want my husband to notify them. I would prefer myself to negotiate and settle this because he doesnt want face it and doesnt know how to negotiate due to language barrier. Also I would prefer to do it to make sure the money goes to cbv or money mart. What can I do to be able to settle this with lesser amt. I am afraid to ask for a lesser settlement. By the way, do they have the right to post this letter of collection stating all information and amount on my door? My tenant saw and read this letter and I am so embarrashed.
It sounds like you are being sued. I cover how to settle when sued here: https://consumerrecoverynetwork.com/question/can-you-negotiate-and-settle-a-credit-card-debt-if-you-are-being-sued/
With your question about your rights with posting on your door like that, I would contact an experienced debt collection consumer lat attorney in your state.
Who was the original credit card lender? Sallie Mae Private College Loan
Who is the offer from and who does the settlement offer letter say they are collecting for if other than themselves? Allied Interstate LLC saying they retain this debt from Sallie Mae
What is the balance of the debt and what are they offering as settlement? Balance is $10,200 and offer is $3,800
What state do you live in?
New York
What amount of money can you come up with resolve the debt? If not enough to meet the offer, how much time would you need to raise more? I can come up with $3,000 in the next 60 days. They are saying they need $3,800 within 40 days. Is this a legit mailing? What would I need to make sure if I pay them money that this debt goes away from Sallie Mae and any other debt agency?
Keith – I am seeing more Sallie Mae settlement offers over the last year. They tend to be in the 50% of balance range. Your offer to settle from Allied Interstate is great. How long has it been since you made a payment on the loan?
You basically need a settlement letter or written agreement outlining the details. It can come on Sallie Mae letter head, or what is more common, the collection agency letter head (Allied in this case). Here is a report with more details about settlement documentation: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/. You will also want to be able to show proof you paid the settlement, if any issues come up later.