Short answer
Capital One is the credit card issuer most likely to sue in order to collect, and its own settlement letter says it will report a settled account to the credit bureaus as settled with an outstanding balance. Both of those facts should shape how you handle a Capital One debt.
Key points on this page
- Capital One is quick to use the courts to collect on delinquent accounts, more so than other card issuers.
- If your debt is mainly with Capital One, bankruptcy protection is worth serious consideration.
- Item 9 of the Capital One settlement letter states that if the account is settled before charge off, the remainder of the balance is charged off and the account is reported to credit reporting agencies as settled with an outstanding balance.
- Item 8 of the same letter states that forgiven principal of 600 dollars or more is reported to you and the IRS on a 1099-C. A balance that has been forgiven and settled by agreement is not an outstanding balance.
- Reporting a balance that is no longer owed falsely characterizes the trade line and skews debt to income and utilization figures, which can affect approval and interest rates on later loans.
- The coupon or free gift in a Capital One collection letter is a collection ploy to get you to call. Since this page was published, the reporting problem on settled accounts is being addressed through disputes with the credit bureaus.
My experience working with financially-challenged consumers and their creditors nationwide since the economic downturn reflects that virtually every national issuer of credit cards, even larger regional credit unions, have gone as far as they can to assist their struggling account holders. Capital One is an exception to this. How Capital One goes about settling a debt with you, their treatment of credit reporting after agreeing to reduce your balance, and the fact that they are the most likely to sue for collection, all combine for one huge exercise in caution and awareness.
Credit card issuers offer plans to reduce interest rates on credit cards through hardship plans, debt management plans, credit counseling plans, or offer balance concessions through debt settlement, which go a long way in helping their customers avoid bankruptcy. In this way (credit card payment concessions), Capital One is not all that different from other credit card banks.
Capital One, in my Experience, is Tough to Work with
Banks who are paying attention know that working out some type of arrangement with account holders, who will otherwise be forced into filing chapter 7 or 13 bankruptcy, is in their best interest. Creditors will generally offer fair concessions as a final option because they will lose the least. For more about this see: Banks Choose to lose the least.
I am not sure Capital One is paying attention.
Capital One is quick to use the courts in order to collect on delinquent accounts. They would apparently rather their account holders file bankruptcy.
I continue to encourage seeking bankruptcy protection if your debt is mainly with Capital One.
Now we have Capital One choosing to be spiteful, and perhaps illegally, with those few credit card holders they may offer fair concessions to. To see the collection letter referred to below in its entirety: Capital One Collection Letter
The coupon for $50.00 you will see in the collection letter linked above is not all that new a twist to get a delinquent CapOne credit card member to call MRS Associates (a debt collector). It is worth noting however, it is only a collection ploy and nowhere near worth taking advantage of the perceived “FREE STUFF”. The main problem I want to draw your attention and provide awareness to, is number 9 on page 2 of the collection letter.
9. Credit Reporting of Your Settled Account. If your Account is settled before it is charged off, the remainder of your Account balance will be charged off. We will then report your Account to credit reporting agencies as settled with an outstanding balance.
Fair Credit Reporting Act (FCRA) and the requirement to report only complete and accurate information to the Credit Reporting Agencies (CRA’s)? This would FALSELY characterize the trade line and SKEW any later debt to income and/or utilization formula rendering them inaccurate as well. This means that Capital One could be causing consumer’s damages post debt settlement, when they are applying for future loan products whose interest rates and even approval will be factored on a credit report that contains erroneous and false information.
Reporting a balance still due and owing when it has been forgiven would falsely characterize this trade line in your credit report. How do we know the unpaid portion of the settlement is forgiven? Let’s look to number 8 on page 2 of Capital Ones collection letter:
8. IRS Reporting of Debt Forgiveness. If we cancel or forgive $600 or more of principal on a debt you owe, we must provide a 1099-C tax form to you and the IRS. Please consult your tax advisor and the instructions accompanying your tax forms for more information.
How can number 8, indicating the required reporting of forgiven debt to the IRS, comport with erroneously reporting an outstanding balance when it has:
- Been forgiven
- Been settled for a lesser amount agreed to by both parties, thereby leaving no “outstanding” balance
If you have a Capital One story to share, especially as it relates to improper credit reporting, I invite implore you to share it in the comment section below.
UPDATE: Since publishing the above Capital One article about credit reporting and settling Cap One credit cards a couple years ago, some softening of options available to account holders who fall behind has occurred. We do still see the poor credit reporting policy on settled accounts with Capital One, but have also seen how that is getting addressed using disputes with the credit bureaus.
If you are serious about resolving unpaid credit card debt with Capital One and have other credit card debts to resolve, it is important to prioritize accounts and target the best savings with the available money you have and can project saving up in the short term. If you have an experience with Capital One collections, credit reporting, or lawsuits, please share in the comments below. If you have questions about how to handle debts with Capital One, post in the comments for feedback.
Capital One has two judgments against me from several years ago. I am trying to secure a mortgage, and need to pay off the two judgments (hopefully at the judgment amounts of $1000 and $1200 and not with court allowed interest added). I have contacted several numbers for Cap One, and kept getting transferred to other reps in other depts. final told me to call a toll-free number for a national network of attorneys who work for Cap One, but the number they gave me was defunct. How can I reach someone with authority to negotiate and accept payment from me? Also, my credit report shows both the charge offs of the two accounts as well as the two public records of the associated judgments. When I pay the judgment, will the CO and the judgments both be updated? Thank you for your kind advice.
Once the judgments are paid they can be updated to show as satisfied on your credit reports. The Capital One charge offs on your credit reports are going to still show up, but they will be resolved too.
When were these judgments entered in the court?
Who was the collection attorney working for Capital One on each account?
Update: called the collection attorneys for the two judgments, Blatt Hassenmiller. They claim only one judgment and would not negotiate, so will pay in full. They have no record of second judgment, say that account was sent back to Capital One … But Cap One already told me both went to judgment and I have copies of court records for both showing Blatt Hassenmiller as attorney for each. Now what? The judgments are from 2011 and 2012. What do I do about handling this second judgment when no one claims to hold it? How do I get it off my credit report or marked as satisfied? Again, I’m willing to pay it. Thank you for your guidance!
It is unlikely you will get either of the Capital One Judgments off of your credit reports. But getting both of them to show as satisfied and paid will open up your home loan opportunities all the same.
You can pay the second judgment off to the court directly. You will want to do this in a fashion that results in the quickest update to the court record. Talk to the court clerk about how you can accomplish that on Monday. If need be, hire a local attorney to make sure all of this is done correctly.
I have 2 capital one accounts which have not been paid since September because my husband is laid off. The balances are $1790 and $560. We just reviewed a small tax return and want to pay these off but can’t afford all of it. I called 2x and asked if they would settle for $1500 total and they both replied we don’t settle accounts, which I don’t think is true. What can I do?
At this stage you may be considered about 5 months late. If that is accurate, you have another month before Capital One would typically charge off your account and send it out to third parties for collection. Try negotiate anew a week or two before they see you as 180 days late. You may also find that your accounts are just not going to get settled directly with the bank, but can be with a debt collector.
Do the balances owed consist of balance transfers, cash advances, or are largely made up of charges that were made in the few months leading up to payments on the cards stopping?
Capital One charged off two of my accounts in 2008. They have sent the IRS and me a 1099-C indicating the debt was cancelled in 2014 and I must include the amount they are reporting as cancelled as income. I called the disputes department advising them they should have reported it in 2008 not 2014 and they are refusing to correct their mistake. I even quoted the Internal Revenue Code section 166. I am going to send my request to them and writing (certified mail) stating to correct the mistake within 4 weeks. I am going to file a Form 8275 with my taxes explaining their error if they still refuse to cancel the 1099-C
Anyone else having this issue with Capital One?
Capital one recently charged off my account in jan. of 2015 and “sold” my account to portfolio recovery llc. I contacted this collection agency and paid off my balance in one payment. I am in the process of getting a home and my lender tried to get my credit rescored after I had paid off this balance. The payment confirmation from portfolio recovery was rejected because it did not come from creditor (capital one). When I contact Capital one they refuse to talk to me let alone help me. I am not trying to remove the account I want the balance updated. Portfolio recovery says they will update to the credit bureaus in 4 to 5 days but they are not even listed on my credit report presently. So presently my credit report is showing an outstanding balance being reported by capital one that i have already paid to the collection agency they told me were servicing my account, and I can not move ahead with my loan until i get my credit rescored which I cant do without a letter from capital one. What can I do? When portfolio recovery updates to credit bureau will my balance change to paid?
If Capital One sold the account, it means they have no legal right to it, and should also update their credit reporting to show a zero balance owed to them, as legally, nothing is owed to them.
It looks to me like you caught all of this mid stream, and you need a week or three to let the credit reports update.
If you want to be very proactive, file a credit reporting complaint with the CFPB against Capital One. You want to provide the same detail you did above about this specific account, but probably want to be more detailed with dates and times, names of people you spoke to, etc.
You can file the complaint here: https://www.consumerfinance.gov/complaint/
Hi Michael,
I opened a CapOne acct in 2008 and in 2009 was laid off and could no longer afford the payments. My credit limit was only $1500. Now that I am older I realize that I should have paid attention to the fact that I was paying for some sort of protection plan in the event that I lost my job but in the thick of things at the time it didn’t cross my mind. I stopped paying them and my balance is now $2118 according to my credit report. They recently sold the debt to Calvary Portfolio who is now also reporting the $2118 debt on my report. So I not only have a balance with CapOne I now have one with Calvary as well. I am unsure of what to do about the debt at this point and if paying it would even make a difference for my credit score. I believe I stopped making payments at some point in 2009, but I really don’t recall. I would like to get a mortgage this year and don’t want to find myself in a corner because of this debt. So my question is do I pay or not? Thanks for the advice.
Is Capital One still reporting a balance owed to them on your credit reports? Now that your debt has been sold to Calvary Portfolio, Capital One should show a zero balance owed then, as they no longer have a legal right to collect anything.
From what you shared, Capital One and Calvary Portfolio will fall off your credit reports sometime next year, or in the early part of 2017. If you are looking for a mortgage before these fall off your credit, it is likely that the unresolved debt would hold up loan approval.
What state are you in? If the SOL for Calvary to sue is passed in your state, you will sometimes find you have an easier time with negotiating an affordable settlement.
Are you able to fund a settlement you negotiate right now, or do you need time to pull together the money? If you do need time, how much?
Thanks for the quick reply. I live in TX and unlike many others on this forum I do not have a judgement against me so I assume the SOL has passed for Calvary to take those steps. It does appear that the balance of the CapOne accounts on all of my reports now reflects $0. I can fund a settlement, but didn’t want to do so if it will not be advantageous. What is the appropriate percent to request to settle?
Call Cavalry and start with an offer to settle for 20-ish percent. Be ready to go up a bit if need be. It is okay if this takes several calls to get a deal done. Go as high as you can afford to pay, and want to.
Use some of the negotiation tips and settlement timing cues I cover on the site.
I would try to have this settled within several months of starting to work with a mortgage broker or loan officer. Do you know what your credit scores are now?
I should have added that the SOL to sue in Texas is 4 years. That means the collectors on this account have no teeth, just bark. Do not let on anything about your credit reports or home loan goals. You wanting to get something done, more than them wanting to accept some form of settlement, gives them too much information in your situation.
My score is at 638 right now and I only have this negative and 1 other which is only $650 so I offered a settlement on that one. I will see what they are willing to take and hope they will list the balance at $0 after the settlement is agreed upon. Is there something specific I should look for in the agreement to ensure I am covered?
Read over the last two critical reports about settlement letters and taxes on settled debt.
Calvary will generally do okay with updating your credit reports to show that you no longer owe anything, once you pay the settlement you negotiate. They have to only report accurate and current information. Give it 6 or so weeks after the fact, and check your reports. If they did not update, post about that here and I can help you from there.
Thanks Michael!
Why would u remove my question on the 1099c
I moved the comment to the post about 1099c’s on forgiven debt. I did refer to this article in my most recent comment reply to you over on that page.
My father recently passed away and my 83 yr old mother is now living on Soc Security income of about $1300 a month. My brother and I are helping her get control of her finances. She did get a little money from dad’s life insurance and will draw on that to help pay for home health care until she has none left. She has a Cap 1 credit card balance of about $8000 dollars. She has not made a payment in about 45 days. We called Capital One today to try to work out a reduced debt payoff. She can probably use about $4000 of my dads life insurance money to pay off the bill. They said no way – we wouldn’t be able to pay less that the $8000. We don’t know what to do? Don’t make payments for a few months and the call back and try again? She does own her home ( has a reverse mortgage) but doesn’t have anymore assets. Any advice? Thanks!
Your settlement effort with Capital One is way too early. You can wait another 3 to 4 months and try again. Keep that 4k powder dry until then. Post an update when you next call Cap One to negotiate, or if you hear from third party debt collectors.
Hello,
In 2010, I disputed a late fee charge on my Capital One bill. I did not know then what I know now. I continued to pay my Capital One card, including the fee. Capital One reported this dispute to the credit bureaus. This week, I paid off this Capital One card in a lump sum, it was not a charge off.
I am applying for a home loan, and cannot get approved with the dispute on my credit report. When I called Capital One, they would not provide any dispute resolution information as they did not have it on record. When I inquired about this, as it is their company, etc., I was told that 2010 is too late and I would have to write in. I have approximately 3 weeks to remedy this issue and don’t know where to start. Of course, it’s a secret who I would contact other than unhelpful customer support guy I just spoke with.
Help? If I can’t get this dispute, which is now a card with a zero balance (closed) off of my credit, I cannot get approved.
Thanks!
Who is your lender, or mortgage broker?
Hi Michael,
Thank you for such an informative site to help people through difficult times.
I have a Capital One card at $20,000 and a Discover card at $15,000. I have had both for about 10-12 years. For the past 5-7 years, I have only been able to make minimum payments. The Cap 1 card was not paid for November 2014, but the Discover was. When the banks were in trouble they arbitrarily raised my rates quite high, although my credit was very good.
I have pretty much been unemployed for 5 of the last 7 years (film industry where I earned $10,000 a month, hence the limits allowed) and have just now depleted all the money I had in an IRA that I’ve been using to pay bills over the years. Because of those withdrawals, with taxes and penalties, I owe the IRS $18,000. I started paying $400 installments in November.
Because work was so dismal, I elected to take early retirement at 55, starting in December, I will only receive $2100 a month. I know I can’t swing these payments, and would love to settle these two cards (only ones I have) In Feb/March, I will have a retirement type IRA available with $175,000 that I can access. (with even more taxes and penalties)
I don’t want to file bankruptcy, and would love to get rid of these. I want to sell my house and move out of the country within a year and don’t want these over my head.
Reading your site, should I let them get passed due 5-6 months (I can’t pay them anyway) and try to settle? Should I do all negotiations over the phone? What is a realistic starting point on my end. I would love 40-50% and could withdraw the money immediately to pay them. I have no car payment and intend to sell it, and my mortgage is being re-worked and will be about $1000 (1st and an equity line).
The IRA is my only source for this cash. Should I tell them that?
Thank You so much for taking the time to help me.
Jeff
Your best opportunity for settling with these two creditors is typically going to be between 150 and 180 days late. So… missing your credit card payments for the next several months is both baked in the cake, and a necessity to get to where you will be able to negotiate settlements.
I highly recommend doing all negotiations over the phone, and relying on things in writing to finalize the agreements you negotiate.
Both of your creditors do not rank high on how low they settle. You can see how I review them, and the realistic expectations I suggest people have here: https://consumerrecoverynetwork.com/review-top-7-credit-card-lenders-best-offering-debt-relief/.
40% settlements with Capital One are not common at all. I see those too seldom to suggest them as targets to hold out for. And the same goes for Discover.
I would never discuss that the lump sum money to settle was coming from an IRA. I would simply say “I have been out of work for years. I ran out of savings, and simply could no longer afford to pay my cards. I have one single resource that is, thankfully, available to help me fund a pay off, but only if it puts the account to an end. I cannot hit them up every month for payments”… or something along those lines.
You are welcome to post here and on the other pages for feedback along the way.
I received notice yesterday that I am being sued by Capital One for almost $1,900. I know I need to respond in written form to my local court. What do I need to put in that response? I don’t think I have made a payment on this account in several years. According to the paperwork it was charged off in December of 2013. I tried to come to an agreement with Capital One back when we started having financial troubles but the payments they wanted were way too high for us to agree to. So I ended up doing what I should not have and ignored letters and phone calls to now be sued. I would like to pay them back. But can only do so much a month. We might could do $50 a month to get it paid off. But more than that would be absolutely be a stretch. Several years ago I was able to settle an account with discover and have been making payments on it of $46 a month for several years now. I was disappointed when Capital One would not work with me.
Each bank will handle account resolution differently. Capital One has its flaws… they all do.
I do not thing the collection attorney for Capital One is likely to accept 50 dollars a month at this point. But they may once you get involved in the court process. They may have little choice, depending on your state, your exemptions from garnishment and bank levy, etc.
What state do you live in?
What shot do you have a pulling half the amount of the lawsuit together over, say the next 6 months?
Hi Michael:
In 2010 we settled our charged off account with cap 1 with a poa through through their attorneys hunt & Enrique’s. We have proof from the servicing company that all payments were made and on time. We are in the process of buying a home and the credit report we received shows nothing completed. We have been monitoring our credit reports for quite some time and it has never shown up before.
I called cap 1 and was told that they have our last payment as returned nsf. In the same phone conversation, she stated that they had sent the irs a 1099 for that year for over 10,000. I am sending everyone, including cap 1, attorneys and all 3 credit reporting agencies copies of our documentation showing paid as agreed which includes banking information certified return receipt with a letter to at least get the settled in collections. Is there anything else you would recommend?
Thank you
If the payment Capital One is saying was NSF, is something your bank records show as being paid on time and not returned, I would include filing a debt collection complaint with the CFPB. I am finding that debt collectors, and banks like Capital One with issues like yours, take resolving them much more seriously when the right people in their organizations are getting this stuff put on their desk, which is more likely to happen when they hear about it from the CFPB.
I have recently gone through a hardship with being diagnosed with a pancreatic tumor and losing my second job ($1000.) I have 3 unsecured debts: 1-discover personal loan $11k, citi $11k, and capital one $10k. After explaining my situation to discover and citi, I have been set up on programs to pay off my debt. Capital one, however, will not offer any help or programs. I’ve called several times over the last 3 months-not paying any amt on account, but they will not help at all. I can afford to pay them $200 a month but this does not meet my min payment obligations and my apr is at 19% now. Should I pay $200 even though my min payment is $368 and I owe over $1k right now? Or do I just continue to not pay and hope they will eventually offer a program or settlement?
Can you pull together roughly 5k to settle with Capital One within the next 3 months? If not, how much longer than that will it take?
Sending Capital One a payment for less than the minimum required will not prevent your account from hitting their collection pipe line in a few more months (where your goal at that point would be to settle for less). If it were my debt, and that is how things were going to progress, I would not waste the 600 dollars (3 months of 200 dollar payments), as that is money that could go toward my settlement.
Will Capital One relent and set you up with a hardship type repayment plan like your other credit cards? It is still possible. Have you connected with a credit counseling agency about getting the same thing accomplished? The national average payment with counseling on debts like this is 2.1% of the balance. That puts you real close to the 200 a month you are trying to get CapOne to accept.
I am not 100% positive that I can get the 5k in the next 3 months, but I do feel pretty positive that I can.
I haven’t connected with a credit counseling agency. I have just been trying to talk to my creditors on my own and explain my situation. So far, everyone has been extremely helpful and has been willing to work with me with not hesitation, but I had to miss a payment on the accounts first. Capital One is the only one that is not willing to help me at this point.
Do you recommend a particular credit counseling agency? Also, will they work with me just on the capital one account, since I have already set up and agreed to payment plan programs with the other two debts.
I am not sure if Capital One will accept a DMP proposal from a credit counseling agency if your other accounts are not part of the same repayment plan. Each creditor has there own policies for these plans, and they do adjust them, and even make exceptions. While Capital One is not as flexible with some of their collection and recovery policies, they are, last I knew, one of the best larger credit card banks for allowable discretionary income when your accounts are part of a credit counseling program.
There are many credit counseling agencies that can help you look into this further. You can reach one at 800-939-8357, and press option 1.
If you are going to be able to pull together half of the balance owed quickly, I like settlement too. Whether you can settle direct with Capital One right before charge off, or end up settling with the first collection agency to get the account, in say 4 to 5 more months, keep your money at the ready. If settlement is where this heads, take some time to read the last few critical reports I have listed here: https://consumerrecoverynetwork.com/debt-relief-program-reports/
I wanted to give an update on my post. After 6 months of calling and trying to get some type of help, I didn’t get any until the account was charged off. Within days of the charge off, capital one called and offered me a settlement of roughly $5,000. I was able to pay a lump sum of $3,000 and am now continuing to pay $150. monthly until the remaining $2,000. is paid in full.
Nice work Jennifer! Be sure to make all of those monthly payments on time. Was your deal negotiated directly with Capital One, or were you called by an outside collection agency?
It was directly with Capital One. I’ve set-up automatic monthly drafts with them to ensure payments are made on time. Thanks for your help and advice; it was greatly appreciated.
Thank you for the information. That is helpful. Yes I can keep it up as I had been doing. But when I went this summer to get a new car, my credit report showed that it had been charged off and I was told by the finance person at the dealership that based on that, I was silly for paying them any longer. I guess I was just silly for listening to advise from someone that really has no clue. I do not have other accounts in collections but I do have another card that I have been paying for about the same amount of time and continue to pay monthly. ($7,500 remaining). That account is closed but has not been listed as a charge off. The credit reporting hurts though because I have a negative credit since there is no available credit on the card. In addition I was imposed a $24,000 IRS tax and penalty a couple of years ago for errors I made (my fault) on my 2009 tax return while going through a divorce. I was able to establish a payment plan with them. ($11,500 remaining). So total is around $29,000 on these 3 items and I have been paying on them for a good 3-4 years and knocked about half of it off so far.
So I guess my bottom line question remains. Do you think I can get back in good graces with Capital One AND eliminate the hassles I’m beginning to get from First Source by reinstituting the $250 per month to them? I do (did) it on line by the end of each month.
Thanks for your insight Michael!
How much is it that you owe on Capital One debts total? Is First Source collecting on all accounts if more than one?
Yes, you can set up payments with First Source. But they are going to try to set them up so that you are paying more than you were before. You will have to stick to your guns if that is all you can pay.
I know you mentioned in an earlier post that you have no shot of offering a lump sum settlement, but I cannot help but point out that First Source is authorized to settle with you, and for perhaps half of what you owe CapOne.
Michael:
I accumulated debt with Capital One that was quite extensive and have been paying monthly since 2010 an amount of $250. However, the debt remains at $10k and I have found it difficult to make the monthly payments. My last one was May 2014. I am now receiving phone calls from a company called First Source Advantage trying to collect. They actually contacted me at work today, which I have no idea how they got this number. In any event, I am not sure what to do at this point. I thought that since Capital One had already “charged off” the debt some years ago, that maybe discontinuing payments would not be an issue. But I think I may have been wrong since I am starting to get calls from First Source. After reading through all of the above comments and responses, it sounds like I am going to be getting sued or something of that nature for the balance. Am I correct that this will most likely occur even though it is a charge off? Should I attempt to begin paying the $250 per month again or is it too late to do that to get First Source from bothering me? Like alot of people I have gone through some hard times financially and still face a few more years of recooping from it and in no way will I be able to pay a lump sum, whether it be through a possible judgement or settlement. I guess what I’m trying to figure out is if I should start the $250 up again or not.
Thanks.
Charge off is just an accounting principle that banks must follow when accounts go unpaid long enough. Your debt with Capital One remains as collectable after charge off as it was before that. And will stay that way until you pass the time limit set by state law for how long you can be legitimately sued.
Capital One does sue. And they are now selling more debt once again.
Before you look at starting up the 250 dollar payments again, is that affordable? Are you confident you can keep that up? And what about other bills? Do you have other accounts in collections,or that you continue trying to pay? If so, how much do those balances all add up to?
Hi Michael,
I have a charge off on my credit report from Capital One from 6/09. I have a docket # from when they sued me. I am trying to purchase a home and my mortgage company is stating that the only thing that is preventing me from purchasing a home is this charge off for $3,191. My credit score is a 613 and I have no other delinquencies. What do you suggest I do? I have no documentation of this ever going to court. Thanks for your help.
Do you have any hard dates set with a transaction for a home? If so, when?
Michael I have 2 charged off accounts with Capital One that are both 1 year out from their SOL’s expiring and both will fall off my CR’s in 4 years which are $1687.40 and $1317.36. A month ago Northland Group on the behalf of Capital One presented me an offer by mail to settle for 45% of the $1317.36 so I figured I could probably get the same deal for the $1687.40 since they were handling that account as well. A couple of weeks ago while looking at my CR’s I noticed the account for $1687.40 had a zero balance and figured they had sold the account to a debt buyer so I put in disputes to force them to update reports with the name of the DB which they did and it is MCM. I did this I would know in advance who I would be dealing with. So I finally received a letter from MCM yesterday stating the typical info about them acquiring the debt from Capital One. Initially I was prepared to pay both debts with Northland understanding that my CR’s would be updated to reflect being paid and would of course still be on my CR’s for the next 4 years since I knew getting a PFD from Capital One would be next to impossible even if I offered to pay the amounts in full. But now that the debt has been sold I think I might have a better chance of negotiating a PFD with MCM since they outright own the debt. My questions to you are:
1) Although an MCM collection account isn’t listed on my CR’s is this something that they can legally do.
2) If I am able to negotiate a PFD with MCM, since they own the debt are they able to have the CapOne trade line deleted or would the deletion only apply if they had their own account listed on my CR.
As always Michael thank you for dedicating your time to answering my questions and all the info you have provided on your site. It is very much appreciated!!!!
Midland Credit does currently offer to not report the newly purchased debts as collection accounts at all if you resolve debt with them soon after they obtain your account. This is obviously a huge benefit. You can call them and see if that applies to your situation. This is not a pay for delete. There will be nothing from Midland to delete, as you acted quickly enough.
Midland Credit, nor anyone other collection agency CapOne sells to, or works with, can cause Capital One to delete anything from your credit reports. In fact, due to the fact that Capital One sold your account to Midland Credit (who you can prevent from showing on your credit at all), your credit report will be better off than if you settled for less than the balance owed directly with Capital One. And that is because Capital One credit reporting, when you settle debts they still own, will often still report the remaining balances owed, in the same manner as the original article above points out.
Thanks for the response Michael. So if I act in time to prevent MCM from appearing on my CR’s then is it safe to assume that Midland will be responsible for updating the Capital One account to reflect it’s paid status. What are your thoughts on what language I should ask them to use to update the account with?
Your Capital One account will likely show a charged off and zero balance owed status until the account ages off your credit reports. You cannot realistically expect much better than that based on today’s credit reporting realities. All things considered, if you resolve outstanding debts, continue to pay current accounts reporting on time, all the time, and make smart rebuilding decisions, the Capital One late pays will not hurt all that much 12 and more months from now. But do try to prevent other collections from showing if you have the budget bandwidth to do it.
Understood, thanks. Now that I’m dealing with a CA and not the OC what do you suggest for the minimum and maximum I should offer on payment of the balance?
Generally I would target between 40% and 50% settlements with MCM. It will also depend on how collectable you look to them. The larger the collection agency, or debt buying company (and Midland is quite large), the more sophisticated collection tools they will use. Settlement percentages are a moving target based on each persons details. There could be 10, to more than 100 factoring data points used, all the way down to the affluence of your zip code perhaps.
When it comes to negotiating settlement amounts, the more you look like someone in financial hardship the better
Thanks Michael.
Hello Michael,
I hope you can help me. I currently owe Capital One $852 on an original amount of $500. My last payment was made on 8/2011. Capital one is still reporting it on all my credit agencies, however I have received letters from ARS National Services Inc since last year (one of which offering a settlement for 55% back in May of this year). ARS does not appear anywhere on my credit report.
I finally have mustered up the courage and finances to tackle this on. I sent a debt verification letter to ARS and received a letter back from Capital One verifying that I was the owner, when they received the application, when it was opened, date of last payment etc. There are three boxes below that and one is marked stating the following:
“We have placed a disagreement code with a resolution of dispute on your credit file to the major credit reporting agencies”
It does not mention ARS at all in the letter from Capital One but I sent the debt verification to ARS. I want to find a resolution to this; my questions are as follow;
1. What is my best option to go about this?
2. If a settlement is the best option is there a sample letter you may share that has correct verbiage?
3. Should I even address ARS anymore or deal with Cap 1 directly?
4. Why is Cap one still reporting still reporting to credit beaureus (last date 8/3/14) if it is a charge off ?
5. How does SOL work regarding dates provided, I reside in Florida? Would this apply since they are reporting to my credit bureaus
I have read on previous posts here as you mentioned that PFD’s are becoming an urban legend and that cap 1 is tough to work with. In all honesty I just want to find a resolution and put this all behind me. I appreciate you taking the time to read this and help me. Thank you again.
ARS National Services is likely collecting on behalf of Capital One based on contingency. When an account is placed with a debt collector, like your is,you typically have to deal with the debt collector to reach your goal of resolving the account.
Your best option at this point will depend on what your goals are. Settlement is one option. Ideally you would want to have all the money to pay the amount you negotiate in a single payment. With the prior ARS offer, you know you can target roughly 50% of today’s balance in your negotiations (that is on target with what I would shoot for based on today’s trends with Capital One settlements).
I do not recommend letters be used to negotiate. They are often ineffective, and have had an unfortunate back firing affect with many creditors for years now. I would encourage you call ARS to negotiate a deal, and get them to document the agreement on their letterhead. Get that written deal in your hands prior to payment.
Some resources for you:
Negotiating with debt collectors.
Getting your settlements documented.
Capital One will continue to show on your credit reports for as much as 7.5 years from the date you stopped paying them. That is perfectly normal, and charge off does not change much of anything about your debt. It does tend to be when creditors subject your account to different collection policies though. Here is more about charge off: https://consumerrecoverynetwork.com/charge-off-and-credit-card-debt-what-it-means-to-you/.
If you want to put this behind you, and can afford to pay half of the amount owed, I would encourage you to review the links above, and negotiate a settlement with ARS. Your letters may have triggered some things related to how your account will be handled, so post about any thing odd.
Michael,
Thank you for your speedy response, links and your time, an I will most definitely keep the board updated. Yes i can afford to pay at least half of that won’t be a problem. I do have a few follow up questions.
Should I contact ARS even though Capital One responded to the debt validation? Or should I contact Cap 1 directly on the phone number provided on the letter?
Although Cap 1 can show up to 7.5 years- is it normal for them to report monthly to my credit bureaus as a C/O even though it’s already charged off?
If you recommend I contact ARS instead of Cap 1- the last letter they sent me for the 55 % settlement amount was in May of this year. Also the verbiage that was used from ARS in the May letter states “Upon receipt of cleared funds, ARS and our client will consider this account either paid in full or settled based on the options chose”
Given your original post on this page about verbiage used from creditors once the dust has settled- What do you think is the best case scenario as far as how Capital One will comment on my Credit Bureaus once I have settled either directly with them or through ARS? How do you believe I can get that result. That is one of my biggest concerns.
On the assumption that I am dealing with ARS what verbiage should I require from them to show on my credit bureaus ? Do they even have control over that? On the assumption once again I am going through ARS once I call them to see if the 55 % settlement is still available, should I have them send me an updated letter with a current date?
I know I have a million questions, but again I appreciate your time, I just want to put this all behind me in the best way possible. Thanks again.
I would contact ARS directly to negotiate. They may tell you the account got yanked. I would then call Capital One to negotiate a deal, or learn where they placed the account now. Did your debt validation request also contain wording to the affect that they cease communicating with you?
If you mean Capital One is showing a fresh charge off each month, no, that is not normal.
The original offer verbiage is no longer in play. You need a new letter. They may never send one again, so you would instigate that with your call to negotiate the pay off.
Capital One should report the account settled, paid for less, or even just paid. That is not the problem with them though. The problem with Capital One credit reporting is that they will still report a balance owed after the settlement is completed, when everyone agrees no balance is owed. And this skews your DTI (debt to income) for other credit purposes, and is false reporting too. If this were to occur, post an update and I will have some action steps to suggest.
ARS is not showing on your credit reports now, and would have no control over how Capital One will show on your credit. And you will absolutely want an updated letter with a new date on it.
You can post as many questions as you like for additional feedback 🙂
Michael,
Thank you again. To answer your question, no there was not anything stating to cease communication on the debt validation letter, it actually gave a number at the bottom of the page to call them with any questions. (Capital One letter head). I would assume as recommended to still contact ARS rather than Cap 1 directly?
Regarding how they are reporting, on my CR it shows under “Date Reported” as 8/3/14 and the date updates with every month that goes by. Is it normal that the date reported date updates every month that goes by even though my DOFD is back in 2011?
Under comments it stated “Charged off account, Account closed by credit grantor”
Thank you for your continued help!
Best Regards,
Julio
Sorry Julio, I meant did your letter to them request they stop calling, or some other verbiage that could be interpreted as your requesting a limit to communications.
Yes, I do suggest contacting ARS first.
Date reported on your credit reports is a normal update item. The underlying data and status of your account is not changing per say, but their data base is throwing information to the credit bureaus monthly, and the bureaus catch that data (even though nothing may have changed), and loads that up with a new date.
Michael,
Update based on your advice! I know it has been some months since we spoke on here, but I did want to update you on the latest with ARS. I contacted them and settled for the amount of $468.79 from the original amount of $852.35. The experience was fairly straightforward, the young man who tended to me on the phone suggested that the full amount would look better so on so forth. I did request another letter to be sent to me with the amount of settlement. It did look like a refreshed version with logo but the verbiage was straightforward. It did say at the bottom “please do not response to this email” at the bottom of it so it leads me to believe it was some sort of template they sent with offer. I didn’t look to much into it and sent my payment recently for the agreed amount. They broke it into 6 payments of $78.13. I called before I sent the money order to confirm they did confirm money order and surprisingly the account had “changed representatives” and did confirm with the young lady that I had settled and that all looked okay. I did want to thank you for your advice back in September. While it almost 3 months later, I always believe in updating the forums. Because of people like you , the average people like us can be more confident that were not getting railroaded by these companies. Thank you again. Happy Holidays!
Awesome! I really do appreciate folks posting updates with how they resolved the situations that brought them to the site. It provides such encouragement for other folks still looking for answers, or trying to make decisions about the next step they will take to put a debt behind them.
All the best to you and yours too!
Michael,
I have received a Letter form Capital one today that my account is been charged off and and that I owe then 2,400 its till not showed as a charge off yet on my credit report i am sure it will soon. They are offerring to setlle the account for 1940.00. At this point do you think it will any difference if i pay in full or just take the setlement offer. If i take the offer will it show a balance or will it be 0. In your opinion what should you suggest to do. I am now in a position that i can pay the full amount. but if the charge off is going to affectme either way i think i should save some money and take the offer.
Thanks
If you can pay the amount you owe, and are concerned with Capital One continuing to report the remainder balance -after you settle – as still owed (even though, as the original article above points out, they agreed no more money is owed), I would pay the full amount.
If you need to save money on the settlement, as that extra money would put shoes on kids feet, and food in their bellies, save the money, get the deal completed and wait for the credit reports to be updated. If Capital One still reports a balance due when it is not, file complaints with the CFPB about the practice.
I had an account in February 0f 2004 with Capital One that was unfortunately charged off in June of 2010 and sold to Midland Funding LLC. I was able to work out a settlement and a pay for delete with Midland, but the Capital One entry is still on my credit reports showing a status of closed/ written off + $amt.
Is there any way to have this status updated or deleted? The debt has been paid in settlement and Midland has since deleted. However, the appearance of the status by Capital makes it appear as an unpaid debt. Capital One has been unforgiving of my past issue even though I have a new card with them now that has been opened since July 2011 and has never been late!
Your experience with Capital One continuing to show a balance owed on your credit reports after you settle with them is not isolated. It is, unfortunately, so common that I would not bother disputing this with the credit bureaus or with Capital One. File a credit reporting complaint with all of the dates and events and agreements etc., with the CFPB here: https://www.consumerfinance.gov/complaint/.
Please do post an update comment with how you progress.
Michael,
Earlier this year I wasn’t able to pay all my credit cards, my son passed away and I needed money for expenses. I stopped paying Capital One in Feb 14 since it has the highest balance (14K) and interest 15.9.
CapOne kept calling me and I have talked to them, waiting for them to offer me any kind of help, lower interest, hardship, something. I am so amazed that CapOne won’t work with me, even so I explained my circumstances, seems like they rather have you in collection than dealing with their customers. My account will be charged off if I don’t make a payment of $330 by this Friday. I realize they see my other cards and mortgage getting paid, eventually I will pay them all off. So, I am thinking of making this payment to keep it from charging off and hope they will work with me? Or let it go to collection and maybe they may offer me payment options or will they sue me right away? Thank you.
Can you afford roughly 300 dollars a month to Capital One while staying current with all other bills?
You will have options to settle with Capital One along the way, and would hopefully be able to do that before being sued (it is a higher risk with CapOne). But lets look at options to consolidate all of those credit cards and how affordable that looks for you, before looking at how long it will take for you to come up with 50% of your balance with Capital One.
What are the balances and interest rates on your other credit cards?