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.
I lost my job and my capital one account went on default, original balance a little over 12k.
I signed for their hardship program and have been paying for an average of 6-7 years, don’t t remember exactly. The balance is down to half, they collected every month.
Around a year ago they stopped reporting and the account is no longer in my credit bureaus and stopped collecting, i called and renewed the payment arrangements for one more year, always doing the right thing. A few months ago they stopped collecting again.
i called and they said that there is no more collecting, i have to call every month and pay voluntary wich i started doing again.
Why the voluntary status now?
In what kind of status is the account now?
I want to make sure this account doesn’t make it back to my bureaus.
They have treated me good so far.
Paying voluntary will revive the debt?
What it means the voluntary status?
The balance is down to half.
This is an odd situation Jose.
For how long had you stopped paying Capital One before you got on the hardship plan?
What to do if capital one has filed a lawsuit already but I do not want to file bankruptcy?
How much is Capital One suing for?
When did you get the court papers?
What law firm is handling the suit for Capital One?
How much total debt do you have?
I have a capital one credit card and in 2014 I got a letter from the collection agency saying that I qualified for hardship and no further collection attempts will be made capital one is reporting to the credit bureau as a debt not paid.
If your goal is to improve your credit you will want to consider negotiating a settlement. If you want assistance with this you can click the get debt help tab in the upper right corner and complete the prompts to submit for help.
Hi Michael, I received a post card from capital one with a court date.
This was an original debt I thought was written off years ago. I have a serious disability and thought the agency that first handled this got rid of it. I went to the courthouse last week to pick up the papers for the original debt amount, but it is in archives and will take two weeks to get them. This brings things very close to the court date. I’m not sure if I should call Cap one directly?
It was good to speak with you yesterday Jon. Let me know what you learn when you get the court research back.
Hello Michael, I opened up an account with Capital One last year with a credit line of only $300 and i used the credit card up and never paid it back up until now because i am more financially stable now i called and spoke with a representative and she told me that my balance is only $451 to pay it off but my account is closed that I would have to reapply again but there is no garantee that i will be approved again. Is that true how does this process work please let me know
Capital One is known for offering account to people again after you resolve collection accounts. I would wait a few months before applying after I settle with them. You can also look at rebuilding credit using secured cards.
Michael, I , like thousands of others, lost a good job in 2008 and the rest is history, as I am now a senior citizen with a poor credit rating. I have three Capitol One credit cards with a total owed of approximately $2000-$2500, which doesn’t seem a lot compared to many people. I work part time and with SS benefits, I want to pay off what I owe them. In the last 1 1/2 years, I have received collection letters from at least 5 collection companies; they change every few months. I tried to contact our NC Capital One Office and they said I had to deal with collection agency. What to do? Should I pay off compete balances or try to settle with them for amount owed less all the interest charges. The total of interest on three cards is almost $500. Will it make a difference on my credit? Thanks for your kind help. Any advice will be appreciated. Thank you. M Frye
It it were me I would work out the lowest settlement possible with the debt collectors (be sure to get everything in writing before you pay).
With accounts this old it does not really matter if you pay in full or settle for less. You want the zero balance reporting in order to start improving your credit, and you get that either way.
I had my wages attached by Capital One back in 2014. I paid of the total judgements through the courts. However when applying for a home loan found it was still on my credit report to his day. How do I get it removed ?
As it stands today, judgments have to age off your credit. You cannot go to Capital One or the court and get it off your credit. But you can still get a home loan with a paid judgment on your credit reports.
Hello Michael,
I have to say your information is very informative. I just want to see on your opinion. I have 4 Capital One cards: 1: 90 days past due and 3 : 180 past due with a total balance 37,484.48 closed by them. I lost my job 1 year ago, and fell behind Payments 6 months ago. I called them advise of my hardship after the first 30 days, but offer to reduce payments only. I was thinking of settleing the accounts before charge off on my own or go through national debt relief or what after it get charged off and then settle. What do you think would be the right path?
Settling with Capital One quickly right before, or after charge off, is ideal. Can you pull together the money to fund 40% settlement deals all at once?
I am a big fan of DIY debt settlement. If you want help fill in the Talk to Michael form in the right column. When I see that I will email you to set up a free phone consult.
Is it an abusive practice by Capital One keeps raising the limit on an elderly person who knew that her income was only 1.2K a month? This elder previously had THREE CARDS with this same company but the debt she ran up was cleared out in bankruptcy. Now I feel that they are setting her up again because a year after clearing the debt she applied for another card and they gave her a $2K limit. The interest is over 22% and she pays the minimum balance which is getting her nowhere. They have raised her limit from $2K to $5K in about three years and she is on disability getting about $1.2K per month.
I have not seen a case or regulatory action that would suggest offering people credit is an abusive practice.
That is kind of like saying the grocery store is involved in abusive practices for stocking candy bars. The bars are there, but you do not have to buy them. Similarly, the credit is there, but you do not have to use all of it.
In December of 2015, I called Capital One to place a hold on my credit card. they failed to do this, Fraudulent charges were placed on my card from January through April. On each and every statement which only contained fraud charges I called or wrote a letter to them to say the charges were not mine and fraud. Even after i notified them, they STILL allowed charges on my card. This happened for a period of 3 to 4 billing cycles, After 2 letters and 3 phone calls I become totally disgusted with them and sent back or threw away any correspondence from them. Now they have hired a collection agency to collect the money that I SUPPOSEDLY owe. They claim the amount is about $360 but will.settle for $305. NONE of these charges are mine! It would seem they ignored my calls and letters and allowed more fraudulent charges to continue with subsequent interest and late fees. I wrote a letter to the ceo of Capital One to see if he would do anything in this regards. I can”t believe the incompetence of these people. Have heard nothing back. Now they are calling this a charge off and trying to destroy my credit I have no other outstanding debts that I have not paid or am behind on. Can’t believe these guys!!!
I would file a complaint against Capital One with the CFPB.
will do !!!!
thank you for your website
should I respond to Northland Group 30 day letter or let CFPB handle it. CFPB has 3 addresses. Which one should I use
Click the link in my comment to you and follow the information about how to file a complaint with the CFPB on their website.
The CFPB is a letdown. They don’t help you all they do is get the company to reply. The reply can admit wrong doing and the CFPB does not do anything about it. Everyone in the financial community will pass the buck and have no accountability.
Hi Michael, great blog, thanks for posting all these Q & A. I have a charge off with Capital One. Last payment was in 2013. They continue to report the debt to Equifax. I am considering contacting them to pay the debt but am concerned after reading so many negative experiences on your blog. They report the debt annually to keep it current on my credit file. My question is what is the start date from which 7 years is calculated for the removal of the report due to the statute of limitations? If the date is close to the 2013 time when I made my last payment, will that date change to a more current date if I contact them now? They are mean hombres and I have zero trust that they will do the right thing if I do the right thing by paying them. I look forward to your answer and any advice you can give me.
Check out this post about when negative information drops off your credit.
It is the date you stopped paying, and contacting Capital One will not change that at all. Even paying or settling with them will not change the drop off date.
Hi i just recieved à served letter from thé sheriffs office that à new York law firm is suing me on behalf of capital one bank for 4500 . What documents do they need in order To win this jugement and does capital one provide documents To debt collector in order To win jugements? I would like To see proof this is mine and i infact made thèse pourchasse- thank you for your help. Do you know what my next Step is. I have 10days.
Do you have reason to suspect the debt is not yours, or the charges or the result of fraud?
If not, Capital One has all they need to prove their claims. And they regularly take collection cases to the mat. Even for as little as $500.
Let me know the situation with your account, and what your goals are, and I can offer more specific feedback.
Just recieved a letter from Suttell, Hammer for a capital one credit card debt. Gives me 14 days to respond. Balance shows $1882, willing to settle for $1300 in two payments or monthly payments. I have other debts and cannot afford this. I got into financial trouble when lost my job but am now working, but not making enough to pay extra. Am worried about being taken to court.
Is the Suttel and Hammer letter notice of suit, or contact them in order to resolve the debt?
If not yet sued, calling to negotiate the settlement with the realistic expectations you have is good. If suit has already been filed I would defend it in order to get the best outcome.
It is the first I have heard from them and it says we have 14 days from the date of the letter to reply with what repayment program we will do. Is it realistic to think we can offer them a settlement of lower than what they ask? ( like maybe $500 at the most?)
Thanks
At this stage you will have to battle to get 50% off.
I have a judgement against me from an old 2008 account with Capital One for 3K plus. The lawyers who recently surfaced are trying to garnish my wages. I have never made much money but I have a fair credit report because I am working hard to reduce my current debt (including 2 new cards with Capital One!). I am 64, working a seasonal job and in HUD housing. I would like to request that they forgive this old debt so I can remain current on my new debt,
They will not forgive a judgment debt. Check out my video about garnishment and bank levy.
I have a debt with capitol one for 5 years i only owe 250 they charge me 1600 for interest im looking for an apt wirh a credit score of 570 by paying this off will it help. Me this is the only debt on my report that im aware of i need to get my credit reports. The only other thinhs that could be on there are standards bills with slow payments tjat have been paid off i just opened a daniels account paying on time
Settling or paying the account with Capital One should result in an update to your credit reports. Read more about how to improve your situation with renting an apartment with still poor credit.
Have you been paying Capital One directly, or a debt collection agency working for Capital One?
Hi Michael. I missed ONE payment and was 38 days late. I called today to see if I could avoid that from going to the credit bureaus and they said “no”. I did not make the payment to see if there is a way to negotiate. I don’t have any missed payments on this or other accounts. Any ideas?
Thank you
What is it you want to negotiate, and with which bank?
i had a judgement 2010 from capital one . i filed bk in 2012 . i am closing escrow selling my property but now have a lien for $1999 ., would i owe this if i filed bk already? the strange part is when i originally closed escrow to buy in 2014 none of this came up ? why now ? i contacted capital one all they direct me to is a fax number i have yet to get a response ? i want to clear this up if i have to pay or not .suggestion?
Was the judgment listed in your bankruptcy petition? If you do not readily know talk to the attorney office that helped you. Let me know and I can offer more feedback from there.
We have two capital one credit cards that have been charged off for a few years. Capital one still holds the debt it has never been sold. They are reporting every month with a late payment. Is this allowed? We are now up to 27 late payments of +120 days.
Thanks!
I am not sure what you have going on with your credit. Before we look at that, what is it you are looking to accomplish? What are your goals for resolving the debts with Capital One?
I am trying to settle some old judgments from 2010. I have not been able to find the proper number or address for capital one to contact them. do you happen to have any of this info? any help would be appreciated.
You should be able to contact Capital One directly at 877-383-4802 and provide them personal identifiers for them to locate who they have your account with for collection, or who they may have sold the debt to.
Do you know the name of the law firm that sued you?
No I don’t. I thought maybe my credit report would list it but it only says capital one. I will try that number, thanks.
Hi
my english is low please read carefuly
I open up 2006 credit card $500. years later go outside country 2014
after that miss payment cause Charged off
I came back I check up credit report I found it….
so I call them last week they transfer collection
I apology for the miss payment and ask them how to fix the problem..
the lady I talk don’t want to talk , and hear wants to asap hangoff the phone
I try to say something she cut off
keep said no Negotiation ,settlement, reduce , nor after full payment Delete Agreement
credit report she keep said there is only one way full payment right away
right now it goes $ 628 what should I do ? can you advice to me the best way
Capital One is tough to handle on some accounts. The debt collection agencies they use can be tough on small balance accounts like this too.
You never had a shot at paying for a credit report deletion.
You may want to try calling back and offering a couple hundred-ish less a few times and see if they take you up on it. You have to explain your inability to pay more. Make sure you get the deal in writing before you pay.