Settling Collection Debts- I need some advice please

[darthspud]

I need some help/ advice.. There are 3 bills that I am paying through debt collectors and have been making my timely monthly payments. In May I will be getting about 4k that will be put towards those 3 bills. What I would like to be able to do is try and settle it for less then I owe. When I started paying off one of them the gentleman that I've been dealing with said that after a few months of on time payments that I could call back and try to settle it for less then owed. Has any one done this? How did you do it? Did you tell them how much you can/want to pay. For example: I owe capital one 911.62 I would like to settle it for about 70% of that which is about $630. Do I tell them that that is how much I am willing to pay in order to call it paid in full or do I let them set the amount? Who do you talk to just the regular CSR?

Is there anything else any one can think of? Thanks for any help you can give!!

 

[MandM-Mom]

Not sure if things are the same as they were 10-12 years ago, but right after college I settled a debt on an old credit card and I had to claim the difference as income the following year(rightfully so), just a little info on my experiences. I believe I was offered the settlement I didn't ask them, I had closed the card and did a payoff and thats when they offered it to me.

 

[dpmfloyd]

pay it in full if you can. i was in the same boat, and i settled for less than what was owed. it was nice because i didnt have to make payments, but - its noted on your credit report something like this, "previously in collections - paid off less than owed."

good luck! weigh your options carefully.

 

[tlh0726]

You need to ask your question(s) to the debt collector agency/service that you are using since different agency/services can/may handle things differently.

My friend who is using a service has everything handled through them. She tried calling the CC companies herself and they would not settle for less than what she owed. The service has settled 2 of her cards thus far. Once so much is in her account they will contact the CC and try to make a settlement. Say she owes 1000 and the cc company settles for 600, the service then will charge her a % (33 sticks in my mind) of the 400 that they saved her. She has not received a 1099 (or whatever other form) on the written off amounts. This is on top of the $65 a month she is already paying to a bank/institution to handle/hold her money.

 

[simba20]

I need some help/ advice.. There are 3 bills that I am paying through debt collectors and have been making my timely monthly payments. In May I will be getting about 4k that will be put towards those 3 bills. What I would like to be able to do is try and settle it for less then I owe. When I started paying off one of them the gentleman that I've been dealing with said that after a few months of on time payments that I could call back and try to settle it for less then owed. Has any one done this? How did you do it? Did you tell them how much you can/want to pay. For example: I owe capital one 911.62 I would like to settle it for about 70% of that which is about $630. Do I tell them that that is how much I am willing to pay in order to call it paid in full or do I let them set the amount? Who do you talk to just the regular CSR?

Is there anything else any one can think of? Thanks for any help you can give!!

I have settled a debt for less than the amount owed. My total was $10,000 (original debt of $5,000, plus attorney's fees, court costs, and interest drove the amount to be paid sky high). In the end, I settled it for around $6,000. In 2008, I learned that the judgment I was issued fell off my credit report.

 

[darthspud]

I'm not going thru a debt consolidation place. I tried that once and it ended up being a big waste of money. But on the other hand it made it harder to pay the bills month to month. All 3 of those bills were sold off to a debt collection agency who sent letters and phone calls until I was finally able to start paying them (change of jobs, living situation ect).. I think regardless it is already on my credit score and my score is horribly low anyways.. trying to settle would it make my score be less.. I don't plan on making any large purchases or even opening up a credit card for quite some time in the next 3-4 years I am going to save up to buy a house but that is really all I can see happening in the foreseeable future granted no one knows what the economy will look like in 3-4 years.. and all I can really have control of is the here and now.. and with me moving out of state I think id rather be completely debt free

 

[Planogirl]

How old are these collections?

 

[dd50]

Check out creditboards dot com.

 

[nowellsl]

How old are these collections?

If the OP is currently paying on them, the Statute of Limitations has been restarted. (If that's what you're thinking about )

 

[*pixie*dust*]

Those debts can stay on your credit report for 7-10 years. If you are considering a home purchase in the next 3-4 you would be better off paying the whole amount.

 

[moongirl]

I would negotiate a "pay for delete" payment. This is where you negotiate with the Collection agency or original creditor to pay your debt in return for them agreeing to "delete" this collection from your credit report. My best advice to you is to go over to the forums on myfico.com and start reading. There are lots of people over there with the same credit problems as you, as well as sample letters you can send, and the kind of expert advice you are looking for.

Pay-for-delete is much better than paying the debt in full (may say paid on credit report but still shows it was late/sent to collection). Paying in full is only slightly better than negotiating a settlement as far as your credit score is concerned. That will trash your credit score. If you even want to buy a car, you will need to have decent credit and these collections will seriously hamper your ability to have a decent credit score. Again, go to myfico.com forums and start learning about what to do! They will really help you there.

 

[ccgirl]

I would pay in full. The one time this happened to me, I did pay in full. Afterall, I was the one that charged that money; right? Would you want someone giving you only $700 if they really owed you $1000? In addition, things like this are what drives up interest rates on credit cards. Good luck with your debt, you are moving in the right direction - pay what you owe.

 

[Planogirl]

If the OP is currently paying on them, the Statute of Limitations has been restarted. (If that's what you're thinking about )

Actually, they can only stay on credit reports for 7 years from the date of first delinquency. That original date shouldn't ever change.

The OP should still pay them but how they're reported won't be important if they are about due to fall off anyway.

 

[cm8]

Hi!! I used to work in collections, and the one way to get some hook is to offer them a percentage off. The thing is most people don't realize that by the time they accept or contact the collections agency the SOL has already passed on the debt and there is nothing that could have been recovered in the first place.

They play on emotions and tell you that you will get a "good mark" on your credit score stating that the balance was collections- paid settlement amount of-------------- and then the account is still in negative status. If the SOL had already run out on the acct, then the Op has reset the clock meaning that he is now on the hook for the whole balance and they can proceed with collection activity to include seeking a judgment for the difference.


If it was already on your credit report and that was not a problem for you, (please don't flame me) I would not have given them one red cent, especially since they only paid a maximum of may $10 dollars for your collection account. The Original creditor never sees a dime as they were all ready paid for your account by the collection agency for a mere pennies of the dollar.

Another thing, they also try to scare people by telling them that a 1099 will be issued for the difference, but at the company I worked for, we never had one issued.

 

[minnie1928]

I would negotiate a "pay for delete" payment. This is where you negotiate with the Collection agency or original creditor to pay your debt in return for them agreeing to "delete" this collection from your credit report. My best advice to you is to go over to the forums on myfico.com and start reading. There are lots of people over there with the same credit problems as you, as well as sample letters you can send, and the kind of expert advice you are looking for.

Pay-for-delete is much better than paying the debt in full (may say paid on credit report but still shows it was late/sent to collection). Paying in full is only slightly better than negotiating a settlement as far as your credit score is concerned. That will trash your credit score. If you even want to buy a car, you will need to have decent credit and these collections will seriously hamper your ability to have a decent credit score. Again, go to myfico.com forums and start learning about what to do! They will really help you there.

I agree with the pay-for-delete approach, since the SOL clock is/has been reset. And, remember to get the arrangement in writing BEFORE you make the payment.

Another great site for info is www.creditboards.com.

 

[deerhart]

#1. When you start the negotiations DO NOT tell them how much money you have to put towards the debt. If they know you have the money to cover in full, they won't deal.

#2. Start out low, like 15-20% and work your way up. Most places, especially collection agencies (which purchased your debt from the original owner for pennies on the dollar) will clear the debt at or below 50% owed So for your $900 debt, you want to look at settling for $350-$450.

#3. Remember that the original debt owner has ALREADY written off your debt AND been paid by the collection agency for the debt. Thus both a tax writeoff and payment. The collection agency is then making money on whatever you pay them. Again, they usually purchase these debts for $0.01-$0.05 per $1 owed. So a $1200 debt is usually purchased for $100 or less by the collection agency (depending on the collection agency). Sometimes, the debt is not sold and if that is the case, then you should negotiate with the original debt holder and NOT the collection agency.

 

[feezle]

Just make sure you get all the proper documentation before sending them any money. My wife settled on two debts for a JC Penney card 4 years ago and they never sent us settlement papers. So they then sold the balance to someone else and they have been bugging us ever since. He credit was already shot so oh well, but the calls get annoying.

 

[*Seanaci*]

You need to ask your question(s) to the debt collector agency/service that you are using since different agency/services can/may handle things differently.

My friend who is using a service has everything handled through them. She tried calling the CC companies herself and they would not settle for less than what she owed. The service has settled 2 of her cards thus far. Once so much is in her account they will contact the CC and try to make a settlement. Say she owes 1000 and the cc company settles for 600, the service then will charge her a % (33 sticks in my mind) of the 400 that they saved her. She has not received a 1099 (or whatever other form) on the written off amounts. This is on top of the $65 a month she is already paying to a bank/institution to handle/hold her money.

Ditto above. It's the exact situation DH and I are in right now. It's easier on us to have our CC's being settled for us through a collection agency than us doing it personally.

I'm not going thru a debt consolidation place. I tried that once and it ended up being a big waste of money. But on the other hand it made it harder to pay the bills month to month. All 3 of those bills were sold off to a debt collection agency who sent letters and phone calls until I was finally able to start paying them (change of jobs, living situation ect).. I think regardless it is already on my credit score and my score is horribly low anyways.. trying to settle would it make my score be less.. I don't plan on making any large purchases or even opening up a credit card for quite some time in the next 3-4 years I am going to save up to buy a house but that is really all I can see happening in the foreseeable future granted no one knows what the economy will look like in 3-4 years.. and all I can really have control of is the here and now.. and with me moving out of state I think id rather be completely debt free

Consolodation and settlement companies do two seperate things. We tried the debt consolodation route first, but the company that had my DH's AMX account kept refusing to take the monthly payment the Consolodation company worked out for us (my 2 CC cosolodatin payments were accepted with no issues). So, we went with a Debt Settlement company. They work with the collection agencies to settle your debt for you. Currently, our company is working to settle our $20k (between two of us) for less than $11k. Sure it takes a bite out of the account every month, but it gives me peace knowing that a set amount is being taken out of our account every month and put into a seperate account to pay off the debt.

Another thing, they also try to scare people by telling them that a 1099 will be issued for the difference, but at the company I worked for, we never had one issued.

I actually recieved a $500 settlement because a collection agency for one of my cards crossed the line in their collection practices. Courtsey of our dbt settlement company, we are also enrolled in UCAN (United Consumer Advocacy Network) in which we submitted complaints (heavily supported of course with either taped calls, saved voicemails or written documentation of calls) for harrassment. If I were you, Darthspud, I'd look into what your state laws are as fair as Fair Debt Collection Practices is. It could help you if you do plan on going at this without help from a debt settlement company.

#1. When you start the negotiations DO NOT tell them how much money you have to put towards the debt. If they know you have the money to cover in full, they won't deal.

#2. Start out low, like 15-20% and work your way up. Most places, especially collection agencies (which purchased your debt from the original owner for pennies on the dollar) will clear the debt at or below 50% owed So for your $900 debt, you want to look at settling for $350-$450.

#3. Remember that the original debt owner has ALREADY written off your debt AND been paid by the collection agency for the debt. Thus both a tax writeoff and payment. The collection agency is then making money on whatever you pay them. Again, they usually purchase these debts for $0.01-$0.05 per $1 owed. So a $1200 debt is usually purchased for $100 or less by the collection agency (depending on the collection agency). Sometimes, the debt is not sold and if that is the case, then you should negotiate with the original debt holder and NOT the collection agency.

Ditto all of this.

Good luck settleing that debt!

 

[darthspud]

So I went to the myfico.com website that a PP mentioned... I had really no idea what I was getting myself into.. That things can/wont be taken off credit reports... Now I feel even more lost then I already was... Whats a 1099? I googled it and came up with more then 4 types of 1099's... I'm going to look and see if theres a debt for dummies type book...

 

[dd50]

If the OP is currently paying on them, the Statute of Limitations has been restarted. (If that's what you're thinking about )

Not in every state. Only a few can restart the clock.