The one & only credit card i’ve ever had I ended up maxing out and then not being able to pay on it – i ended up owing almost 00. That was almost 4 years ago and though I realize how stupid I was to do that – i still never paid it. It went to various collectors and has been a large part of the reason why my credit is complete crap. Long story short I want to fix my credit, but have heard conflicting advice about this credit card – to pay it off or let it run it’s course on my credit report & eventually be removed in a couple more years. I recently got a settlement offer of 7 to be paid in installments. I am tempted to try and pay it off, but i’ve heard that it will then be on my credit report for even longer. Can I tell them I will agree to pay it if they do a "pay for delete" and how do I go about negotating that, how does that work? Please help!
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Forget about the pay for delete. It does not work for credit cards, installment loans, or other regularly reported debts. The collection agency can only remove what they reported. The original creditor’s charge off remains. Pay for delete only works for single entry items like medical and utility bills.
You may want to offer $250 to $300 as a lump sum payment and see if the take it. Offering the installments kinda sends a red flag for me. Normally, a settlement offer of 25% would be lump sum. If this offer was verbal, they may be trying to get a payment to restart the SOL.
Before you pay anything, make sure you get the settlement agreement in writing. Keep it along with your payment proof, forever. Do not give the collector direct access to your bank.
- When a credit card is charged-off as bad debt, you need to understand that the damage to your credit is already done and there is no undoing it. Don’t make the mistake of simply cutting a check to whatever collection agency has the debt for the charge-off and assume that your credit rating will be magically restored…Doing so will not remove it from your credit reports. It will simply be updated to a "Paid Charge-Off," which, while slightly better, is still a seriously derogatory item. Per the Fair Credit Reporting Act, a charge-off, whether paid or not, can remain on a consumer’s credit reports for up to seven years. This does not mean that you will have bad credit for the entire 7 years though.
It’s my position that a tiny increase in your credit score is not worth the risk of triggering aggressive collection activity against yourself. Your effort to “do the right thing” to pay off old debt could be met with threatening, abusive collection calls…threats of lawsuits…and once they find out that you are willing to pay they will probably add on all sorts of fees and they’ll come after you for two or even three times the original amount of debt. Even worse, they might decide to take you to court to try to get a judgement against you for the debt…leading to possible wage garnishment of 25% of your wages.
- There are two reasons that you may want to consider paying back a charged-off account:
1) You are applying for a new mortgage, loan or apartment and the creditor is insisting that all defaulted items be paid off
2) There is a confirmed lawsuit pending on the debt
If neither of these apply, then it’s often best to take a "Don’t Ask/Don’t Tell" approach…just sit tight and let the charge-off fall off your credit report naturally in 7 years. The main damage of the charge-off to your credit should be over in 2-3 years.
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There is a statute of limitations for credit card debt, which is the amount of time that they can successfully take legal action against you for the debt. This time period varies for each state. You can find this time period for your state by going to the link below and looking under "Open Accounts."
http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml
If your debt is older than the time period listed for your state, they can no longer defeat you in any court action because the debt is time-barred.
First all debts have a statute of limitations, check the SOL for your state, to see if the debt has expired. This means that the collection agencies can not take legal action against you to collect the debt, meaning they can not take you to court and get judgment. If the SOL has ran out for the debt, then I would not pay it, do not acknowledge that the debt is actually yours. The negative marks will fall off your credit report after 7 years.
If you do pay it, and you negotiate a settlement, this will not improve your credit score, the damage has already been done by Various collection accounts being placed on your credit history. They will all stay on the report for 7 years. Even if you got a pay for delete from this one agency, the others would still be on your report. For a debt 3-4 years old, try to pay no more than 25%, if you do decide to pay, get everything in writing first, then send a money order, never allow a collection company access to your bank account.
First of all, if you acknowledge (affirm) the debt in any way, then you reset the state statute of limitations. Use the reference cat dat supplied to find your states statute of limitations. If the debt is "time barred" do nothing. If they decide to take it to civil court your are protected by the statute of limitations and that would be your defense.
If the debt is not time barred, then you should try to avoid any legal actions, they could garnish your paycheck, seize bank accounts or place a lien on your property. Garnishment is not allowed in North Carolina, South Carolina, Texas and Pennsylvania.
If they will take the $497 then before paying it ask for a "pay for deletion" to have the debt removed. Even if they won’t do it, at least it will show on your report as paid in settelment which is better then in collections.
The debt will age and drop from your credit report after 7 1/2 yrs from the date of last missed payment (as per Running of Reporting Period – Section 605 [15 U.S.C. § 1681c] and even if you make any payment agreements, this will not reset the reporting period, nothing can reset it.
If you do make payments to the current collection agency, then notify the credit reporting agencies and ask that the other collection agencies that are showing on your credit report for the same debt be removed. You will need to provide proof of your agreement.
Here is a sample pay for deletion letter, you fill in the blanks
[YOUR NAME and ADDRESS]
[Collection Agency NAME/ADDRESS]
[DATE]
To Whom It May Concern:
This letter is in reference to the following account as reported on my credit report with <insert name of credit reporting agency> and is to inform you that the validity of this debt is disputed. The account number I have is the one listed on my credit report – which omits the last few digits.
Account: 847474XXX
In the spirit of compromise , I am proposing the following offer. I am willing to send you certified funds in the amount of $XX in exchange for the following:
Deletion of this account on any reporting agencies it resides on, including but not limited to: Equifax, Experian, and Trans Union. This action would be verified by your sending me a copy of the universal data form showing request for removal of listed debt.
.
The understanding that this debt, while not mine , was satisfied in full.
Agree to never discus this account with any party and never report nor cause to be reported this account to any reporting agency including but not limited to: Experian, Equifax and Trans Union.
Certified funds shall be construed as: Money Order, Certified Check, or Cash.
My letter should NOT be construed as an acknowledgement of liability for this debt in any manner.
If you agree to these terms and accept this agreement as laid out, then please send back your approval on your company’s letter head. Make sure the letter is signed by a person with the authority to accept said offer and that your letter states the terms of this offer.
I look forward to your cooperation.
Sincerely,
[NAME]