hello all...am i on the right track?
Date: Mon, 01/17/2011 - 09:27
first off, i had a good job and ran up a small amount of cc debt. i ended up losing that job, and was unable to make my monthly payments, and made no payments on these accounts for the last 1.5 years. there are 4 cc accounts that i had, and all 4 im assuming have been charged off by now. i have been recieving letters from 4 different collection agencies in reference to these 4 cc accounts. all 4 letters mention within the letter to call them about a possible settlement.
here i will list the cc and the approx current balance
1. best buy / $1200
2. wells fargo financial (they were the issure for credit at furniture store) / $1400
3. wa mutual cc / $3200
4. household bank cc / $3500
i have done some reading here, and i think i know what steps to take to make sure i settle these correctly. i will list the steps im going to take. if im missing anything in the way i plan to manage these debts, please inform me.
1. call the original creditors to see if they will settle with me and withdraw account from collections.
2. if original creditor is not interested in settling with me, find out who they sold the debt to.
3. call whoever they sold the debt to and negotiate a settlement.
4. get in writing, that the account we are settling on is reported as paid... what status do i want to try to get in writing? paid if full? what exactly do i want to make sure i get in writing is what im not sure of....what account status do i want the collection agency to report to the credit bureau's?
i do have around $4000 cash right now that im willing to spend to settle on these accounts.
please give me any pointers that i may be missing. also, if my goal is to get everyone to settle at 50%, am i expecting too much?
im ready to call these people asap, as im very excited to have all of this lifted off of my shoulders.
Well, you have a good idea, with just a few tweaks you should be
Well, you have a good idea, with just a few tweaks you should be good to go. Definitely do #1, though if the accounts have been sold the OC can't call them back even if they wanted too.
Now from there things should be a bit different, first you want to check your credit reports to see who is currently reporting on these items as the info the OC has may be outdated if the people they sold the account to has sold it off.
NEVER call a CA to do a settlement unless you live in a two party state and can record the conversation without informing them....honestly it is safest to have the settlement in writing.
You will want to have any CA validate the debt (those that are sold, not ones being collected FOR the OC......you want to make sure that all the info matches...is the amount they say you owe the same as what the OC said you owed? If they are charging any fees and/or interest is it in compliance with the contract/agreement you signed?
Finally remember that a paid collection is only marginally better an outstanding collection and even then, only if you are buying a house...everyone else will view a paid collection as bad and it will still tank your scores.
What you want is a Pay For Delete (PFD) where you agree to pay based upon them removing the account from the credit reports.
As a rule of thumb you want to base your settlement offers on how old the account is, the older it is the less you can offer. Though if you want a delete it is generally good to just pay the whole amount. Also keep in mind that the amount over the settlement, if it is $600+ you will receive a 1099c and have to pay taxes on it.
One way around the 1099 is if there is a dispute about the actual amount owed that you and the CA can agree on what was actually owed, that way you wouldn't have to pay the 1099c.
