Suze Orman advice

Getting the letter is good advice. They aren't obligated to mark the account as paid in full if it wasn't actually paid in full, however. But you can always ask, and they sometimes will. Sometimes you can get them to delete the entire trade line as well.

Putting those words on the check doesn't work. Most payments are sent to lockboxes and automatically deposited. That little phrase on your memo line no longer works.

[SIZE=3]A check is not a written agreement or a contract but I would argue that it could be used as evidence of an oral agreement. The argument is you orally agreed over the phone with the collector to cashing of the check as settled in full and as evidence you wrote on the check ???Full and final payment for account #9999. Cashing of this check is for the Settlement in Full of account #9999.??? or something along those lines. Make sure to write it on the front in the memo line and on the back below the signature line. The trick is convincing a judge that the above scenario is what really took place assuming you are ever sued. Also, I don???t think the check even with a letter attached is enough to make the credit bureaus remove an entry from your reports. The reporting company still has to agree to not report. You might be forced to sue for FDCPA and FCRA violations and you would be betting the farm that the check would hold water. I would not count on it holding up. You are in a much better position if you obtain a written letter from them stating such and such account will be settled in full upon payment of such and such amount on their letter head that is signed and dated. Keep a copy of the letter and the cashed check forever. [/SIZE]

I guess it's not wrong on the part of the creditor to mark it as 'settled' if it wasn't actually settled in full. I've heard that they mark it 'fully paid' or get it removed as a goodwill gesture only for people who've otherwise been good customers with them in the past. Is that correct?

I don't think you could ever make that stand by just writing it on a check. I think Orman sometimes gives dumb advice. It would be nice to have every settled account marked as "paid in full" but most aren't going to do that. The fact is more and more are defaulting on CC debt and the companies just aren't, on a 20-50% settlement, going to report that you paid it as agreed. I think if you are planning or willing to settle, you have to accept the fact that your credit is going to suffer. It will recover; it just takes time.

Restrictive endorsements are binding in some states but more than likely, they would return the check back to you.

I've heard on this forum that one should at least make this request even though, most cc's probably have no intention of lying on your behalf. This is what they would technically be doing if they were to report to the credit bureaus that you settled in full when the truth is the opposite.

When I sent out letters and initial checks to some collections agencies offering pro-rata payments on the debts, I put a sentence in the letter stating that if they cashed the check I would take that as their acceptance of the pro-rata payment plan. I also asked them to correct the balance due if what I showed was incorrect and stated in the letter that I was to be contacted via USPS mail or e-mail only. So far so good. They've cashed each check I've sent and I've sent in a printout with each payment showing how I pro-rated the available fund between creditors and the balance my records show due.

I'm not pushing for removal of the collections from my credit reports yet. I've had other collection agencies remove the accounts without my asking so I'm going to wait and see what these do once their paid in full. And even if they don't remove them, a paid collection is better than one that shows a balance due.

Restrictive endorsement generally do not hold up. Checks tend to be processed electronically these days. An agreement is typically on another form and may or may not accompany the check. If an individual endorses a check with such an endorsement, it is an indication of intent but likely will not hold up.

I had a collection account related to a previous roomate -- I had moved out, while still on the lease. I know, that left my vulnerable...

Anyway, it took me pulling my credit report to find the collection so I called the CA, I told them I wasn't sure about the debt and had to think about it -- then said, wait, you know, I don't want this over my head.

There must have been a mistake, but I will pay you in full to settle this, if you leave this off of my credit report on account of the error.

They said, in essence, sure -- if we get the money, we don't really care about the reporting.

I paid them off, disputed the collection with the Credit bureaus. I was very, very nervous, but when the bureaus contacted the CA, they did not verify the debt, and poof! Gone.

I was totally in their hands, it was not a legal obligation, but I was happy to have it taken care of. I was able to buy a house, 1 year later, and qualify for the best interest rate available, which I would not have been able to do, with a collection on my report, even a closed one.

It's likely you could have had the same end result without paying a debt you had no obligation to pay. You could have asked for verification and, when none was received you could have disputed the debt and had it removed. I don't understand the point of your post.