What does "settled with an outstanding balance" from Cap1 mean?

It means you exactly what it says....you are settling the account. Quite common. If they waiving more than $600 you will receive a 1099 to file with your taxes next year.

Reading this problem, I also came up with the same question. How is the bank planning to write off the portion of the bad debt? I'm simply asking since I have never come across such verbiage before. Is there a chance the bank will sell the outstanding debt balance to a CA?

On the front of my Cap 1 settlement it states "we'll consider your account settled and stop collection efforts on the remaining balance".

The rep said they would not sell the remaining bal.

On the back of the agreement, #8, it says it will be reported as "settled with a remaining balance".

Many on other forums claim Cap1 will still report the remaining balance after settlement. I guess I'll cross that bridge when I get to it.

Oh... mine was already charged off.

Hi James,

Capital One is telling you that they are willing to settle a debt with you. You indicate that is your goal and you are prepared to follow through. That???s the good part. Charge off is simply an accounting function. Capital One "charging off" the remaining unpaid, but forgiven balance, is what it is. As long as you have documentation of the settlement and timely payments that show you met the terms of the Captial One settlement agreement, you have what you need if there are later attempts to collect on a settled debt.

CapOne is also telling you that they want to hold a grudge against you (and many other Americans they extend credit to), who fall on hard times, and who they later settle accounts with as a standard recovery and loss mitigation strategy. That???s the bad part.
What they are saying to you appears to be what they have been saying on this specific issue for a couple years now. This is??? at least in my opinion??? ???We are Cap One. We don???t care that our policies and practices may be violating the fair credit reporting act. What are you going to do about it???? Whenever I think about this specific topic, I tend to replay some of the marauding Viking ommercials Capital One aired on televeision for many years during the unsecured credit card issuance crack up boom.

Here are some options to consider:

Accept and fund the settlement with the verbiage about reporting an outstanding balance. This would at least knock down the account and remove the risk you are later sued as part of Capital One collection efforts.

After your credit reports are updated with Equifax, Experian and TransUnion showing the incorrect and erroneous balance still owed, file a consumer dispute with the credit reporting agencies (CRA's).

If any of the reporting bureaus fail to address your concern appropriately, or after playing computer ping pong with Capital One, which is sometimes how your dispute gets investigated, the CRA???s write back to you and tell you that they have verified with the furnisher (CapOne) that the information is accurate, speak with an attorney who specializes in FCRA violations.

You can copy Cap One on all of your communications with Equifax, Experian and TransUnion. You can also dispute the accuracy with Capital One directly.

Depending on the results following any of the above, or irrespective of the results, file complaints with the OCC and the CFPB. The OCC is Cap One???s primary regulator. The CFPB is also tasked with supervision of a bank the size of Capital One. The CFPB also provides regulatory oversight of unfair and abusive practices against consumers with regard to the credit reporting agencies. The CFPB will also, in all likelihood, serve a larger supervisory capacity over the credit reporting agencies no later than July 21, 2012.

What you choose to do at this point is up to you. Some people just want to settle the debt and move past the financial stress. Others are very mindful of, and frequently monitor their credit reports for accuracy.


What follows is an article I wrote (now slightly edited) on this very topic from 2010. I have attached the settlement letter referenced in the article to my comment. I am confident your settlement letter would contain the same issues raised below. I would add that the position of Capital One on this issue seems nonsensical. They gain absolutely nothing by erroneously reporting balances remaining. They risk regulatory fines and being sued if the actions are found to be in violation.
Best of success in your efforts.
------------------------------------------------------------------------------
Virtually all of the national banks issuing credit cards have adjusted to the realities of the economic downturn. Banks created plans to reduce interest rates and lower monthly payments on credit cards through internal hardship plans that often would have only been available through credit counseling agencies. Several banks offered lower monthly payments to those enrolling in a debt management plan through nonprofit credit counseling than had been available in the past. Many credit card issuing banks have offered earlier and better balance reduction concessions through debt settlement. All of this goes a long way in helping heal their individual account holders financial wounds from the economic downturn and assists them in avoiding bankruptcy.

Not so with Capital One, in my experience.

Banks who are paying attention know that working out some type of arrangement with account holders, who will otherwise often be forced into filing chapter 7 or chapter 13 bankruptcies, is in their best interest. Creditors will generally offer fair concessions at different stages of your account being delinquent because they will 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 where they receive little to nothing when a card holder files chapter 7. Creditors may see an average return of as much as 40-60% of credit card balances returned to them over 3 or 5 years (mostly 5 yr) in chapter 13s that are filed. But, approximately 70% of chapter 13s are reportedly not completed.

Banks know that working with consumers often provides a better outcome than pushing them in to a bankruptcy.

For the past several years Capital One appears to be more bent on pushing those on the financial edge over the cliff and into bankruptcy.

Now we have Capital One choosing to be spiteful, and perhaps illegally, with those they may offer fair concessions to. The collection letter referred to below is attached to this comment.

The coupon for $50.00 you will see in the collection letter is not all that new a twist to get a delinquent CapOne 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.

How does reporting an outstanding balance due after an agreed upon settlement, where both parties agree that when settlement terms are met it satisfies the obligation, comport with the 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 settlement when they are applying for future loan products whose interest rates and 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:

1. Been forgiven
2. Been settled for a lesser amount agreed to by both parties, thereby leaving no ???outstanding??? balance

How is this NOT in violation of the FCRA?

If anyone reviewing this thread has a Capital One story to share that relates to improper credit reporting, I invite you to share it in the comment section below.

As I stated in the other thread, there is no such thing as "settled with outstanding balance." If there would still be balance outstanding, then there was nothing settled. No balance can possibly remain outstanding after a properly executed settlement.
I see you have posted the same question on the other board (CIC). Unfortunately, the section moderator over there is uninformed and cannot be bothered to check his facts. Thus the myth of "they can go after you even after you settled" came to life. Yes, you need documentation that you settled, just like you need documentation if you paid in full. But in no event does a lender you settled with have the right to recover any more than they settled for, now or in the future. The same goes for selling the "remainder" of the debt: They do not have a right to collect on any remainder, so they cannot sell a right that they don't have to a third party.