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ldz | I owe $3500 to Bank of A. Can I settle with $1,000? |
The original loan amount was $2000 and it is now $3500. They sold the debt to a collection firm called Phillips & Cohen. I have been able to raise $1,000. How can I settle with them with this amount? Should I try to settle with B of A or the collection firm? I am simply trying to prevent going to court. Please provide samples of settlement letters I should write in this scenario. Thank you for your answers.
Additional Details
Thank you for your answers. Can anybody provide a sample letter I should send to the agency? |
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jannie
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I'm sure a lot of people would like to do that
but it doesn't make too much sense that they would take only that much for a settlement |
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what?
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Bank of A. no longer has any interest in this matter, I assure you. If they've sold the debt, then there is nothing that they can do. Likely, the collection agency paid more than $1,000 to buy the debt, in which case there is absolutely NO way that they would be willing to settle for the amount that you have proposed.
While you are motivated to avoid court, the collection agency is not. Such companies make a huge percentage of their profits from wage garnishing. And even if you somehow could get the collection agency to settle, I highly doubt that they would be willing to settle completely for 28.5% of the amount that they could collect if you paid in full ($1,000 of $3,500 = 28.5%).
If you want to avoid a court case, then contact the collection agency, and tell them that you will pay the $1,000 now, and can make payments ox $X per month if they do not add any new charges to the debt that they purchased -- i.e. no collection fee and absolutely no NEW interest. This would likely be better for them, as the loss of the new fees would (mostly) offset the fees that they would have to pay to go to court and garnish your wages (or attack your other assets -- i.e. house, car, any funds in a retirement / bank account, etc. -- which they could legally do in some states, but not in all states, and there are numerous restrictions on what exactly they could attack, so check your local laws). But if you agree to put that $1,000 down up front, they will likely be fairly cooperative. |
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melone l
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Speak to a debt relief agent. Mebbe this article might help:
What is Debt Relief?
http://www.askaquery.com/Answers/qn1583.html
Debt Management and Building Wealth
http://www.askaquery.com/Answers/qn1581 |
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jackvanz
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a freind of mine tried to settle with Phillips & Cohen and didn't get to far. I think it was only about 80% of the original amount. i read a great book that explain how to settle account. the book has actuall phone transcripts. Talk Your Way Out of Credit Card Debt by Scott Bilker. You can get it at Amazon or http://www.DebtSmart.com
jack |
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KL
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Most of the time creditors just want the principle that is owed and are willing to waive the interest that has accrued if it means they will be paid imediately. $1,000 is half of what you originally borrowed, so I doubt it. You should try to settle with them and work out a payment plan. Writing takes to long, just call them. |
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teenriodoll
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First thing you need to do is send a letter to the collection company within thirty days of receiving the first collection letter. Specifically you need to have them itemize the amounts owed. How much is principal, interest and other fees. The Fair Debt Collection Practices Act gives you this right. Secondly you need in your letter to the collection agency inquire if Bank of America still owns the debt or if the collection agent bought the debt.
This is important to find out. If they bought the debt they should have a purchase and sale agreement they can provide you. When debts are 6 months or older they can be bought for as little as 3-5 cents on the dollar. So your $3,500.00 total debt may have been bought for $175.00. If you are going to pay the owner of the debt make sure they give you a letter first confirming the debt was paid as agreed or paid satisfactorily on your credit report not settled or a paid collection which is negative and can stay on for seven years. Your communication should be in writing sent certified mail, return receipt requested which will costs you about $4.84 for a first class letter.
Please take a look at my previous answer to this question about a week ago in my profile. It was rated the best answer by the qustioner. Remember you have the most power over the owner of the debt BEFORE you pay anything. The debt owner wants the money, so you have some leverage here. There is also a statute of limitations issue which is cover in my other answer. Once you pay or admit you owe the debt, the statute clock is reset.
You can get ideas of settlement letters in a credit book by Todd Bierman, or Bob Ventura in the library.
Good Luck |
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Dr Dee
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Better not even if they agree to it, it will really screw up your credit rating. |
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Studly
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Yes, you can negotiate with the original creditor. I've stated this countless times in this forum! Your legal obligation is to the creditor, NOT the collection agent.
The collection agent has signed a collection agreement with the creditor. Therefore he is nothing more then a 3rd party employee. If they have purchased the debt outright, that's a differant story. But you will find (unlike what many are saying here) that most debts are not sold outright.
So that said, you can try calling the original creditor and see if you can come up with a settlement. They may not talk to you at all, but that's their decision.
All this talk about 50-60% settlements is also a fable. You may get it once and a while, but most debt collection agents don't settle for that great a loss.
VERY IMPORTANT!
When you type up your letter, DO NOT make any offers to pay. This will restart the Statute of Limitations and give them more time to take legal actions against you. Simply state that you are not offering to pay anything, but are negotiating a settlement.
Also, demand in your settlement that in exchange for any payment, they must remove any negative items from your credit history. Get this IN WRITING! Just because they place "paid" on your credit report does not remove notations that it was late or went to collections. This will still ruin your credit score.
Where is this collection agent located? If they are close where you live, they may sue you for the money. But it's not likely they will go after you if they need to hire an outside lawyer or collection firm to handle the court case. It's a gamble but something to think about.
I wish I had a letter for you to use. I found one on the net a while ago but they deleted the site. Basically just state that you are trying to negotiate a payment plan. You only have $1000 to pay, and could possibly pay a monthly fee to pay the rest over a year. |
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bizconsultant2000
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I have purchased debt portfolios before as an investment and depending on how your credit was when the loan was granted, how long it has been since the account was wrtitten off by the bank, etcc.... you could actually settle with the collection agency probably for $1,500.00 They more then likely (again depending on rating and time elapsed) bought it at 25% of the balance so they would still profit by taking half. No one wants to go to court on amounts that small. Just from my personal experience only.... I would try to settle it. |
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Mrs Apple
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If you owe $3500, you need to pay the full amount. You should contact Bank of America and see if you can pay in monthly installments. Your debt must be really overdue for them to pay a collection firm to get money from you. |
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Another Perspective
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You can't settle with the bank anymore, they sold your account to a collections company. Which means as far as they are concerned, it has been settled by the collection agency as they likely purchased it for $1500 - $2000. This means that the bank couldn't care any less about if you pay 1 cent on it now, the account is no longer theirs. Now, as far as the collection agency goes, depending on how long they have had the account they may or may not consider a settle. Also, it is almost NEVER that they will take less than 50% of the full account value. What I would do is put that $1000 to the side, pay something ($20) every month until you can get 50% of the value on the account saved. Then call them and tell them you are about to lose your job and that you have $2000 or whatever in the bank and you are willing to pay off one account. You have another account at another collection agency that you owe $2500 to but you would prefer to pay the company with $3500 off first since it is more. Also tell them if they don't accept your offer as a full settlement you can continue to pay $20 a month until you are broke which might not be too far from now. Trust me, I used to have horrible credit, this is something I have done several times. |
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amy24h7w
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There is only one way out of this situation no matter who you talk to...you are going to have to pay the whole thing. At least the original $2000 at the very least neither bank is going to okay being out $1000 that YOU spent. If you get really lucky they may wave the outstanding late fee, but I Really doubt it. Good luck, and try to keep up with your bills in the future. I too am in debt., but it was not self inflicted, it was court ordered $20,000 & then $40,000 if not paid within the next two years consider yourself lucky that you dont have to pay way more. |
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