 Please help my wife has credit card debt problems? |
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lexsmoma | I recieved a letter from my credit card company saying they would waive half of my account balance if...? |
I pay the remaining half. The letter went on to say that they would consider my account paid in full and they will report my account to the major credit reporting agencies as "Account paid in full for less than full balance".
My question is, if I take this offer and pay off my debt for half, will I have credit problems in the future because they will see that my "account was paid in full for less than the full balance"? Is it better for me to work on paying off the enitre balance and skip the half-off offer so my account says "paid in full"? If anyone has done this, or works for a credit agency, and can give me some advice that would be wonderful! Thank you in advance!
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There is no fine print. It is simply a letter asking me to call them with a decision on the offer within 30 days. |
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Michael N
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This will affect your future credit rating. An account paid for less then full balance is considered a write off and has negative credit implications. |
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Studly
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DO NOT PAY A DIME YET!!
A wise man once said...
"If the deal is too good to be true, it usually is."
and..
"Never EVER believe a collection agent". OK, I said that, but it certainly applies here.
Why would he offer you such a good deal? It could be that your debt is beyond the statute fo limitations, and legally they can't collect a dime. So if they can con you into thinking you have a great deal, they can at least get half!
Trust me, I've seen this happen before many times. Collection agents are NOT in the business to do you favors.
Here are some other facts you need to know:
1) When you pay off a debt, all they are required to do is show the debt as "paid" or in your case "settled for less then full amount. But all of the negative information will still be there! The charge offs, the collections, and now the fact that you didn't pay the whole amount. This is still going to kill your credit.
2) To make it worse, it updates your on your credit report as a recent activity, so for the remaining of the 7-year reporting period this is going to look worse then it does now!
3) The other responders already told you about the 1099 tax trap....
4) They didn't tell you about how many collection agents will then turn around and sell off the remaining debt to another collection agent, who will then come after you for the rest. Totally legal, because you don't have any paperwork saying that this debt is "paid in full" and fully satisfied.
So now that I've given you a wake up call...what now?
Find out how old this debt is! If it's 5-6 years old (or close to the 7 year reporting period) don't pay it. Just try and wait it out, and let it drop off automatically. Double check the SOL for you state to make sure it has expired.
DO NOT call these people up. Send them a negotiation letter accepting their offer to pay half, but they must also agree to:
1) Delete this information from your credit report....NOT update it. DELETE!
2) Agree not to file a 1099. If this is a collection agency they probably don't have that power, as it's usually done by the original creditor when they charge off the debt. But since the collection agent is acting as their representative, they have the power to agree to this.
3) Get them to give you this agreement IN WRITING, and make sure it includes that this debt is completely satisfied and "paid in full".
Do a bit more research into debt negotiations. |
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sassynjazzy
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this is what is called a 'charge off or write off ' basically it says that they could not collect from you, and had to just accept anything you would pay. so that being said, whenever another creditor views you credit report, they know exactly what it means, and will consider you a credit risk...but look at the good side, at least you'll be out of the debt |
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Haywood Jablome
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I doubt there would be credit problems. Just in case, I would laminate that letter and keep it in a safe place. |
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jason
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before you accept anything, it is a good deal, do you have the funds to pay half of the debt in one lump sum? that is probably what they want and not that you continue to make payments on the remaining half you would owe. at maximum you might be given 3 payments. I would certainly make sure of the details if that is even an issue about having all the money right now.
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to the person who made the long winding post on collection agencies, did you happen to read the post? the letter was from her credit card company and it is not at all uncommon for this type of LEGITIMATE offer to be made. |
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redvelvetflames4ever
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BE EXTREMELY CAREFUL!!! I went through this 5 months ago with Chase Visa. What they fail to mention is it is reported to the credit history reporting agencies as a charge write off and you receive a 1099 at the end of the year so you would have to report the balance owed in your taxes as part of your income. You MUST get in writing from them by paying whatever it is they are offering the debt is paid in full and not reported as a charge off NOR will you receive a 1099. Get this first in writing before you make any payments to them. Problem is they rarely do this and go on with this nonsense it is the law they have to report to the CRA it is a write off and they have to send you a 1099 by law. Bullcrap. There are cases that people have actually been able to make this type of negotiation. In the end if they refuse it is up to you to take the deal which may be the only alternative to avoid possible civil action being taken against you to collect on the full amount of the debt. |
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DebtFree
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a verbal deal on the phone is no deal. make sure you get it in writing before you pay it.... otherwise you will find out they lied and you have no deal. |
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SandraD
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If you take the offer it will still be a negative remark on your report. Try to pay the full amount or take the offer, once paid, dispute the account as paid in full. Most of the time they will delete it off your credit report. |
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stan c
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If you pay half and they send the 1099 for the other half, you're not getting a good deal. My question is, why are they offering you the deal if you could pay? Why don't you first request your free credit reports from annualcreditreport.com or call Trans Union toll free @ 877-322-8228 for all 3 reports. If you still want to make the deal, tell them to credit their half before you send your half. If they refuse, atleast you gave it your best shot. |
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mrscda
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First, read the fine print. Probably it says something to the effect that they will file a 1090 "something " (1099?) on your taxes and the balance they knock off gets put on your income that you made for the year, so you end up paying taxes on it and depending on the amount could really make a differnece if you usually receive a refund. Just read the fine print! |
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bdancer222
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Take the offer. Do they want it in a lump sum or are they willing to take payments? I suspect they want a fast payoff.
You will also probably get a 1099 and have to pay income taxes on the forgiven half.
Undoubtedly your credit already is poor. The paid for less will still look better than the unpaid debt. |
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msmoobaby1
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This is a great offer and will only show a positive on credit report |
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