Should I take this offer? I received a letter from Capital Management Services on behalf of Arrow Financial Services who is collecting on a charged-off First Premier Card. They are offering to take $93.00 on a $620.00 debt to settle the account. A paid collection isn't great, but I need to know how to approach this as I also sent a DV to them which was received on 2/17/11 Thanks for any help! ARROW FINANCIAL SERVICES L 5996 W Touhy Ave Niles, IL-607144610 Account Number: PREMIER B-XXXX Current Status: COLLECTION ACCOUNT Account Owner: Individual Account. High Credit: $446 Type of Account : Open Credit Limit: Term Duration: Terms Frequency: Date Opened: 01/2009 Balance: $620 Date Reported: 04/2009 Amount Past Due: $620 Date of Last Payment: Actual Payment Amount: Scheduled Payment Amount: Date of Last Activity: N/A Date Major Delinquency First Reported: 04/2009 Months Reviewed: N/A Creditor Classification: Activity Description: N/A Charge Off Amount: Deferred Payment Start Date: Balloon Payment Amount: Balloon Payment Date: Date Closed: Type of Loan: Factoring Company Account (debt buyer) Date of First Delinquency: 06/2006 Comments: Collection account
If the debt is truly yours and you're confident you're dealing with the right party, 15% is a pretty good deal. That said, I would rather pay more if I had the cash and I could possibly negotiate complete removal of the negative mark. The paid collection isn't going to do anything to help improve your credit scores.
For me, the purpose of paying off any "bad debts" would be to avoid a possible lawsuit in the future, not to increase my credit scores. Therefore, the objective would be to settle as cheaply as possible, and to not pay anything on debts that are past the SOL. That being said, 15% is a good deal, but only if the offer explicitly states that the debt will be "settled in full", i.e. the remaining balance will be forgiven and no one will ever try to collect it from you in the future. What you do not want is to pay the 15%, reset the SOL, and then the collection agency tries to collect the remaining balance from you, which may even grow over time with interest and other fees.
The letter reads: "On behalf of Arrow Financial Services LLC, Capital Management Services, LP is willing to accept less that the full balance as a settlement on the above mentioned account. The settlement offer shall be $93.00 due in our office no later than TEN (10) days from the receipt of this letter. We are not obligated to renew this offer. Upon clearance of sufficient funds, our records will be updated to reflect that the above account has been satisfied." Does this sound like they are willing to close the door on this matter upon payment?
Yes, that letter means that the account will be settled in full. Make sure to pay with a money order or cashier check (not a personal check) and to save the letter for at least 10 years, just in case they renege on their deal in the future. And of course, send the payment by a mailing service that gives proof of delivery. If there is enough time for standard First Class mail, then send it Certified Mail, Return Receipt Requested, which costs about $6, and gives proof of delivery in the form of a green postcard that shows who and when the package was signed for. If you need it to arrive sooner, send it Express Mail, which costs about $13, and will provide trackable proof of delivery. This is important if for some reason the collection agency wishes to claim that the payment arrived past the deadline, so the offer is null and void, and therefore you still owe the remaining balance.
This company also provides a web site for payment, and under the payment options is the settlement amount of $96.00. I am considering purchasing a pre-paid Visa card and paying it this way. Any thoughts?
A prepaid card will provide zero documentation of your payment. Don't go that route. Stick to a money order or cashier's check via CMRRR and keep documentation of everything.
