I spoke with a creditor the other day from SBJ Financial who was collecting on behalf of Bank of the West. They called me. The debt is an unpaid charge-off of $770 from two years ago. In the end, I worked out a deal (over the phone, but they promised it in writing) that I would pay 80% of the original balance and they would show the account as "settled." What I am wondering is "setttled" a good mark on my credit or bad? Should I try to get it completely removed from my credit report? I tried once already and the guy said there was no way. I told them I would pay in one month. Also, they said they would fax me a settlement letter after I paid. Should I do this a different way? Please let me know. This is my first stab at tackling an old debt. Casey Sidenote: It's funny because the collector tried every tactic you guys talk about to scare me. When I said I wouldn't make payments, he said "Should we just go ahead and pursue legal action then?" I was like, sure, if it's worth it to you. Then he said the debt was in collection status and I called his bluff on that because I had just seen my credit report and knew it was a charge-off. Finally, when I offered to pay 80%, he came back with a figure that was slightly higher then the original balance because he added "interest since this has been sitting on my desk." I said NO, I'm paying 80% of original balance. Every time he had to talk to a supervisor, but would quickly give in. Thanks for helping me out guys!
Do not take the settlement without deletion. I have one from 5 years ago and no misses ever since and I get turned down all the time because a settlement puts a p/l flag(profit/loss) on your score and that has been much worse than a paid or even unpaid chargeoff. You realize of course that in another year they will start throwing 50% settlements at you. Even if you have to pay the entire chargeoff in order to get a full deletion(in writing) I would do it. To this day I regret settling for a lousy $400 less when the damage to my report has been just horrific(40 points+ the flag). I do not know if they would risk a judgement/lawsuit against you over that small an amount but I would risk it. Maybe someone else has an opinion.
I have charge offs that are a year old and they are offering me to settle for 50%. You're being generous with 80%......Keep in mind if the discount is over $600 then they will send a 1099 to the IRS and you'll have to declare the money you saved as income.
I'd rather have the deletion. "Settled" is a HUGE black mark. No advantage over "Charged Off". Hold out longer. You should get a better deal. In parallel, you should start the Validation process. Start hitting back.
I thought my answer was implicit. Would you rather pay 6.1% on your mortgage or 9.5%? Much bigger issue than the 1099 taxes due. Point is, do whatevr you have to keep the word "settled" off your CR's. I know. Cap1 had my paid charge off listed as a settled. Huge negative when you talk to a mortgage broker, try to get a credit card, whatever. Pay the differenc if you have to. Keep that word off your CR's.
The point I was trying to make is the fact that folks get to hung up on paying a few bucks tax on the 1099*
