I have negotiated a settlement with a credit card company for a chargeoff that is 6 years old. It will go off the report automatically in Feb 2003 and the SOL for suit in my state was up after 5 years. They are agreeing to settle and to report to the CRA within 30 days that the account is settled in full. It now shows as a chargeoff. I have this in writing also. Should I accept this as settlement or demand it be removed completely before I pay anything? They have no leverage since it drops off next year and they can't sue. Does it matter if it shows settled in full or is that still considered a negative? If they were to show settled in full would it then stay for another 7 years since this was originally reported in 1996? I do not want this on my report any longer and if this will start the time all over again I would rather just wait the year. I don't want to restart the clock on a negative account. Not sure what to do.
Is there a reason that you are wanting to pay this now? What is the amount if I may ask? If the SOL is up and it is 6 years old, why not wait for it to fall off? When you pay you are resetting the clock and it will be there ANOTHER 7 years. Believe it or not a paid charge off will not really increase your score. Like I said, unless you have a reason that you have to pay it pay ONLY for a deletion and GET IT IN WRITING. I personaly wouldn't pay it, but I have no morals. LOL Either way, paying anything is risky. Sit back and let it fall off. If the collector calls again tell him to kiss it and not to call you any more. They can't sue you.
The reason we would settle and pay now is we are going to get a mortgage later this year and have to have all collections cleared. However, if they will not negotiate a settlement to delete we will get a subprime mortgage and refinance next year when it falls off. I knew the clock would reset but wondered if settled in full was a negative. If so then I will not let them do that. I would never pay this and let it stay as a negative, especially when you are resetting the clock. If the report currently shows it as a chargoff would changing that to settled in full still make the account a negative rating? I have already sent them a letter saying I will not settled unless it is delected entirely but wondered for a fall back position if having it say settled in full is a bad thing. I'm not familiar with the terminology.
Here is what I would do. 1) Dispute with the creditor. ask them proof as you would a debt collector. they still have to provide you with proof you owe them money. send CRRR When you get the green card back. Wait a few weeks then send in a dispute the a copy of the CRRR and the letter to all the CRA. Whether or not you hear back from the original creditor doesnt matter... keep all your records of dispute. dispute 2 or 3 times. Keep sending in Your Previous dispute letters, Your letters to the original creditor and copies of your CRRR. after two or three times send an intent to sue and a request for procedure dispute. If they send you a company name and address SUE THEM>...... Seriously. It is better to wait and get your credit cleaned up before you buy a house. DO NOT PAY THE DEBT. I repeat DO NOT PAY THE DEBT. To refinance will cost you thousands of dollars you could save... If you need more info email me. Kev home owner club, 50k in citicredit club. owner of a 1953 ford club.
Thanks kustomkat but the settlement amount is small enough that it would not pay to wait and go through the entire dispute process if I can get an equitable settlement through them now. It is a credit card but the settlement amount is very small ($500ish) so I would rather work out a settlement that benefits both of us. Especially when the mortgage payment savings would eat up that amount in less than 2 months. I am trying to avoid resetting the 7 year clock with another negative rating. It sounds like lizardking is saying it is still negative so I will send them a letter saying delete or no settlement. Lizard is right about the mortgage company, all they care about is that it is settled and they will accept a zero balance. However, I do not want a negative on my report for another 7 years when it has already been on there for 6. That certainly is no benefit to me so I will tell them to go jump unless they delete. I was not familiar with the terminology so I did not know if that would still be a negative. I thought I might be holding out for something better when what they were offering was not bad.
I'm a little confused about your message regarding the 7-year clock... I settled an account with First Premier 2 months ago that was charged off in 2000. It was updated and is reflected as a paid chargeoff with Experian, and it also says it will remain until 2007...NOT 2009 as your message would suggest. To my knoledge, the account doesn't re-age when you pay off the chargeoff. The derog is reported from the day the account is either 90 days past due or when the original account is charged off, so you SHOULD be safe if you want to settle AND let the account fall off. Can anybody ABSOLUTELY clarify this?
It does NOT re-age. I have an account that charged off in 98 I paid it in 2000 and it will fall off in 2005 NOT 2007.
Paying on a charged off account will NOT start the 7 year clock again. Here is the FTC staff opinion letter. 2. Is the reporting period extended if (A) the original creditor sells or transfers the account to another creditor, (B) the consumer responds to post-chargeoff collection efforts by making a payment on the debt, or (C) the consumer disputes the account with a CRA? Does it matter whether the 7-year period has expired when any of these events occurs? No. In enacting the new provisions discussed above, Congress intended to establish a date certain -- 180 days after the start of the delinquency that led to the chargeoff -- to begin the obsolescence period. It did so to correct the often lengthy extension of the period that resulted from later events under the original FCRA. Enclosed are two staff opinion letters (Kosmerl, 06/04/99; Johnson, 08/31/98) that discuss the impact of these provisions, and the legislative history relating to their enactment, in more detail. Because the commencement of the seven year period is now described with some precision by the statute, it is our opinion that none of the subsequent events you listed -- sale of the charged off account by the creditor, or a payment on or dispute about the account by the consumer -- changes the allowable period for a CRA to report a chargeoff.
My understanding is that only applies to derogs placed after 1997 when the new law passed. I might be incorrect, but I was told for anything placed on the report prior to 1997 this new law would not apply and you will reage by starting new activity. I am new so I certainly am not an expert. If your collections were placed in 99 and 00 they would not reage because the law changed. Am I wrong on this?
Section 623(a)(5) of the FCRA concerns the duty of furnishers to provide a notice of the delinquency date of accounts to consumer reporting agencies. This section provides that persons who furnish "information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall . . . notify the agency of the month and year of the commencement of the delinquency that immediately preceded the action." The provision is clear that furnishers must provide to consumer reporting agencies the month and year of the commencement of the delinquency that immediately preceded placement for collection, charge to profit and loss, or similar action. Thus, under the plain language of the statute there is no allowance for the use of an alternate, later date; you must use the statutory date for reporting. Use of the "paid-to-date" as that term is used in your accounting system is not acceptable.(1) The legislative history indicates that Congress included the requirement of Section 623(a)(5) so that there would be a uniform date certain by which all consumer reporting agencies would compute the seven-year reporting period for adverse items of information. It was the intent that the seven year reporting period begin with the commencement of the delinquency rather than any other date.(2) I have never read anywhere where it gives different rules for different dates. If you read the above, it says congress intended for 1 protocol to be used to establish the 7 year dates. It doesn't say there is other rules for debts prior to 1997.
Oh come on. Talk with a manager. They'll know it'll drop in a year. the odds of them collecting this (with the exception of you wanting a mortgage) are slim to none without this situation. don't tell them about the mortgage. It's too much power. Tell them you think the creditor and amount is off and you're thinking of going full validation... after all, they have all their documents in a row, right? (sarcasm a bit here)... but, even though you think the account is in error, you'd be willing to pay some for a full and immediate deletion... you know, the hassle factor and all... And after all, any reasonable person can see it'll drop in a YEAR anyway. Now, if you were the manager and your choices are: 1: validation fight and possible payment 2: no payment at all with no validation fight 3: a reasonable person offering a reasonable percentage for deletion (and giving them a possible dispute in the account which allows them to delete according to their contracts with the CRAs) Hmmmm. what would you do? Your fallback position is you can always wire the collection agency the money and get a paid in full letter from them. your cra doesn't have to update for your broker to know it's paid and allow you to proceed with a prime mortgage. It's done all the time even when the cras haven't updated your reports yet... On choice one, act nice but a bit confused. You may have owed some but certainly not THAT amount... so you could fight them and still decide not to pay... or you both can be reasonable... what does the manager suggest... you get the idea. Remember, you don't get what you deserve, you get what you negotiate
Thanks LKH, I had done some research on this as well but being the rookie I am I may have confused myself needlessly. In that same opinion you quoted they have this as well: . Since Sections 623(a)(5) and 605(c)(1) provide new rules for calculating the 7-year period that became effective in 1997, do chargeoff accounts now have different obsolescence periods depending on when the chargeoff occurred? Yes. Section 605(c)(2) states that the section "shall apply only to items of information added to the (CRA) file of a consumer on or after" 455 days after enactment, or December 29, 1997. Therefore, a chargeoff reported to a CRA on or after that date is subject to the new commencement-of-the-delinquency method of calculating the obsolescence period set forth in Sections 623(a)(5) and 605(c)(1). On the other hand, a chargeoff reported to a CRA before December 29, 1997, is not covered by the new provisions, as discussed in one of the enclosed letters (Kosmerl, 06/04/99). If a credit account was reported as a chargeoff before that date, the Commission's view has been that it can be reported for seven years from the date the creditor actually charged it off.(3) This says the same thing you are saying but what I do not understand is what happens when you settle and they change the acount to settle as agreed? Would it no longer be a chargoff and now being entirely different thereby making the new date the date it was paid? I may be way off base here and that was really my reason for posting in the first place. A mortgage company would only require a letter stating it has been settled so if I went ahead with the settlement I did not want to have this issue on my credit beyond the original 7 years. It is over 6 years old now so I don't think it is hurting my score since everything since is perfect. I'm being cautious because I do not need a new negative account showing delinquency in 1/2002. What do you think I should do, accept a notation as settled as agreed and let it fall off next year or hold out for deletion entirely?
Read Maries post above. I think she gave some good suggestions. As far as the 7 years goes, what has changed is the start date for reporting.
Marie You must have tapped into my computer and read the letter I sent to them today. What you are suggesting is exactly what I did. I of course used some of the letters posted here by the pro's and inserted what was applicable to my situation. I gave them until the end of January to respond or I will begin the validation process. Here is the first paragraph: This letter will serve as my intent to resolve the past due balance that has been written off by your bank. However, please be advised that I dispute the validity of your debt and this offer in no way waives my rights to validation of your debt. I am willing to discuss settlement but if an agreement cannot be met prior to January 31, 2002 I will begin the validation process since I dispute my owing of any money to your company.
