I have two credit cards from Chase Bank that are over the limit. At one point, I stopped paying all together for a period of about 6 months because I had no money. Things are improving, and I have been making regular payments for a few months. I am still in collections, because I am running behind 2-3 months because of the non-payment period I had last year. My balances are not huge to some people ($5000 on one card, $4000 on the other) but to my limited income they are impossible to pay off. My credit score is just skimming 500 now because of these 2 cards. So I am getting anxious, thinking that this is beyond fixing. Credit counselors won't help me because my debt is all with this one company. But anyway, Chase contacted me with a settlement offer - 50% of the balance in 12 months - no interest or fees added during the time period. To me, this seems like a great deal, because with my income it is just barely do-able and I can now look forward to no more hassle. My question is, in the long run, will a settlement like this look worse on my credit, than just continuing to pay the minimum and dragging it out? I am hoping that after we pay off the settlement it will only look bad for a couple of years, and maybe we could get a secured card afterward to begin rebuilding. Any input would be appreciated!
The notation of settled in full or anything along those lines will, as you suspect damage your credit rating. However the damage diminishes with time. In a couple of years it's really not a big deal any longer so long as it's the only one on the report. If there's lots ot these it will do more damage. Also, if you ever hope to get another card with Chase, the chances may be slim to none that it will happen if Chase maintains any type of "blacklist" (this is only speculation on my part since I don't know if they do or don't) The offer could be generous, if the debt is yours as you say it is, but I would write them back and say something like, I appreciate the offer but I would not want to commit to something again that I can not pay......and the offer to pay a lesser % over a years time and deletion of the tradelines in your credit report. More than likely they will accept the $ amount but tell you they "have to report it accurately". Then it's up to you whether you want to continue the fight.
Well, the rep is supposed to call me back tomorrow morning, to see if we accept this settlement. We have seen nothing in writing yet, so I will wait until that materializes. So you are saying, I should refuse the offer, and write back, requesting a better one? I was shocked that they offered the 50% reduction! I am kind of a timid person, I guess I need to grow a backbone. LOL So I should ask for say, 45% or 40%? How low should I go - I don't want to look like a fool. (Which I am!) I have been reading a lot of the postings on this site, and it is all new to me! When I spoke to the rep this afternoon, he told me that yes, there would be a note on my credit report that would say paid in full. From what I have read here, that is bad, but not as bad as it could be. I am worried about permanently damaging my credit - and my husband's credit. But that notation sounds a lot worse than just letting the amount get bigger and bigger with the interest & fees. Our credit score seems low to me already! We are not in a charge-off situation yet. They told me that we would have to be 6 months behind for that (we are 2-3 months). Plus, they tell me all the time that "NY is a litigation state." That upsets me more than anything!
PAID FOR LESS THAN AGREED...IS BAD Pay as much as needed for TOTAL REMOVAL or PAID/NEVER LATE BALANCE $0 "ACCOUNT CLOSED BY CONSUMER"
George - How do I go about telling the rep I'd like a message like that put on? Do I just ask them on the phone outright before I get the initial offer in writing? OR do I wait until I get the paperwork, and then write them back asking for it? OR Should I wait until I get the settlement completely paid off, and then send them a Goodwill letter? I'm sorry for all the questions, I'm a newbie! Holly
Send the letter that says YOU WILL PAY 100% CONDITIONAL ON THE FOLLOWING... COMPLETE REMOVAL or PAID/NEVER LATE BALANCE $0 "ACCOUNT CLOSED BY CUSTOMER"
But I can't pay 100%...and it will be just barely possible to pay the 50%, but with the year's time they are giving me with no fees or interest, I should be able to cover it. Should I say I accept their settlement, on the condition....etc
Re: Re: Does a settlement damage my credit? That sounds great. Hope they go for it! Should I mention it when I talk to the rep tomorrow morning, or just write the letter when I get the settlement statement? That is my last question - I swear! For now, anyway! Thanks so much!
Re: Re: Re: Does a settlement damage my credit? I also wanted to add that these accounts were closed by Chase a few years ago due to the 6 month non-payment activity, and the over-the-limit status. They were not charged off, they are still being held by Chase and I am dealing with their internal collections department. Does this make a difference in whether or not I should accept the settlement? I've been reading about the SOL stuff and I am wondering if any of that would apply to these accounts. I live in NY. We have been making payments recently, but that doesn't reset the clock does it?? Where can I find out when these accounts went into collections - should I just call and ask Chase? Would they tell me that info? Yikes, I have more questions today than I did yesterday! I spoke to the rep this morning, and she said she would get the settlement paperwork together and submit it today for approval. I guess she has to get someone higher up to sign off on the arrangements, but she said we should know by Saturday morning if her boss accepts it. Any help would be greatly appreciated! Thanks! Holly
Re: Re: Re: Does a settlement damage my credit? The SOL starts from the date of last activity, which for you is the last payment you made on this account. I would not get in a huge rush to do anything for two reasons: 1) You have nothing confirmed in writing at this time. (Always,always, always insist on it being done in writing even if you come to a verbal agreement) 2) Time is on your side from the aspect that the more age on the debt the lower they will settle for. The 50% offer is, as I said previously what some would consider generous.....however, the other folks are correct in saying removal of the TL is the best option for you. This may be difficult to get approved, especially if you have been paying on it until 2-3 months ago. If they agree in writing to remove the TL, not sell or assign the remainder of the debt and not to issue a 1099C at the end of the year, take the offer. I negotiate a little harder than some on here, but there's a time and place when you have to give pause to wheher the offer being made is the quickest and easiest way to get the end result you want. If it is, then by all means go for it. I still think you could get it down a little lower if you wait them out another 30-45 days......and no suit will be filed in that time. It would take them six months just to begin the legal route.........even if they decided to which is highly unlikely anyway. Good luck!
Re: Re: Re: Does a settlement damage my credit? Actually, I have made payments recently - not just 2-3 months ago. They are calling me 2-3 months behind, since I had some payments that I did not pay at all for a long while, and I have recently been playing catch-up, making double payments, etc. This has not been helping my balance though, because of all the fees and interest. I am trying to be optimistic about this settlement offer. Just last week I called and spoke with a rep about settlements, and she told me they would need at least 80% if I wanted to do something like that. She then referred me to a credit counseling service called Greentree, who told me on the phone that we wouldn't qualify for any help, since our debt is all with Chase. (something about 30% needed to be with other companies before they could help us). So I called Chase back, spoke with a rep who basically said, oh that's too bad, there is nothing we can do. Then, poof, this other rep from Chase calls and says she could set up a 50% settlement offer. So this was out of the blue - I thought we were just going to be stuck continuing to pay the same old, same old. Hopefully it works! I have been working on drafting a letter to say thank you for the 50% settlement, but we would also appreciate a full removal after that is completed. I didn't think about the tax situation. Crap, should I just ask for the moon all in the same letter? Which is more important to ask for? Should I say I'd like a removal, but would accept a positive tradeline? Or just ask for the removal and follow up if it is denied? Thanks again! Holly Holly
Re: Re: Re: Does a settlement damage my credit? You should definitely shoot for removal of the TL. Did you get the name of the rep that offered you 50%? Also, is he/she willing to put the offer in writing? I would not settle anything until it is in writing because you are dealing with a trained collector who is liable to screw you unless you can prove the offer was made. With that in mind, write a letter to the person who made the offer, confirming your conversation and tell him/her that you appreciate the generous offer but there are two issues you would like to clarify prior to the settlement.(assuming you are accepting the 50% offer....if not then there's 3 issues) 1) You seek deletion of the tradelines from your credit bureau files or in the alternative report paid in full as agreed. 2) Please clarify whether a 1099C will be issued. (You may or may not want one) 3) Only if you want to negotiate the $$ I am unable to accept 50% as I don't have that much to pay because......... But I can pay XX% immediately upon your acceptance of this offer. Whatever you do......get it in writing and once the deal is done, get written proof. Also, when you pay do not issue a check from your checking account or even from your bank. Go get a money order or cashier's check somewhere totally different. And don't fall for the we'll accept a post dated check thing either. That's just a way to trick you into giving them your checking acct info. And NEVER EVER use a credit counselor......they sleep in the same bed as the collectors. Lots of luck in your pursuit!
Re: Re: Re: Does a settlement damage my credit? I do know the name of the rep, and I have her phone number. She said she was putting the proposal in front of her boss, and if it was accepted, then we would receive confirmation by Saturday, and we would get something in writing. I definitely do not want a 1099R, as we are right at the top of our tax bracket, and any additional income will put us out of the running for several credits on our taxes. But asking them NOT to do a 1099R, that sounds like tax evasion, and it scares me a bit. Can I get in trouble for asking them not to do one?? I intend to accept the 50% offer, but the only reason I can do it is because they are giving us 12 months to pay it off. I can't do it in one lump sum. I pay them every month with a check already..would it matter very much now if I changed my method of payment? My plan right now is to accept the offer as it is written, so we can get the 50% cut. I really don't want to jeopardize that. I was planning to accept the offer, and then send a follow-up letter saying thank you for the generous settlement, yadda yadda yadda, but we would really appreciate a total deletion once we have finished paying. And if they don't respond to that, I'd then send another letter asking for more positive tradelines instead. What do you think?? I am so totally new at this!
Re: Re: Re: Re: Does a settlement damage my credit? Do nothing until you get that written confirmation. No it's definitely not against the law for them NOT to issue the 1099. There is no requirement, only a guideline. If they don't issue the 1099 you have nothing to worry about. In the event they do, you must report the amount as income or prove insolvency to the IRS.....take you pick. They will most likely want to issue the 1099 but the tax impact on the 5K write off should be minimal. Once you begin paying the 50% over the 12 months, it will be nearly, if not totally impossible to get them to delete or make the tradeline positive. Secure the agreement in writing now before there's any misunderstanding and a chance for them to back out. BTW......if you can not afford the lump sum, 50% over 12 mos is probably a good deal as long as you are comfortable with that arrangement and will be able to meet the committment. It does not matter if you change your method of payment. As long as they get their $$ they could care less if it was in pennies or hundred dollars bills or a check. You'll do just fine, but be sure to take your time. If the credit is already damaged then speeding it up just to make the creditor happy will not make this better. Take it at your own pace.
