I settled an account with a CA. I received a settlement offer from the CA with the OC information on it, confirming our agreement to settle the above referenced account by accepting 2493.73 as settlement in full. letter stated my balance 6242.06 agreeded settlement amount 2493.73 and the cash savings amount 3748.33 After payment was made I received a letter from CA confirming they received and posted my payment in the amount of 1000.00 and this payment will satisfy the settlement agreement. Ca will close my account as settled in full and return it to their client the OC. with a balance of 3748.33 What should I do ???
Settlements like that seem very tempting to lots of folks but they are rife with dangers for the unwary. There are 3 main things that can happen if no written contract to the contrary is performed before the debtor pays them. The first problem is the damage to your credit. They can and most often put an evil notation on your credit reports saying you paid only part of the bill or that it was a paid charge off. After that no creditor will want to deal with you in the future and since you admitted the debt when you paid it off it is going to be pretty tough getting it removed later. If you plan to pay them off you will want to use a check with a contractual agreement on the back which forces them to take it off within 10 days of cashing the check. You can learn all about how to do that by going to Westcap endorsement and you get the wording for the stamp so you can have one made if you want to and some folks have been using laser printers to put the stamp on their checks. All the instructions and wording for the stamp are on the westcap endorsement webpage. Just click on the blue link. The second problem that is often encountered is the IRS form 1099. In many cases they will accept the partial settlement and then file an IRS form 1099 with the IRS for the remaining balance and then you will have to pay taxes on the unpaid balance. That would be a nasty surprise at tax time and can often mean the difference between getting a tax refund and having to pay more taxes instead of getting money back. They seldom if ever tell you about all that when you settle either. They let you find it out the hard way because if they told you up front you might refuse to pay and that would mean a lesser paycheck for the collector because he is paid on a commission basis. He gets a fairly healty chunk of what he collects from you and he don't want to be taking any pay cuts if he can help it. And the next thing that can happen is that the collection agent gets you to pay him and then he don't tell the creditor that he collected the money and keeps it all. Pretty soon the creditor sends your account to another collection agency. That has happened so many times in the past that in many states 3rd party collectors have to put up bonds to the state, be licensed and adhere to strict rules in order that the state can be sure that creditors and the public are not victimized by unscrupulous bill collectors. People believe that if they pay the collector their troubles are all over but that is usually far from the case. That's why you need to take really solid precautionary steps and make them provide you with a contract that will protect you from such evil practices. Good thing they aren't all like that but there are enough of them out there that it should be a real warning to anyone thinking that if they pay the bill collector they have put an end to the matter because they probably haven't.
so Bill, here's $5. loan me your stamp! before i offer that payment, the steps to be taken are validate the loan with the CA. i want to settle, i would not send them a check with that stamp on the back out of the blue, is there a form for the contract i would use to ensure that my butt is covered? i have been reading so much, i can't remember where anything is. thanks
the stamp IS the contract... I did the equiv a few years ago, printed it right on the check. I sent it along with a letter that mentioned I was paying off/closing the account and that in return for my check that had to delete all records of it. I never mentioned the check had the contract printed on it, and I assumed they would seperate the check for processing before they ever even read the letter... They never deleted, but they never reported again, and a simple CRA dispute took it off when they didn't/couldn't verify.
Well, still don't actually see the $5.00. (LOL) All of the instructions on how to do it and what to do if you want to "rent" my stamp are also on my webpage at http://www.creditwrench.com/westcap.html and so is the exact wording so you can get a copy made for yourself or use your laser printer if you want to. Obviously I'm not planning to retire on the proceeds of the $5 a pop. (LOL) Barely covers my actual expenses by the time one counts photocopying, gasoline and time to do it. Out of the $5 I might actually earn $1 or maybe $2. No biggie. So you can visit the webpage and do whatever.
Since I did not use the stamp on the back of the check, I still have the settlement letter saying that the collection agency and the original creditor agrees to accept the settlement offer. Can I use this letter if they don't bring the balance to zero? thanks.
