I can't find anything on this specific situation, so I'm asking for some input from you guys. My dad has a sears account in good standing. He's been paying the minimum on it (for the most part) since 1990, and he feels like he's never going to pay it off. He just got a home equity loan and wants to pay Sears (and some other CCs) off and be rid of them. It kills him to hand over 2,000 to Sears tho, since he figured out he already paid them 3x the original cost of the products he bought with that damn card. (please dont anyone tell me 'he signed an agreement, yadda yadda yadda") He wants to settle for a lesser amount. I told him they probably won't agree to settle, (being that its a current account) and that he'll probably have to pay them in full if he wants to be done with them. Plus I think if they did agree to settle, it would bring his FICO scores down. I know that when someone settles for a lesser amount they should get an agreement for deletion in writing. (but this is usually for very delinquent accounts.) Do you guys think Sears would ever agree to this? (I DONT) But, if they did, how bad would it be for his scores? I dont think he should do it, but I wanted to ask for sure before i give him advice. thanks
I'm not sure about them agreeing or not however remember if he does make an agreement for less then he owes that there is the possibility that Sears will report the "forgiven" amount to the IRS and your Dad will have to pay taxes on that amount. They may send him a 1099 at tax time.
:-O I forgot all about that! I will be sure to tell him this. Sears is just the type to do this to someone too. thanks! Didnt sears just sell their CC division to Citibank or someone? I wonder if that has any bearing here... *off to do a search* thanks again.
also, if he settles for less he won't get another card w/them. if he plans on not using the card again, get a HE-TERM loan (not a HELOC) w/like a five year amortization (so it will all be paid off in 5 yrs)...most states is tax deductible...and he should thank god he is lucky enough to have a child like you looking out for him.
sears or citibank will not settle for less if the account is current (why should they ?). if you want to settle for less you are going to have to stop paying on the account. i don't think they will discuss settlement issues until you reach the 90+ day late point. then you will have the issue of sears reporting the lates on your CR and effecting your fico scores (is this important to you ?). lates will stay on your CR for 7 years but lose their effect after 2 years, assuming all other CC are being paid, i don't think it will be a big deal.
You can sure some up with some interesting pickles Crowmom. Sears, (and everyone else for that matter) has NO motivaton to settle a "performing asset" for a lessor amount. He would probably have to stop and let it defualt first, which is a BAD idea. Just tell him to take it on the chin this one last time. And tell him we said to BEHAVE himself from now on. ~ .
lol butch, Thats what i told him, more or less. my exact phrase was "Sears pretty much has you by the cajones." He really was naive (hate using that word for my brilliant father) enough to think that they would be nice and say 'sure, you've been paying us on time for 12 years, in fact you've paid us hundreds more than you really needed to...we'd be happy to settle for less." makes me so mad. I have my own battle with sears and they just don't play nice at all. thanks so much for the advice guys.
