Hi Everyone, I discovered this site back in 2007, in despair after the bad financial choices I had made in college were finally coming back to bite me. Since then I've actually made a lot of headway on my own, just by getting into special payment programs and actually changing some of my spending habits (hey, novel idea!). However, I'm back to the forums because of an old Macy's debt that was finally charged off in 2009, and the CA who bought the debt has just now begun to contact me. I've been reading tons of posts, and went ahead and sent the CA a DV letter. Just received the validation (knew I would, but wanted to try anyway) and now I'm feeling a bit overwhelmed by the options for my next step. When I was first contacted, they offered me a settlement for 55% of the balance, payable in 3 installments. The debt validation letter made no mention of a settlement option, and it may no longer be on the table. My original thought was that there was no reason to pay the settlement, because from what I've read here, it won't fix anything on your credit report and the CA is not obligated to even report that you've paid. The balance is $1825 - should I expect that they might sue me? I would appreciate any suggestions as to what my next move should be: settlement, pay in full, wait out the SOL? Thanks so much, I have learned a ton already!
Welcome back, and it's good to hear that you took control of your financial situation. Before we go any further, I wouldn't worry too much about your DV letter provoking the CA to take the settlement option off the table. You did, after all, exercize your rights under Federal law, so I don't think it would make the debt buyer look very good if they retaliated by taking their previous offer off the table. Now, please correct me if I'm wrong, but from what I've gathered from your post thus far you are 99.9% certain that this debt is yours and regardless of whether or not you were satisfied with the "validation" they provided, you nevertheless wish to resolve the account once and for all. If that's the case, then let's move on. If not, you do have some more options available to you which I'll happily discuss. Well... Yes and no. It's true that if you just pay on the settlement, it won't do anything beneficial for your credit reports because a paid or settled "collections account" is just as harmful to your score as a delinquent one. However, if you were to get the CA to agree in writing that as a condition of settlement, they either delete the account from your credit reports entirely or remove all negative notations from the listed account, then you would be resolving the account on far more favorable terms. After all, why should you continue to be "punished" with a negative listing on your credit reports once you've satisfied the debt? That's just how I look at it, anyway. Again, yes and no. If they feel you're a prime candidate for obtaining a judgment against you, they more than likely will sue. However, more often than not, a debt buyer typically does not have as much supporting documentation available to them as, say, the original creditor. If you choose to stonewall the CA at this point, you're essentially taking a calculated risk. They may sue you if they feel that legal action is the only way to resolve the account, or they may simply give up and sell your account to another buyer. Or, they may just sit on it and hire 3rd party debt collectors to periodically hector you from time to time. Also, being sued in court isn't a pleasant experience, but it's not the end of the world either. Again, more often than not, debt buyers don't possess enough evidence to prove that the debt they're suing you for is yours, and in some states, there are strict laws governing whether or not documentary evidence presented at a trial falls under hearsay rules. It's also highly unlikely that the debt buyer will be introducing someone from Macy's IT department as a witness to authenticate those records. In the absolute worst case scenario, they would obtain a judgment against you and while you may lose a considerable amount of bargaining leverage with a settlement, you need only work out a reasonable payment arrangement with the judge. Plus I believe (someone PLEASE correct me if I'm wrong with this) once the judgment is satisfied, it's removed from your public records and credit reports. I'm not telling you what you should do, but merely doing my best to educate you about all the possible outcomes so that you can make an informed decision as to what the best course of action is. That's entirely up to you based upon your financial situation. If you can afford to pay the account in full without creating undue hardship for yourself and it's what your conscience says is "the right thing to do," then pay it in full, but be firm on either a "pay for delete" arrangement or the removal of ALL negative notations on the account (consequentially, when you're paying it in full, that gives you a LOT more leverage when negotiating the aforementioned terms). As far as a settlement, you should only settle for what you can reasonably afford without creating undue hardship for yourself. Again, don't be afraid to ask for a "pay for delete" or the removal of the negative notations on the account. Waiting it out is also a viable option, but like I said, you're taking a calculated risk by doing so. Only you can determine if, based upon your own personal situation, the benefits outweigh the risks. I hope I was helpful.
Thanks so much for your advice, Stand_Tall. I think I'm going to go ahead and try to settle it and ask for a PFD, just to have it all off my back once and for all. However, I'm wondering about installment agreements - do CAs generally (or ever) work with debt-holders on paying over more than 3 months or so? Originally, the CA offered me a settlement in 3 payments, but it would be much easier for me to get it done over 6. Is that realistic to hope for? Again, I truly appreciate you taking time to consider my predicament.
No problem. I'm glad it was helpful. Well... One thing to keep in mind with debt buyers, and I apologize if you may already know this, is that they purchase charged-off debts from original creditors for pennies on the dollar. They then turn around and try to collect on those debts and will typically (but not always) settle them for a fraction of what the original amount of the debt was. What I'm saying is this: Even if a debtor settled with the debt buyer for, say, 40% of the original balance, in many cases they're still making a profit on their "investment." Taking all these things into consideration, it stands to reason that paying the reduced amount in full over six months as opposed to three is hardly unrealistic since they're still more than likely making a profit on a debt they purchased for a fraction of what it was worth and a six month plan is still a fairly expeditious way to settle the account over time. I cannot predict whether the debt buyer in your particular situation will be willing to cooperate with you or agree to that arrangement right off the bat, but you can take comfort in knowing that your request is not unreasonable in the slightest. I recall you saying that the remaining balance was $1825 or so and that they offered to settle for 55% which by my calculations amounts to approximately $1003.75 or $167.29 a month divided into six monthly payments. If you've thoroughly evaluated your finances and can afford that kind of payment without leaving yourself short, then by all means go for it. I would make it clear to them that a PFD/negative comment removal arrangement is non-negotiable however, and I strongly suggest you get everything in writing and not agree to anything over the phone. Send them your settlement offer through the mail CMRRR and don't pay them a penny until they return it to you with an authorized representative's signature (i.e. someone in management or their general counsel). Thank you, and again I hope that I was of help to you. I'm hardly an "expert" on these things, but I've learned more about the whole debt collections process in the last two years than I ever wanted to know in my entire lifetime!
The message was very clear and I thank you. We've had the situation and currently I'm still on the process of having a settlement with my card company to close the deal. I know that it's bad on the record, but just a question, if you applied for a loan and the bank would think twice because of your debts, however, you supported it with a good record of the cash flow on your savings account will they consider your loan?
Update to my Macy's debt situation (now it's referred to as Citibank/Macy's, which was news to me) - after I received the debt validation from the CA, they went ahead and sold it to another agency! This agency, Capital Management, did not start off with any kind of settlement offer, but I went ahead with my PFD letter. They responded by calling my father's house (at least they don't have my new cell number) and giving them a number I could call. I was nervous to call, just because I had no idea what kind of person I was going to get. Fortunately the guy was reasonably decent. In regards to my offer of $600 (in 3 installments) to settle the debt in exchange for deletion of all negative marks and tradelines on my CR, the rep said it wasn't possible. First he said that "usually" after the debt is paid/settled, about 60-90 days later the CC would report it as paid to the CRAs. Then he said that it's impossible for any company to have all negative notations completely removed from a CR listing, they can only report that's it's up to date or paid in full. Second, he said that he couldn't do $600, that the absolute most he was ever allowed to offer was 55% off the original amount, which would bring the balance to around $800. I'm not sure what I should do here - I think $800 is a reasonable amount for me to pay over 6 months, but I don't want to give in too quickly. I also don't want to do it over the phone, and have no written guarantee of that agreement. My first thought was to write back to them and offer $675 or $700, but I don't want them to assume I'm eager to pay it off and decide to try and get more out of me. Any thoughts/advice would be much appreciated!
I do not think $800 is a reasonable amount, because junk debt buyers (JDBs) such as Capital Management buy the debt for pennies on the dollar. For a $1825 debt, I guarantee they didn't pay more than $180 for it, and probably paid $85 to $95. Therefore, your offer of 50% is extremely generous, and provides the JDB a handsome profit for essentially doing nothing. The reason the rep you spoke to wants to settle for a higher amount is because they get a commission based on how much they squeeze out of you! Furthermore paying anything toward this debt--even paying it off in full--will not help your credit scores at all. The damage to your credit was done when the debt was charged off. At this point, only time can heal your credit, and that will happen in 2014 (when this account ages off your credit report) regardless of whether you pay or not. My advice is to ignore these people, do not call them again, and wait for them to offer you a juicy settlement offer--assuming that you wish to pay anything toward this debt. I know that I have gotten unsolicited settlement offers in the 25% to 40% range, which means that if I was truly serious about settling my debts, I could probably settle them all for about 33% of the total balances owed. If you do want to settle a debt this old (2007) you should use 25% as your starting point and refuse to negotiate above 35%. The JDB paid so little for the debt, and furthermore they only bought a printout of your name, address, SSN, account number, and balance owed. They will not sue you, because they don't even possess the documentation needed to prevail in court!
