I recently negotiated with two collection agencies a lump sum payment for two different credit cards. I settled each for a significantly reduced sum, and have closed the accounts. During these negotiations I did not negotiate the treatment of the settlement on the credit report. Will payment and closure of these accounts be deemed a positive or a negative? Was it a mistake to pay them off at a reduced amount without securing credit report treatment? Assuming it was a mistake to pay them off without credit report treatment, can such a mistake be remedied post-payment? Thank you.
I don't think so, sorry. Once they have your money, they are probably going to be hard to track down. Did you negotiate that they won't sell the balance to another CA? I hope so. If not, the difference in what you paid and what you owe, they will most likely sell to another CA who will come after you for the difference.
No selling of balances - I have letters stating account settled and closed. Will this improve one's credit score?
There are many discussions on this board regarding how paid chargeoffs can ultimately be removed from credit reports. First, read the FAQ question regarding paid chargeoffs. Next, here are a couple of threads to check out: -- http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&pgnum=4&postid=195337 -- http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=195487#post195487 I mentioned several different strategies people have used here to successfully dispute paid collections (Knockout letter; Goodwill letter; Nutcase series; and DanceRat strategy) in my posting in the second thread above. Link to that post: http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=195705#post195705 There are of course many other comments, so search the board for "paid chargeoffs" and you'll set yourself up with an evening or two of helpful reading. Bottom line: Congratulations on successfully negotiating and resolving your debts. Your next step, once the debt settles and you're all paid off, is to begin the task of cleaning your credit reports. Doc
Doc, thank you for the cites. I did read through the FAQs, but the information wasn't as complete as I needed. Tip for others on this board: If you have an outstanding balance and want to simply pay it off lump sum, you've got to negotiate the payment downward, and negotiate hard. Do not give in at the first rate reduction the collection agency offers you. Keep on working that number lower and lower. This is a *great* time to negotiate down an oustanding balance - the markets are awful, and just wait until the big lenders (COF, MXT, etc.) watch their stock prices tumble due to loan losses. The orignators and agencies know what's coming - use this to your advantage. Cash is king in a faltering economy. I was able to negotiate lump sum payments for only 30%-40% of my outstanding balances. I had a reason for being so obstinate, i.e. I was disputing certain outrageously fraudulent charges incurred on credit cards. I refused to capitulate, and let the accounts sit and sit and sit until the collection agencies came to the bargaining table with a real offer. I told the agencies if they wanted to resolve the account, and wanted a nice lump sum, they would have to go low - way low - before they saw a red cent. Note this negotiating tactic is most effective when you have the funds to pay it off all at once - nothing gets the agency more excited than the prospect of seeing a large lump-sum payment = fees for the agency. You can negotiate a payment plan for settling the debt, but the total percentage of debt reduction they offered was less, at least in my experience.
This is a helpful tip for simply paying an account off. However, a CA usually won't settle so low if you want deletion of the tradeline as part of the bargain.
