Written off accounts...

I haven't received a 1099 yet. If anyone would have, it would have been me.

Most unsecured creditors don't usually sue. Its easier for them to write it off as loss and forget it. Anyway, a lot of old charge-offs are paid before they drop off the bureaus since they count on loan denials and credit repair folks to help them collect. Seecured creditors, on the other hand, are another story.

 

Keep in mind most creditors use two or three collection agencies, giving them each about six months to establish contact with you and start a payment plan. So you could be mailing letters to an agency that no longer holds the account. Contact the original creditor to find out who holds the account. To remove a collection account listing where n agency no longer holds the account, you simply have to dispute the listing on your credit report. In most cases, they won't respond and the listing will disapear.

Whether they will settle depends on the original creditor's wishes about the debt. With settlement authorization, agencies will typically settle between 50-60% of the debt if you pay in one lump sum. Making monthly payments to them means you pay the full bill. Depending on the age, you can settle for a little as 10% in some cases. Time is on your side so the longer you hold out before trying to negotiate, the better. Waiting until the statute of limiations expries gives you much more negotiating power.

Unless you are very skilled, I would not recommend calling an agency to deal woth them. They will try to bully you into paying in full. Sending them several letters that denote that of they want to collect anything, they need to offer a settlement, is best. They will eventually get tired of you and want to get rid of your account. Telling them you need to rebuild your credit or are applying for a loan is a kiss of death for any setlement. Don't do it!

Derogatory information remains on credit reports for seven years from "date of last activity." (BK stays 10 years) So, paying the debt resets the clock most of the time. Negotiating removal of the tradline in writing before they get a dime is your best bet. If you pay the debt off and they change it to paid status, you could try waiting at least six months before trying to dispute the item with the credit reporting agencies. Once the account is back with the original creditor, they have no compelling reason to keep the listing on your reports.

Your last question ...you get a couple of secured cards, pay them on time, and in about two years you'll be in a much better position. Try http://www.fcnb.com

 

One more tidbit

If you wait until the collection agency sends you a "final notice" letter, that's a clue their window of opportunity is about to exprire. That's a good time to swoop in with the "Send me a settlement letter confirming you will settle for $x." Like any negotiation, start lower and figure they will meet you about half way.

Getting a settlement letter generated is just as easy as the other lame letters they send. Every collection agency has standard settlement leters in their computerized "arsenal."