Written off accounts...

Discussion in 'Credit Talk' started by B2, May 11, 2000.

  1. B2

    B2 Guest

    If a credit card closes an account and writes it off as a bad debt, will they send the IRS a 1099 as income to the debtor? I've heard that legally they can, but it is really unusual for them to actually do so.
    The same with judgments - I know they can get them, but again, they usually don't.
    Any input on this?

  2. Jim

    Jim Well-Known Member

    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.
  3. teresa

    teresa Guest

    How do you get a hold of those company's that have charge off on your credit report and you finally seem to find an address for them and you send a certified,return receipt letter asking for a settlement and they still don't respond? Also after a charge off is paid off, how long is it still on your credit report? Can you do anything to change the negative signal it shows on your report even though it is paid? How do you get back onyour feet when your never are given a chance again?
  4. Jim

    Jim Well-Known Member

    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
  5. Jim

    Jim Well-Known Member

    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."
  6. teresa

    teresa Guest

    RE: One more tidbit

    Thanks for all your info. Basically I shoul dget all copies of my credit report and wriet each one and find out where my account is at, and go to them....well i hope you are right...I mean it is hard trying to get ahead and start to rebuild my credit. But secured credit cards are the best way right? Well I will go to the site and see what it says..thanks

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