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Will a "Settled For Less Than Agreed" Hurt My Cred


Bambee
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Hello all. I am in the process of settling an account for a personal loan. The bank has already agreed to indemnify me or pay me back the settlement amount if another lender demands payment on this account in the future. The bank agreed to do this because it cannot find my original promissory note for this account.

However, the bank refuses to report this account as anything but "Settled For Less Than Agreed" to the CRAs. I've read the "Good Credit is Sexy" book and I've suggested all the tips printed under the "Negotiate Your Credit Rating" section on page 157 (i.e. agreeing to change a listing based on a new settlement agreement, etc.) but to no avail. My attorney refuses to counter by suggesting other options for the account such as "Paid" only with all other negative notations deleted, "Settled" only with all other negative notations deleted, etc. and the bank claims that they are legally required to report "Settled For Less Than Agreed" only. Hogwash.

Will this "Settled For Less Than Agreed" hurt my credit report? The bank claims that this status is better for my credit report but, at the same time and according to my lawyer, the bank will not put this assurance in writing in the settlement agreement.

What are my alternatives? The CRAs have already deleted this account from my credit reports.

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It's better than just having a collection, but not as good as paid in full or better yet a PFD. To answer your question, It won't hurt your score or file any more than it already is by having it there in the first place.

But if it's already gone from your reprots then don't push it. Let it be gone. That's actually even better.

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Now the first thing that jumps out and says HI! in your post is that the Bank itself can't find any records proving you owe this debt. In light of the fact that they do not have your signature on a promise to pay, it doesn't exist until they find it. Period. It is not legal for them to demand payment for something that they cannot show evidence of indebtedness, that is extortion. So why in the world is your attorney suggesting you pay this at all with no evidence the debt even existed in the first place?

In general if an unpaid item has fallen off your credit report by means of the 7 year limit, there are very few States that have SoL times longer than the reporting period itself. Therefore, it is likely (but check first) that they could not come after you in a court action on it anyways.

If the trade was deleted by dispute, the CRAs are required to prevent the item from reappearing on your report unless they have written certification from the furnisher that the information is accurate and complete...and the CRA must notify you of the reinsert if it is placed back in. Since they have no record of the promissary note, they can't reinsert without falsifying the certification of accuracy and completeness.

To your question about settled. "Settled for less" is no different than a paid charge off. Why? Because to settle for less, the lender must charge off the unpaid portion.

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