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Will a Settled For Less Than Agreed Hurt My Credit Report?


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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Thanks admin. I'm also thinking about just paying the entire debt to the bank. If I do that, do you (or anyone else reading this post) think that I can get a more favorable credit status for this account? If I pay the entire balance in full, the bank cannot say that I "Settled For Less Than Agreed" or that I settled at all for that matter, right?

Also, remember that the CRAs have already deleted this account from my credit reports. My next question is will this account re-appear on my credit reports with the "Settled For Less Than Agreed" status after the settlement is finalized?

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Technically, If you pay the full amount it will help you on future loan applications.

Yes if you settle for less than the full amount it has a very good chance of showing up on your CR.

However, if you pay it in full the OC will have no vested interest in re-posting this to your cr. Also, you will have no outstanding unpaid balance if it does show up AND they can't sell the remainder of the debt to a Junk Debt buyer.

Plus, if you dispute this in the future, the OC has no vested interest in re-verifying the debt. It is possible to get this to drop off your CR before the 7 years.

Really the better route is to go for PFD.

Good luck.

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Thanks Radio Guy but what does PFD mean?

So if I pay the entire balance, would the bank still report this as a "Settled For Less Than Agreed" or will they say "Paid-Charge Off" or something else?

Also radio guy, if I pay the entire balance in full, are you saying that the bank re-insert this account on my credit report (the CRAs already deleted the account)? And if the bank does re-insert, are you saying that I can have the account deleted again because the bank has no interest in re-verifying the account? Please explain.

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PFD = Pay for Delete. There is a whole section here about getting a paid for delete agreement signed by a creditor. You can search it on the forums.

Whoooops...

I missed the fact that your attorney refuses to push for paid for delete.

I am doing to many things at once...

If you pay the entire balance they will say paid in full in the Cr, It may show up as a paid collection item, it may just show up as a paid account that was 180 days past due. It shouldn't 'show up as a paid charge off technically because if you pay it can't be charged off. But seriously the banks and the CRAs are SO bad at reporting it could show up as anything or not show up at all.

If you pay this in full the bank doesn't care at all about re-posting this, they got their money so they may not report it. If they do then in the future you dispute it and the bank again doesn't care about the account because it is paid so they may just put your request at the bottom of their compliance list and they may accidentally pass the 30 day mark for re-verifying.

I've worked in banks for years, if the account is paid no one cares - its a waste of time and money to mess with paid accounts. If this were a credit card company, they would be much more diligent about reporting paid collections.

Good luck.

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Thanks radio guy. I'm sorry for asking so many questions but I've always valued your advice.

I think I will pay the balance in full as I previously stated. Should I also push for a "Paid In Full" status on my credit report or just leave the credit reporting issue alone and dispute this later with the CRAs (if it shows up at all)?

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Should I also push for a "Paid In Full" status on my credit report or just leave the credit reporting issue alone and dispute this later with the CRAs (if it shows up at all)?

As long as you're not going for PFD... Don't say a word about your CR to the bank.

I'm sorry for asking so many questions

The only questions you should be sorry for are - the ones you don't ask...

Glad to help...

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Thanks Radio Guy. I don't think I'll go the PFD route since this account has already been deleted from my credit reports. However, you've raised a very good point about the bank selling the remaining debt to a Junk Debt Buyer so, yeah, I'll definitely pay the full balance and dispute this account later with the CRAs if needed. Quick question though, HOW would I dispute a "Settled For Less Than Agreed" account with the CRAs? What would be my reason for dispute?

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HOW would I dispute a "Settled For Less Than Agreed" account with the CRAs? What would be my reason for dispute?

I don't think will be the issue since you are paying the full balance.

But the book has a checklist of the order of disputes, ( in case is does re-appear as a paid in full account with deliquencies or whatever...)

First always is "Not mine"

Then you start dinging them for inaccuracies, Like dated opened, high credit amount, blah... blah... blah...

If you do settle for less than the full balance, the dispute reasons and their order is about the same...

Now you said the attorney has been negotiating this for you so you may want to stick with him and not bring up this PFD stuff. I DON'T know what is going on with that... usually banks are so afraid of legal costs that they may have a tacit agreement with the attorney not to report it after you've paid the full balance. .. (Banks hate to be sued because the Feds look these suits over in their audits.)

There is a chance that reason this fell off you credit report in the first place is because you have an attorney and the bank coded your account as a do not report or HOLD-reporting account... Frequently clerical bank employees are reluctant to remove this type of hold for fear of reprisals by their superiors if you do litigate in the future. All they want is the money so they can remove this account from their outstanding collections report to Sr. Mgmt.

This is a Tough decision because you don't know what will happen in the future with the reporting for this account.

Does your attorney know this fell off your credit report?

If yes, ask him if HE thinks it will re-appear after you pay it in full... see what he says and make your best guess.

Good luck,

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This account fell off of my reports over a year ago in a prior dispute - long before the lawsuits and the settlement. And, yes, I told my attorney several times that this account is not appearing on my credit reports despite the bank's claims that they are reporting this account delinquent to the CRAs.

In any event, it appears that I know more about credit reports and CRAs than my attorney. The attorney basically lied to me during our consultation about his experience handling credit matters but I later discovered that he doesn't have a clue about this stuff. I'm essentially paying this lawyer to settle this case on my behalf and to draft the settlement agreement. :-(

So based on my knowledge of CRAs, the "Good Credit Is Sexy Book" and the experts on this board, I've decided to pay the entire balance, keep a close eye on my credit reports, and dispute this account with the CRAs if necessary.

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