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JDB increasing original balance on credit report, but settlement balance decreasing?


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Good Morning Everyone! I'm happy to have this forum. I have a few questions, and I'm hoping someone can help me. First and foremost, I've read the archives, which say not to pay debt buyers. Well, it's too late for that, I've already began payments on a settlement offer, so please don't remind me how foolish I've been. I feel terrible enough as it is.

Here is the situation. The Debt Buyer purchased my account from original creditor, and immediately added five thousand dollars worth of interest to a four year old balance, though the original credit had charged off the account, and stopped adding interest. The statute of limitations on this written contract is 10 yrs, and this is for a personal loan.

It was explained to me, that if I began monthly payments on the settlement amount, they would stop adding interest to the original amount, and would simply decrease the settlement amount, and after the settlement was paid in full, they would note that with the credit bureaus, and I would owe nothing further.

I recently discovered, that the original balance is continuing to increase each month on my credit report by $100 dollars, though I receive monthly notices showing my settlement balance is decreasing. This is not what I agreed upon. Is this something they must do legally? Had I known this, I would not have made these arrangements.

The reason I'm concerned, is because it will take 8 years for me to pay off the settlement amount at the monthly rate I'm making payments. So this means, once the settlement is paid, it will look like they've given me a $5,000 settlement on a $15,000 debt, which means I may end up owing taxes to the IRS for hundreds of dollars. Due to an accident, I don't plan on returning to work after the settlement is paid, but I may, and there is no way I'll be able taxes on $10,000 of forgiven debt. Does anyone know how much that would be?

Also, this account was originally due to fall off of my credit report in four years. Will it now remain an additional 7 years since I've resumed payments? or will that remain the same, but it will only restart the clock to sue me if I stop payments for some reason? What should I do? I"m confused and feel very foolish right now.

Edit: I just called debt buyer and the person I normally speak with was not in. The gentleman she works with says their office updates every 30-60 days, so they probably have just not updated since I began payments. Still I won't relax until it's actually done. The office says they'll send me a letter explaining the adjustment. Also, I discovered this morning, that even if I'm making payments to a debt buyer for the next hundred years, the item will still be removed from my credit report 7 years from the date of first delinquency with original creditor. So I had two items removed today from all 3 bureaus, though I'm still currently making payments to them for the next 3 years, and will receive confirmation via mail in a a week or so from the credit bureaus.

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