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Paid off Debts, Settled Debts


creditstudent38
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Paid off debts on three credit cards,

Settled debts with lump sum payments

Paid lump sum settlement on three credit cards! Woo hoo!

Usually (with skilled negotiation) they can be settled for @20-40% of accumulated balance:

NCI Nationwide Credit Inc.

NCI (25.7%) of accumulated interest fees +principal

2500.00 (of 9800.00 capital one card debt) paid 02/08/2012

need Debt Release Letter

February 22, 2012 ask for “debt release letter.”

So credit report lists “paid as agreed? Paid in full? Satisfied?”

still need to Call for Paid in Full after

15 day grace/clearance period after which one can request a debt release letter

(debt release letter received via fax on feb 23, 2012)

Asset Acceptance Corp

1952.00 of 7800.00 on Heritage First USA/Chase Card (25%) paid 02/08/2012

February 29, 2012 ask for “Debt Release Letter”

22 day grace period after which one can request a debt release letter

still need to ask if credit report improves and says paid in full or paid as agreed and if debt collector agency reports it as fulfilled or satisfied whatever the wording is.

NCO Financial Systems

$1876.32 of $4690.80 Capital One Card debt (40%) paid 02/28/2012

Asked for mailed AND faxed “Debt Release Letter”

*still need to ask if credit report improves and says paid in full or paid as agreed and if debt collector agency reports it as fulfilled or satisfied whatever the wording may be.

Now all that remains of my "unsecured/revolving" credit debt is two credit card debts:

1) BofA/Suntrust ~5k

2) MBNA Card ~9k

both allegedly owned/bought (or sued) by JDBs Midland Funding LLC. That's a different story.

Anyhoo, it feels good to pay down some high interest debts for reasonable settlements.

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There could be a way around the 1099-C income. If your debts exceeded your assets, you could have your CPA submit a form to the IRS showing that you are illiquid before the debts were paid. If you had $15k in CC debt and only $5k in assets, you are upside down and illiquid. Just keep that in the back of your mind for when you receive those 1099s.

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There could be a way around the 1099-C income. If your debts exceeded your assets, you could have your CPA submit a form to the IRS showing that you are illiquid before the debts were paid. If you had $15k in CC debt and only $5k in assets, you are upside down and illiquid. Just keep that in the back of your mind for when you receive those 1099s.

This is true BMC100. I have read about the implications of insolvency, though un/fortunate for me, (if you could call it that) it's sort of a tax break if I can prove that I'm insolvent for the year.

Fact of the matter is I'm still deeply in debt due to student loans, so that also factors in at some point.

We'll see when those 1099c forms start trickling in, if at all. One or two of the cc/ca's that I settled with mentioned it, so they will likely report any "income" forgiven above 600.00 up to the principal amount.

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  • 2 weeks later...

I was recently offered a settlement for a debt with an attached judgment on it. I need help in outlining the terms and conditions for the settlement.

The debt collector represents the company who bought the debt from the original creditor. The question I have is whether I should be talking to the company they represent since that company is the one who will be reporting this to the credit bureau? Before I start paying them a cent, I want everything to be in writing and legally binding.

The conditions I want to have are as follows. Advice me if they are reasonable and worded properly:

Completion of payments will render this account closed and that I must be released from all judgments associated with this account.

A release letter, relieving me from this debt, must be sent after the last payment is cleared.

That the balance will not be sold for further collection nor obtain judgment to collect them.

That cashing-in the checks would mean you are complying with these terms on good faith, thus creating this agreement legally binding.

In addition, I do not know how to let them have this matter "paid as agreed" or "paid in full." Any help on this one?

I would also like to tell them in a good way (perhaps through better wording) that breach of this agreement will prompt me to obtain civil proceedings against them.

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My accounts on my credit report are showing as "last paid 02/12", "collections account" and not what I expected like "paid in full 02/2012" or "settlement paid satisfied 02/2012" should i be concerned?

They still show a balance and they dont reflect my paid in full, and settled in full that i got in writing, will it take awhile for this to show? like 30, 60, 90 days. I see a slight improvement in credit scores, like a 12pt jump, but do I dispute via Equifax or wait for the CAs to send 1099 or paid/settled in full to be reported to Credit report agencies? do I have to send a letter in writing to the Collection agencies to make them report as settled in full and NOT "last paid" with a balance? Is there legal action beyond writing or request for delete or something?

Im a little concerned now about my credit report saying "last paid 02/2012" instead of settled in full.... but it's weird it shows that it is a collections account but it says i have no revolving credit, just installments i think. Well i still have my paperwork and conf#'s from where i settled and written letters of settled in full..

Edited by creditstudent38
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My accounts on my credit report are showing as "last paid 02/12", "collections account" and not what I expected like "paid in full 02/2012" or "settlement paid satisfied 02/2012" should i be concerned?

They still show a balance and they dont reflect my paid in full, and settled in full that i got in writing, will it take awhile for this to show? do I dispute via Equifax or wait for the CAs to send 1099 or paid/settled in full to be reported to Credit report agencies? do I have to send a letter in writing to the Collection agencies to make them report as settled in full and NOT "last paid" with a balance? Is there legal action beyond writing or request for delete or something?

Interesting. The creditor must do their end of the bargain if specified explicitly in the outlined terms and conditions of that settlement that the agreed amount will satisfy full payment. I would send the letter you received from the creditor to the credit bureau as proof that your account was indeed settled and that it should reflect an updated status.

But do contact the the debt collector first and see why they reported as such. If you can not get them to respond, you should file a complaint to Better Business Bureau and/or to your State's Attorney General. Those were what I have seen advised here in this forum while researching on my own problems.

Can you PM me or post the settlement letter you sent your creditors here? I would like to outline clean and clear the terms and conditions of the settlement they are offering. Thank you.

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As a courtesy they sent me (2 of them anyway) a letter stating that the above mentioned debt is settled in full in return for so and so payment. This can be negotiated via phone, though some insist on a fax, written letter or offer/voucher certificate with a lump sum payment offer. I have been lucky to negotiate these with 3 out of 5 creditors. These were long overdue debts, w/cap one (2) and chase (1) that ended up at NCI, NCO, and Asset Acceptance. I arranged it over the phone with a visa debit card and made it explicitly clear that this is to be a lump sum one-time, paid in full deal, and that they must mail or fax a letter saying as much, to which they complied. How that shows in a credit report is a different story, which may take some time to repair.

The remaining 2 (Midland) are being terribly difficult, it is no wonder they have an "F" rating on the Better Business Bureau (Pollack and Rosen). If I had all the time and money in the world I might try to nail them on FDCPA and FCRA violations and have them fined and their license taken away permanently. Their disregard for common decency and their flawed and greedy business model will bite them back soon enough; they've wronged enough people for far too long now, so word is getting out. >>>>>> (Encore Capital, Midland Funding, Pollack and Rosen JDB Attorneys) <<<<<<<It's a wonder they've abused the system this long,

I'm just upset that they're being sharks, well they'll meet pro shark hunters soon enough (rising complaints, civil suits, class action suits, AG investigations, savvy smart pro se litigants, etc).

Well, i'm just saying be wary of anyone who has a BBB "F" rating. Because with them it's anyone's guess, they may lie, cheat, steal, who knows?

And im just saying I would have much rather dealt with the original creditors on this but they sold my debts down the river, 3 times, for a nickel on the dollar now. And the bottom feeders act entitled to full amount. NO!

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My tax person tells me, that you must be insolvent the year the 1099-C was issued. Second, if I'm not mistaken, they have up to three years to issue the 1099-C. It's been three years since my default, and I just got my 1099-C last month, so, they got me in that three year period.

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My tax person tells me, that you must be insolvent the year the 1099-C was issued. Second, if I'm not mistaken, they have up to three years to issue the 1099-C. It's been three years since my default, and I just got my 1099-C last month, so, they got me in that three year period.

So...Insolvent means debts (i.e. liabilities, money owed) are greater than income/assets/property? this is definitely the case with me!

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There could be a way around the 1099-C income. If your debts exceeded your assets, you could have your CPA submit a form to the IRS showing that you are illiquid before the debts were paid. If you had $15k in CC debt and only $5k in assets, you are upside down and illiquid. Just keep that in the back of your mind for when you receive those 1099s.

thanks, I'll make a note of it bmc100! is there any way I can get official documentation of this via the IRS itself or do an audit/accounting of my current assets/debts

assets= <2k

liabilities= 138k (mostly student loans)

is that insolvent enough? ha!

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In my case, I plan on sending them a more tailored letter in addition to their letter offering the settlement.

I would prefer to specify that the judgment creditor (name) agrees to accept payment from judgment debtor (me), the amount of $xxx, in accord and satisfaction, which means that the debt is satisfied in full including any interest fee, damages, or expenses incidental to the principal obligation and upon completion of the agreed settlement amount, that the judgment debtor must be released from the debt and from any judgment associated with this account, meaning all judgments must be vacated and dismissed with prejudice including levy and property lien.

Cashing-in the checks by the judgment creditor and/or by the collection agency will make all the terms and conditions of this settlement agreement legally binding and further waive the judgment creditor and/or collection agency's rights and claims to collect the remaining balance and pursue/enter future judgment associated with this account.

I hope I can find a pro-bono lawyer to help me outline this and make sure there is enough legal wordings in it. Any help from kind-hearted California lawyers in the LA area? :)

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thanks, I'll make a note of it bmc100! is there any way I can get official documentation of this via the IRS itself or do an audit/accounting of my current assets/debts

assets= <2k

liabilities= 138k (mostly student loans)

is that insolvent enough? ha!

By the way, do let me know how you process your 1099-C's. The jdugment creditor told me that the amount I will pay will satisfy the judgment amount in full and will not be reporting it to the IRS nor give me 1099-C's. Not sure if this is true. This is why I have to put everything in writing before I start making payments.

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What I wanna know is how in the world did you get them to settle for such a low amount. My debt is. Seriously less then 500 and one less then 1,000 and they are trying for 2 and 4 grand and won't settle for even 1,000 on the smaller one

well my debts had ballooned way past principal (for instance 1900 cred limit became 4500 or more with interest and fees) and I ended up paying almost the full 1900 for that one!

as for having some leverage, i blocked all their calls for like 2 years. and i accumulated all the collection agency notices and looked for ones that offered lump sums, then out of the blue i call them and say hey lets take care of this..today.

now the last two are being c***s for some reason so we'll just have to see about that,then again they are the high balance ones, so maybe thats why..

im sorta judgement proof (less than 2k assets and little or no income) and the only money i have is some leftover student financial aid

i think they all figured that i would never pay them, and decided to take whatever they could get, or whatever I offered them right then..or possibly get nothing/ have to sue/more collection costs

they made money on it, trust me, they pay like 3-6 cents on the dollar for these debts.

look at Encore Capital's annual statement, it's public information, they buy tons of debt in portfolio for like 5 cents/9 cents on the face value dollar amount then they outsource CAs/attys to aggressively sue for the whole amount. Corporate greed at its finest. (insert expletive here)

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Originally Posted by creditstudent38

Quote:

Originally Posted by credit911

Hi,

So I plan on accepting the settlement either today or tomorrow. The judgment creditor will send by e-mail the settlement offer. Earlier this week, they can offer 3 monthly payments, after which they will send a letter that the account is settled and closed.

They said that since their law office is linked with the court system, all judgments associated with my account will be automatically dropped. I have been recording all of our conversations with regards to their settlement offer, in case they won't live up to their end of the bargain.

So far, they agreed that all judgments be dropped, the case be vacated with prejudice, that they will not sell the balance for further collection, and that completion of agreed payment will settle and close the account.

I plan on detailing our verbal terms and conditions once they e-mail me the letter of settlement offer.

What advice can you give?

sounds like you're doing things right, and that they are being reasonable, if they email, maybe print it up and make it explicit that after three payments of money order or traceable debit card that you get conf #'s for, and that then it is done and done. One lump sum is easier, but make sure they honor those terms they gave you and make it explicit and keep records.

Hey creditstudent38, I have a question about credit report.

For example, an account went into first delinquency in 2006 and per Transunion's date estimation, it should come off in 2013. Now, from 2006 up to the present, the account has gone into collection. If I settle the account this year, they will mark it as either paid and settled or something in those lines and report it to the credit bureau. Now, my question is, does that new remark on my credit report last for another 7 years OR it should follow the original date of first delinquency and come off by 2013?

________________________________________________________

This is a really good question so I'm posting it on this board. I wonder the same exact thing. I've pulled my CR recently and it's showing two recent payments, but I HAVE NO IDEA IF THIS RE-AGES THE ACCOUNT, or if they (CAs) have to report explicitly on CR as paid or settled in full. Mine are from 2007 when I couldnt afford payments anymore until now.

Does anyone know if this re-ages the account, and if there is any recourse if 'settled in full' isnt stated and it re-ages the account and shows a remaining balance...???

I've heard of this happening and it one of the most rotten things that CAs do, I know they do this sometimes do this and it's really terrible..if theyve done this to me I will be very upset.:(

so okay, i have the same question.. does anyone know about this?

I know I got letters and faxes for my payments that mention both the OCs and CAs, with confirmation numbers, but you never know, sometimes people get taken for a ride...or they just forget to send letters or forget to report to CRAs

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You've kind of piled a bunch of questions and what ifs into a fairly tangled web that's a little difficult to follow...so...let me state some facts that might help you understand where you're at.

1. The lenght of time a tradeline (TL) can stay on your credit reports is determined by the "date of first delinquency" (DOFD) which is the date upon which a payment was due to the original creditor (OC) and you didn't pay it. If that account is never again brought current with the OC (i.e., paid in full), the DOFD does not change.

2. Settlements with collection agencies (CAs) are not worth the paper they're usually not written on. CAs, in almost all cases, do not have the legal authority to speak for the OC. Although there are exceptions, most of the time, if you owe the OC $1000, and the CA agrees to "settle" for $500, you still owe the OC money. The CA will send part of that $500 as their "commision" and send the rest to the OC.

3. As far as tax consequences are concerned, read IRS Pub 982. Since student loans are not "dischargeable" in BK, they may not count as a liability for determining your insolvency. (I'm honestly not sure about that).

4. If your debts are old enough to have been sold to a junk debt buyer(JDB), you have a whole nuther set of problems.

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willingtocope

I understand a little about student loans, and there is what is called a "financial hardship" usually for folks that make less than 150% of federal poverty level and there are specific pay plans for that. And I had considered bankruptcy for the unsecured debt, but I found a middle ground that might help me through this, and that was setting aside some money to pay down the high interest unsecured debt,

I hope Im not that naive that Ive been completely fleeced, tho in reality i must deal with my current situation accordingly. I do know my credit score has improved recently.

I don't know where you're getting your information, maybe some very bad experiences with CAs, or what, but I'm hoping for the best. I know I waited too long, way past 3 months or 6 months to try to deal with it, but I had no choice.

I looked on my credit report, to see who the current owner of the debt is, and made payment arrangements accordingly. We shall see if that improves things, and if CAs are just liars. ( I know they are. I have first-hand knowledge of this, and JDBs are probably worse.)

And you seem to be very foreboding about JDBs maybe also from personal experience? or maybe some hard won experience? and while it's aggravating, yes it's another thing I have to deal with...

Im sorry if youve been burned by JDBs/CAs and yes I would like some info to fight back, because there are some bad actors. But i'm trying to be optimistic and focus on practical advice, on beating them, dealing with them, or negotiating. This board has gotten me thru this far, so anyway its nice to know that im not the only one.

Anyway, maybe you could tell us the absolute worst case scenarios and scare me some more. jk :rolleyes: Well at least, if it isnt as bad you say i will be thankful.

And thanks to you I learned a new phrase... "trade line" so thanks for that!:mrgreen:

Oh and really "not a liability?" what's more of a liability than non-dischargeable debt? But then again I don't know much about how the IRS determines insolvency for the purposes of a 1099c as far as student debt but I'll read up on it.

Edited by creditstudent38
clarification
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Some of my advice is based on personal experience...most is based on reading about other people's experiences over the last 8 years.

I looked on my credit report, to see who the current owner of the debt is, and made payment arrangements accordingly. We shall see if that improves things, and if CAs are just liars
First, you need CRs directly from the CRAs. Any other source is likely to be out of date or just flat out inaccurate. Second, if a debt has been sold, the OC's TL will say "sold to another lender" and their balance will be $0. If its sold, you''re dealing with a JDB. CAs do not buy debts...they just handle the hassling for OCs or JDBs.

And, there is a very easy way to tell when a CA is lying. Their mouth is moving.

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Some of my advice is based on personal experience...most is based on reading about other people's experiences over the last 8 years.

First, you need CRs directly from the CRAs.

I pulled one of those 3 in 1 full reports with scores and FICO see above (transunion, equifax, experian) and examined it closely, very closely.

Any other source is likely to be out of date or just flat out inaccurate. Second, if a debt has been sold, the OC's TL will say "sold to another lender" and their balance will be $0.
Yes, I see several of these entries on my report(s) from actual CRAs. I think im ok in getting this right, knowing who owns what, and if they are JDB or CA, tho I agree its darn confusing.

If its sold, you''re dealing with a JDB. CAs do not buy debts...they just handle the hassling for OCs or JDBs.
yes, I understand this.

And, there is a very easy way to tell when a CA is lying. Their mouth is moving.
well that lying was the rotten thing I was talking about that they do. I think some of them really honor the payment agreement as paid in full on behalf of OC (for one of my trade lines, an old capital one card debt, NCI systems collected/settled in full with faxed letter for Cap One for instance) maybe it was a rare event. I know some of them deceive into re-aging the debt and thats not cool.

Thanks for your responses.

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