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I have a chance to settle a debt with Discover. Amount owed $2600, they are willing to accept 1K.

Do I accept their offer? I am set to go to arbitration and am thinking about rolling the dice. If I

lose I will owe a much larger amount. With that being said I could file bk.

Will a judgment or a bk be worse on my credit. I would assume bk.

Thoughts?

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@azneb

 

In my opinion, settling a debt always looks better to potential creditors than disposing a debt through bk. 

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Actually, a judgment has a worse effect on your FICO scores. It will hang over your head for 10 or 20 years, and anyone who's going to lend you money will be concerned that the judgment holder gets "first dibs".

A BK stays on your reports just as long, but creditors know you can't BK again for years, so usually if you keep your nose clean for 2 years, they'll lend to you.

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Actually, a judgment has a worse effect on your FICO scores. It will hang over your head for 10 or 20 years, and anyone who's going to lend you money will be concerned that the judgment holder gets "first dibs".

A BK stays on your reports just as long, but creditors know you can't BK again for years, so usually if you keep your nose clean for 2 years, they'll lend to you.

 

@willingtocope

 

Good points.

 

But what if you settle before a judgment is rendered?

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"Settled for less" hurts less than either a BK or Judgment.

Again, if you have good history for two years, CCs will "trust" you again (at a high interest rate), mortgage lenders will deal with you (maybe with PMI) and car loans won't care much.

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I recently settled an old Discover debt that was inside SOL by 3 years.  I was able to get 30% on a debt that was over $8K. The upside, I believe I avoided a lawsuit that was surely coming my way.

 

Low and behold, Discover updated the settlement on all 3 of my credit reports to be a positive, paid, closed account. A week after, they sent out a preapproval offer for a new Discover card. I think I was lucky and someone coded the account wrong, but I'm not going to complain (or ever dispute the acct).

 

Obviously YMWV, but settling with Discover is not always a bad thing.

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You certainly can note in your terms that the debt be coded as "paid as agreed" or "account closed" with no comments. Or that they stop reporting. 

 

One way to do that is to have a confidentiality clause in the settlement, with substantial liquidated damages for either side for violating the ND. Nobody talks. If they report to the CRAs, they have violated, and you can collect.

 

It's normal to have liquidated damages equal to or double the amount of the original debt.

 

I would also want to ensure that the debt can never be sold, again, with liquidated damages in some amount.

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You certainly can note in your terms that the debt be coded as "paid as agreed" or "account closed" with no comments. Or that they stop reporting. 

 

One way to do that is to have a confidentiality clause in the settlement, with substantial liquidated damages for either side for violating the ND. Nobody talks. If they report to the CRAs, they have violated, and you can collect.

 

It's normal to have liquidated damages equal to or double the amount of the original debt.

 

I would also want to ensure that the debt can never be sold, again, with liquidated damages in some amount.

My experience with the failure of an OC to comply with agreed upon settlement terms causes me to question whether specifying liquidated damages will keep me away from having to use litigation/arbitration to eventually resolve dispute/violations.

 

If liquidated damages wander into the realm of punitive the courts may refuse to enforce them.

 

I would be interested to see where liquidated damages "equal to or double the amount of the original debt" were upheld or struck down by a court.

 

I am not against using liquidated damages in an agreement but one needs to know what they are doing IMHO.

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@Credator: if the liquidated damages are assessed against both parties, that seems, IMO, to take away the punitive aspect.

 

But I, of course, am not a judge.

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they are not offering anything up to settle but the $1000k.   I just sent him an email stating that I have an issue with their settlement agreement not saying anything about the possibility of being sued for remaining balance or discover not reporting my credit as " paid as agree"   he says he doesn't have anything to do with that.   My thought is if he has the permission to settle at a lower cost he should have the ability to agree to put whatever he wants on my credit report!!!  Keeps threatening that they need to send the retainer to JAMS and once they do that I will owe much more than the 1k.    Do I call his bluff?   I just don't know if I have enough ammo to defeat these clowns at arbitration or not nor do I want to do all the work to fight considering its they came down from 2600 to 1k.

 

Thoughts!!!

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 I just don't know if I have enough ammo to defeat these clowns at arbitration or not ...

 

What do you have for ammo so far? Identity left? Mistaken identity? Fraud or error on the part of Discover?

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@Wins the Battle

 

One way to do that is to have a confidentiality clause in the settlement, with substantial liquidated damages for either side for violating the ND. Nobody talks. If they report to the CRAs, they have violated, and you can collect.

 

 

I doubt an OC or CA would include a confidentiality clause in this type of settlement agreement.  Non-disclosure is usually for the type of agreements in which a party doesn't want certain things revealed.  A CA will do that when they settle an FDCPA claim because they usually don't admit liability and just don't want the terms of the settlement agreement discussed.

 

I've seen people suggest including liquidated damages, but I've yet to find a ruling on that issue in regard to credit card debt, settlements, the FDCPA, etc.  It could be out there, but I haven't found it.

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they are not offering anything up to settle but the $1000k.   I just sent him an email stating that I have an issue with their settlement agreement not saying anything about the possibility of being sued for remaining balance or discover not reporting my credit as " paid as agree"   he says he doesn't have anything to do with that.   My thought is if he has the permission to settle at a lower cost he should have the ability to agree to put whatever he wants on my credit report!!!  Keeps threatening that they need to send the retainer to JAMS and once they do that I will owe much more than the 1k.    Do I call his bluff?   I just don't know if I have enough ammo to defeat these clowns at arbitration or not nor do I want to do all the work to fight considering its they came down from 2600 to 1k.

 

Thoughts!!!

If a DC attorney's lips are moving I assume they are lying.

I don't bluff in negotiations. Others may have insights as to their routine success in bluffing in negotiations while dealing with sophisticated parties.

 

The $300 would be my counter offer to them. They have offered to settle for $800 If it does get to JAMS and I am liable for attorney fees I couldn't afford whatever they decide I owe. I could go into further detail however I am curious if creditors read these blogs. I am probably being paranoid.

The latest: Spoke to attorney he says I who the original 1600 plus the 900 they have paid to JAMS which is non refundable. I offered to pay them the original $800 in which they originally offered. He said they would come down to 1600. I spoke to him again later in the day and he said the OC has agreed to accept $1000. I went from owing 2500 to 1000.

DO I accept their offer or do I roll the dice and possible be stuck paying 3k+?

...

If I keep moving the goal post I am not sure how I would know when I have "won".

 

...

No one on an online forum can possibly answer the OP's question as to, "DO I accept their offer or do I roll the dice and possible be stuck paying 3k+?" At least not ethically IMHO.

...

Last I checked this is not a gambling website.

 

If I either cannot or will not do the work necessary to prevail in a collection case, it seems that filing a BK or writing the check requested by the opposing party are two of the more common options for consumers fighting an alleged debt.

 

Those continually searching for an "easy button" in litigation will likely be harmed by those that understand there are no real shortcuts when fighting a tenacious and engaged opponent.

 

...

I've seen people suggest including liquidated damages, but I've yet to find a ruling on that issue in regard to credit card debt, settlements, the FDCPA, etc.  It could be out there, but I haven't found it.

I would assume that if I put in a liquidated damage amount that the courts later determined was a penalty and is unenforceable, that I may still be able to enforce actual damages if such can be determined. I would probably want to have severability language in the agreement that may mitigate any possible harm done by unenforceable liquidated damages or any other unenforceable clauses in my agreement.

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@Credator

 

Personally, I think we sometimes make to much of debt settlement agreements.  It's not necessary to get into liquidated damages and severability language.  "Settlement" and "settled" means just that.  It's over and done.

 

If the agreement says the account is settled, nothing else is owed.  There doesn't need to be an inclusion of a statement regarding their entry on credit report.  Their entry on a credit report would have to reflect the fact that the account has been settled because that's the status of the account.  Their entry might include "settled for less than the full amount", but it still means that nothing else is owed. 

 

Nor does there need to be an inclusion that the balance will not be sold because once an account is settled, there is no remaining balance to be sold.

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@BV80

 

@Credator

 

Personally, I think we sometimes make to much of debt settlement agreements.  It's not necessary to get into liquidated damages and severability language.  "Settlement" and "settled" means just that.  It's over and done.

 

If the agreement says the account is settled, nothing else is owed.  There doesn't need to be an inclusion of a statement regarding their entry on credit report.  Their entry on a credit report would have to reflect the fact that the account has been settled because that's the status of the account.  Their entry might include "settled for less than the full amount", but it still means that nothing else is owed. 

 

Nor does there need to be an inclusion that the balance will not be sold because once an account is settled, there is no remaining balance to be sold.

I may have been convinced of "over and done" prior to an experience with an OC that refused to comply with the plain terms of a stipulated agreement.

 

I have one shot at an agreement and I will make sure it is my best shot. Each should choose their own path to their "win" that they feel comfortable with. IMHO

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@Credator

 

I agree that each person should be comfortable with the agreement but he doesn't need to be so picky that the other party rescinds the offer.

 

In the event that a party refuses to comply with plain terms, you have recourse.  But, of course, that could depend upon the details.

 

In this particular situation, "settlement" means it's settled.  It appears that "settlement" and "payment" would be the only legal terms to consider and the legal definitions of those terms don't widely vary.

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@Credator

 

I agree that each person should be comfortable with the agreement but he doesn't need to be so picky that the other party rescinds the offer.

 

In the event that a party refuses to comply with plain terms, you have recourse.  But, of course, that could depend upon the details.

 

In this particular situation, "settlement" means it's settled.  It appears that "settlement" and "payment" would be the only legal terms to consider and the legal definitions of those terms don't widely vary.

Yep. The agreement terms were clear and they were violated by the OC. Recourse appears to be a lawsuit. I am not naive enough to believe settled magically means "it's settled". YMMV

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@Credator

 

Of course, I don't know the details of your predicament.  :-)

 

The more details involved, the greater the chance of confusion, discrepancy, or violation.

 

In the OP's case, there's only one detail.  Does $1000 settle the account?  The answer would be "yes".  As a result, there's no remaining balance (no balance to sell) and credit reports would have to reflect the settled status.  There's not a court out there who would not agree that a balance was no longer owed.

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@BV80

 

@Credator

 

Of course, I don't know the details of your predicament.  :-)

 

The more details involved, the greater the chance of confusion, discrepancy, or violation.

 

In the OP's case, there's only one detail.  Does $1000 settle the account?  The answer would be "yes".  As a result, there's no remaining balance (no balance to sell) and credit reports would have to reflect the settled status.  There's not a court out there who would not agree that a balance was no longer owed.

There were minimal details and the terms were crystal clear in the case of my violation.

 

Each situation is different.

 

As I recall, severability has been in almost every contract I have signed that had more than one clause. I doubt any attorney, DC or otherwise, would object to their client signing such.

 

Whether "There's not a court out there who would not agree that a balance was no longer owed." does me no good if I am unable or unwilling to go to court, spend money, possibly hire an attorney and properly plead/motion the court enforce the violated term(s).

 

I would want to keep the agreement terms simple but include everything I required.

 

I don't trust an OC, JDB, CA, or a DC attorney to comply with the terms of an agreement no matter if it is well written, signed in blood, and/or filed in court.

 

...

I am not against using liquidated damages in an agreement but one needs to know what they are doing IMHO.

I am skeptical that liquidated damages routinely avoid having to go to court to enforce an agreement's terms and/or collect damages. AFAIK liquidated damages don't have some kind of mojo for agreement compliance.

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Yes it was for the 1k.   I cost myself an extra $200 by filing for arbitration.   I just wasn't confident I'd actually win at arbitration and it would be foolish of me to take the chance of having to possibly pay all the arbitration fee which probably would of been 3K plus.

 

I think I did ok.

$1670 sued for

$  968 arbitration cost

$2638 total

 

I ended up paying 38% of the total bill.

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This is interesting. Perhaps the magic number for Discover is 32 bucks...

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