Spotlight

Payment of delinquent/charged off debt

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I recently had three major cards (BOA, Discover, Chase) that were charged off in 2014.  Prior to that, my credit score was around 800.  I accumulated debt when the economy  crashed in 2008.  I lost a rental property to an upside-down mortgage and also lost my job.  My credit score is currently around 600+.  I still have one debit/credit with my bank and one credit card with Capital One wich is always paid at the end of each month.

I am soon to be the recipient of a possible 8 figure settlement. Therefore, I was wondering if it is possible to pay off the debt of these other credit card companies even though they have been charged off?   If this is possible,   will they remove the delinquencies from the credit bureaus?   And will it improve my credit?

I would love to buy a condo (with cash) but I believe it may still not be possible with bad credit even though my future bank account and stock holdings may be quite substantial.

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15 minutes ago, Spotlight said:

Therefore, I was wondering if it is possible to pay off the debt of these other credit card companies even though they have been charged off?

Yes.  "Charged off" is an accounting term meaning it is no longer an asset but a liability it does not mean the debt is no longer owed.  The only condition on paying them off is that those creditors still actually own the debt.  All 3 of those are known for selling their bad debt portfolios to junk debt buyers.  If they no longer own the debt then they cannot settle with you.

16 minutes ago, Spotlight said:

If this is possible,   will they remove the delinquencies from the credit bureaus?

No.   Settling the debt owed now has NO affect on past payment issues and all 3 of those are known for their hard line stance against pay for deletion.

17 minutes ago, Spotlight said:

And will it improve my credit?

Slightly.  A paid charged off/collection account is better than a non-paid one.  Eventually it would hurt less.

18 minutes ago, Spotlight said:

I would love to buy a condo (with cash) but I believe it may still not be possible with bad credit even though my future bank account and stock holdings may be quite substantial.

Your credit would not stop you from buying real estate with cash.  They won't even check it.  Even if you finance a mortgage if those collections are paid and you are putting down 20% or more you would get a mortgage just not the best interest rate.  Of course the more you put down the more leverage you have to negotiate a better rate.

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Clydesmom,

Thank you for your quick reply!

At the time,  I had received several collection letters from those junk buyers.  Since my only current income is from Social Security,  I mailed each of them a letter claiming my right pursuant to the FDCP Act and to section 207 of the Social Security Act regarding protection from judgment.

Thanks again!

 

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48 minutes ago, Spotlight said:

Since my only current income is from Social Security,  I mailed each of them a letter claiming my right pursuant to the FDCP Act and to section 207 of the Social Security Act regarding protection from judgment.

Neither of those protect you from getting a judgment against you.  What it does protect you from is them levying your bank accounts to satisfy the judgment.  HOWEVER, only 2 months of benefits are protected from being seized.  Any amount not from an exempt source or greater than 2 months worth of benefits CAN legally be levied.  If you get an 8 figure settlement they most certainly can sue you and levy your bank accounts to satisfy the judgment.  Not to mention putting a lien on any property you own.

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Do you mean to say that they would only remove enough funds to satisfy the amount of the debt?   Would I first be warned of an impending levy so as to pay them off beforehand? 

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2 hours ago, Spotlight said:

Do you mean to say that they would only remove enough funds to satisfy the amount of the debt?

Yes.

2 hours ago, Spotlight said:

Would I first be warned of an impending levy so as to pay them off beforehand? 

No.  Few states (and I don't believe NY is not one) require that you be notified of an intent to levy because if they did the consumer would simply empty the account.

2 hours ago, Spotlight said:

I would assume that maybe my only recourse would be to file bankruptcy before the settlement. 

You would have to disclose the pending settlement and therefore would not qualify.  If you are getting millions of dollars why would you BK debt you know you owe?  It is a huge disservice to those who truly need to file.  Why not simply offer to settle the debts for pennies on the dollar and get it in writing as a settlement in full and the rest is disputed.  That way if someone did try to collect again or worse sue you have an iron clad defense and you can rest easy knowing the settlement is safe.

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46 minutes ago, Clydesmom said:

If you are getting millions of dollars why would you BK debt you know you owe?

Absolutly!  I would rather pay.  You have been very helpful.  Thank you for your time.  

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2 hours ago, Spotlight said:

Are there any statutes of limitations with regard to my situation?

Yes.  In NY the SOL for lawsuits based on credit card debt is 6 years from the date of your last payment.  If the accounts were charged off in 2014 then they have until 2020 to sue for these debts.

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Oh well, I guess I'll just have to wait it out till 2020.  Cash is king!

Thanks, Clydesmom and Angellily.  You've been very helpful.

Spotlight

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