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Charge Off Question


megaconfused
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Almost two years ago I made the decision (possibly mistake) of entering a debt consolidation program.  The program requested I stop making payments on all of my accounts in the program. I did. After 6 months the largest of my debtors sold the account to a debt collector and filed my account as charged off.  I later came to an agreement with and settled the agreed upon payoff amount with the debt collections agency. I even paid taxes on the forgiven debt as a 1099C. I have read a lot of blogs and I realize that I will have a difficult time having the charge off removed from my credit report and I am not sure if I am going to even try to pursue that as an option.  My big question is as follows; Does the original lender have the right to try and collect or file a lawsuit to collect any money from me after I settled with the debt collection company?  I did not settle the full amount and they filed as charge off before I had paid anything.  Does this mean I still have to settle with the original lender?  

 ( I have made it out of the debt consolidation program and have paid off all agreed upon pay off amounts and currently sit debt free. I know my credit was damaged but I am taking steps to repair it now. ) 

any advice or comments will be appreciated. If I am still obligated to pay I plan to attempt to come to a settlement. If by paying the settlement with the debt collector I am no longer obligated to pay do I have a chance to get the charge off removed??

THANK YOU 

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28 minutes ago, megaconfused said:

Does the original lender have the right to try and collect or file a lawsuit to collect any money from me after I settled with the debt collection company?

If they sold the debt:  no.  The OC is out of the picture completely.  If you settled with their collection agency who had that authority:  also no.

29 minutes ago, megaconfused said:

 Does this mean I still have to settle with the original lender?

No.

30 minutes ago, megaconfused said:

If by paying the settlement with the debt collector I am no longer obligated to pay do I have a chance to get the charge off removed??

Who is the original creditor and who is the company you settled with?  That will tell us the chances of getting it removed.

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1 hour ago, Clydesmom said:

Who is the original creditor and who is the company you settled with?  That will tell us the chances of getting it removed.

First of all Thank you for taking the time to answer my questions. The original lender was Prosper and the company I settled with was First Step Group LLC. 

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For credit reporting, I would verify that the final statement on the account is settled, paid for less that amount owed. That looks better to potential creditors who look beyond credit scores than an open account. Also, Fair Issac changed the scoring model to take into account settled accounts because JDBs complained to them that people were refusing to settle because it affected their score in a negative way. It might be removable but I would doubt it and not spend too much effort and certainly no money to get it removed. The 7 year clock started on the day of settlement and as it ages, it will affect your score less and less.

As for settlement, I have to ask, did you get it in writing? If you did not , you might have a problem because then it becomes he said/she said and you know a debt collector is lying if their lips are moving. If you did get the settlement in writing, make sure to staple the cancelled check to the settlement and keep if somewhere easily accessible and yet safe as you will probably get a call for the rest of the debt, regardless of what the settlement said. If you are sued down the line, you defense is accord and satisfaction, submitting the settlement and cancelled check as evidence. You might even have a FDCPA claim if sued for misrepresentation of the status of the debt.

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