Settlement Letter

[Want2Know4Me]

State: OH

I want to attempt to settle several debts with CA. I have heard that CA have agreed to settle for a percentage of the original debt then sold the remander of the debt to another CA.
Is it possible to word the letter in such a way so whatever amount they settle for is considered PIF?
Also....has anyone had any success getting a CA to settle a debt for a "paid" ?

[Kanchazi]

this might help you
[url]http://credit.about.com/cs/debtnegotiation/a/052103a_3.htm[/url]

[capri142]

Im not exactly sure what a CA is but there are a few things you need to be waware of about settlements. First a settlememnt is not considred payment in full of your obligation to a creditor and other creditors do not look kindly on the words Settled in full on credit reports also while a creditor may accept a settlement on a severly delinquent account just to get something it will not be considered paid in full or appear that way on your credit report. Second. You may well have to pay taxes on the amount that is written off by the creditor if it is more than $599. Third if you settle an account with a creditor they cannot sell the difference to a third party as suggested in your posting. Fourth, Settlements are rarely a good idea.

[justalayman]

Originally Posted by capri142

Im not exactly sure what a CA .

CA- collection agency

[Want2Know4Me]

Thank you for your response capri142. Could you please tell me why settlements aren't a good idea? If the CA agrees to accept the settlement offer as "payment in full" then they must honor the agreement.
Are you saying that it is better to pay nothing if you cannot afford to pay the entire amount? The fees and interest are more than the original amount owed.

[Debt Guy]

I think capri is off base.

A settlement darn sure makes more sense than being sued and a judgment granted.

No written document is absolutely guaranteed. There are no magic words. You could have the best words in the world and then still end up being sued to enforce the document. Or you could be sued and then need to defend yourself.

I would look at it this way -- assume you settle and further assume someone later decides to sue you for the balance of the debt. You will then attend the hearing and show your paperwork to the judge. What would you want that paperwork to say that would be convincing to the judge?

Maybe this is worth a couple hundred bucks to hire a lawyer to draft for you and keep you out of trouble?

[capri142]

is a settlement a good deal?

If a sellement will avoid a judgement and the creditor will accept the settlement as full satisfaction of the debt would be the only time that I would say that it is a good deaL.

However, if your credit is still important to you. settleing your bills for as little as possible is not exactly a very good or wise decision. There also tax consequences.

I've had many people contact me with offers to settle when they have perfectly good credit and excellent accounts. Perhaps they just sold their home or came into a chunk of cash and think that if they offer the creditor a percentage of the bill they will be happy to take it. After explaining how a settlement will affect their credit and the tax consequenses they never persue it.

Paying your bill in full is still the best way to reolve a debt.

However, if you do decide to go the settlment route, make sure that you obtain IN WRITING, before you send any money, exactly what the terms of the settlement are.

[Want2Know4Me]

Thanks again capri142 and to you Debt Guy for responding. I agree 100% that paying the debt in full is the right and best thing to do. However, that isn't possible. So....I am trying to figure out another alternative. How would I go about making sure that the CA I am offering the settlement to is the owner of the debt? Do I contact the original creditor or do I request that the CA prove that they are the owner?
Even if I could pay them in full it still wouldn't help my FICO (it would still be a paid collection)....so at this point I am trying to avoid judgements, wage garnishment etc..

[Debt Guy]

Q. I agree 100% that paying the debt in full is the right and best thing to do.

A. These are moral and value judgments. I disappove of any person tries to settle their debts when they have full ability to to pay their debts. Those individuals cause problems for those with genuine problems. However, I disapprove of creditors who prey upon people who have fallen on hard times. I disapprove of many of the methods used by collection agencies.

Q. However, that isn't possible. So....I am trying to figure out another alternative.

A. Well, you have to do something. You either make a deal or you file bankruptcy. Otherwise, the creditor will sue, garnish and hound you until the day you die.

Q. How would I go about making sure that the CA I am offering the settlement to is the owner of the debt?

A. CAs are not always owners of the debt. Often, the OC contracts with the CA to collect the debt.

Q. Do I contact the original creditor or do I request that the CA prove that they are the owner?

A. This gets a little testy. If the OC has sold the debt to a third party, that third party has absolutely no obligation to prove to you they own the debt and 99.9% of them will say take a hike. However, if you contact the OC, they will tell you to whom the debt was sold. That should be good enough for your purposes.

Q. Even if I could pay them in full it still wouldn't help my FICO (it would still be a paid collection)

A. You are correct. If you credit has already taken the hit, why not save some money with a settlement?

Q....so at this point I am trying to avoid judgements, wage garnishment etc..

A. Then do something. I still say that perhaps you need to hire someone who knows what they are doing. Hire a lawyer. Hire a settlement professional -- there are some honest ones -- just never, ever, never under any condition or regardless of the promises they make -- never pay any money in advance. (was I clear on that last point?)