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Help with settling a debt

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What is the name of your state?


I may have the opportunity to offer a lump sum to settle a debt. The collection agency instead of giving me an amount suggested that I put a offer in writing with my conditions. Any one know or can any one suggest where I can look to get an idea as to what percentage of a should be covered when making a lump sum offer.

Additionally, I would like to make sure that, if accepted the payment is reflected on my credit report as "paid in full" . Can any one also suggest what I need to list as a condition to assure that it is reflected that way on my report or is it not possible to show a "paid in full" by means of settling with a lump sum.


Senior Member
First, you have to wonder why they are asking for YOU to make the offer. Are you getting close to the expiration of the debt (by SOL)??? If so, and you make the offer, you will reset the SOL 'clock'.

As for how much.... make a ridiculously low offer... maybe 25% of the total. Then, if they refuse, ask them to make a counter-offer.

Then, as for rating..... the key is in the numerical ratings....
Unless the judgment was in error, it can't be removed. The file data isn't removed when paid... only amended to show that it was paid. The key here is what 'rating' was the debt/judgment shown as.

Here is a list of the payment rating 'codes' used to report debt on the credit report:
I = Installment Accounts
O = Open Accounts
R = Revolving Accounts
+ 0 = Unrated
1 = Paid as agreed
2 = 30 days late
3 = 60 days late
4 = 90 days late
5 = 120 days late
6 = 150 days late
7 = Chapter 13 Bankruptcy ("Wage Earner Plan")
8 = Repossession
9 = Chapter 7 Bankruptcy (Liquidation) an /or an open collection account

It really doesn't matter if the debt is an I, O or R.... but the lower the number, the better. It is to your advantage to negotiate as close to a 1 as possible.


Settling a debt

Is it unsual for the attorney to suggest that I make the 1st offer?

I don't think the SOL applies to me. My last payment to this account was in November 2001. Due to the a death in the family I wasn't able to make a payment for a couple of months and was contacted by the attorney/CA in February 2002. It is currently posting as 180 days past due. My credit union might lend me the money if I can get the attorney/CA to agree to an amount but I don't it seems that I don't have a lot of time to do this. the attorney want has sent me an agreement for judgement that I can live with but ask that I sign and return the form by 8/9/02.

I was sent a copy of my signed credit card application when I was contacted by the attorney through a summons for an agreement to pay as verification of the debt I guess.

Any suggestions.


Senior Member
Since the SOL is not a consideration (your default is too new), then I really don't see anything wrong with your making the first offer. So, go ahead... give them a low offer that is reasonable... but that you can live with.

I would consider offering a lump payment (maybe 30% of the total), or monthly payments (maybe 50% of the total). Then, see what they say.


Senior Member
I've seen on other sites where MBNA and 1stUSA will settle for 40% and Chase for 35%. The 2 that really seem to play hardball iare Sears and Discover. Prehaps start at 25% and hope you can get a deal south of 40%. I seriously doubt they'll do any sort of deletion for payment. Be sure you get a written statement that this settlement cancels the entire debt and the balance will never be resold.


Senior Member
Bigun.. did you perhaps see my post about Chase ? I just got a letter stating that they would settle for 35% of the total $4600. The account is scheduled for charge-off, so they're trying anything to get money. I just can't take the tax hit that would leave me with.

That's another consideration of settling. Anything over $600 of cancelled debt is reported to the IRS as 'cancellation of debt' income and is considered taxable !! Apparently the only way out is to prove to the IRS that you are insolvent, and I'm sure they make that as tough as possible. The would most likely send you a 1099-C form that you would have to file with your 2002 income tax.

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