Settlement offer [Credit Card Debt]

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UpstateNY86
Posts: 199
Joined: Tue Dec 18, 2012 7:56 am

Settlement offer [Credit Card Debt]

Post by UpstateNY86 »

Ok, here is the situation. My future MIL is in the midst of a divorce. She is trying to keep the house, but the bank will not finance here what she needs. She has the means to afford it, but this income cannot be documented or verified and is unacceptable to the bank. On to plan B. She has her fathers credit ran, and they can obtain the mortage together. However, he has a CC card debt in collections that must be paid or else its a no go.
The debt is 3200 with merrick bank and now is in collections with a company called Carson SmithField. I would like to help her out and am willing to pay this bill so she can obtain the mortage(we both live here at the moment). I know they pay like 5-8cents on the doller for this debt. What should I offer the agency? Also, will it make a difference to the bank that a settlement was agreed upon, and that the full balance was not paid? All that should matter is the party is satisfied IMO.
Thank You. :beer
DualIncomeNoDebt
Posts: 436
Joined: Wed Jul 18, 2012 3:38 am

Re: Settlement offer

Post by DualIncomeNoDebt »

UpstateNY86 wrote:I know they pay like 5-8cents on the doller for this debt. What should I offer the agency? Also, will it make a difference to the bank that a settlement was agreed upon, and that the full balance was not paid? All that should matter is the party is satisfied IMO.
It matters. And settling versus paying in full is not "party is satisfied." The party took something less than was owed. It will adversely impact the credit score -- and if it is paid in settlement, I believe it will count as "recent activity" and will remain for seven years. Worse, I think the report will continue to reflect the delinquency (e.g. 180 days late), but will also reflect "paid," but not "paid as agreed" or similar language. If not paid in full or as agreed, this will have additional negative impact. Both the delinquency and the settlement could result in as much as a 200-point drop, though the report likely reflects some of this already because of the delinquency.

Will it prevent getting the mortgage? I don't know, but it may, depending on how everything else looks. Underwriting could very easily have a hard requirement that any recent chargeoff = automatic no to underwriting the mortgage note.

Personally I despise the entire credit rating industry. Paying cash for everything, zero debt, no loans, no bills due or monied owed -- wonderful way to conduct your affairs.
Topic Author
UpstateNY86
Posts: 199
Joined: Tue Dec 18, 2012 7:56 am

Re: Settlement offer [Credit Card Debt]

Post by UpstateNY86 »

We talked tonight. They started at 2200 and then dropped it to 1900 saying final offer. :shock:
rr2
Posts: 1071
Joined: Wed Nov 19, 2008 9:04 pm

Re: Settlement offer [Credit Card Debt]

Post by rr2 »

Can you negotiate a pay for delete?
Topic Author
UpstateNY86
Posts: 199
Joined: Tue Dec 18, 2012 7:56 am

Re: Settlement offer [Credit Card Debt]

Post by UpstateNY86 »

Whats that?I just want to be assured from the mortage broker that if we pay at the settled rate the mortage will be cleared. I will ask tomorrow. Just chomping at the bit!
rr2
Posts: 1071
Joined: Wed Nov 19, 2008 9:04 pm

Re: Settlement offer [Credit Card Debt]

Post by rr2 »

It's not as common now but a few years ago it was possible to negotiate with a collections agency to make payment in exchange for deleting the item from the credit report. Google "pay for delete".
LifeIsGood
Posts: 1243
Joined: Mon Feb 11, 2008 7:43 pm
Location: Atlanta, GA

Re: Settlement offer [Credit Card Debt]

Post by LifeIsGood »

Make sure that what ever is agreed upon is put in writing. Collections firms tend to get amnesia.
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SC Hoosier
Posts: 207
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Location: South Carolina

Re: Settlement offer [Credit Card Debt]

Post by SC Hoosier »

Sell the house and go rent one. Then pay off the debt. All of you should attend Financial Peace University. It will change your lives and prevent these types of problems. Google it.

SC
I live in No Payment Land. It is wonderful, and I'd love for you to live here too.
mollymillions
Posts: 40
Joined: Fri Jan 25, 2013 2:28 pm

Re: Settlement offer [Credit Card Debt]

Post by mollymillions »

With some difficult (and possibly time-consuming) you may be able to settle the debt for around 20% of what is owed. If you are in a hurry you may not be able to knock it down that far.

I have heard recommendations that if you get an agreement, in writing that this settlement pays the debt in full, that this should mitigate the negative credit impact of having the debt settled (though damage has already been done, and it is likely only time will heal that).

Whatever you end up paying them, be sure to get the agreement in writing before you send them any money. Collectors lie. Do not allow them to draft your bank account, pay with a certified check or money order only, for safety. These organizations can be very unscrupulous.
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