Question about settling a bill in collections?

Question

I got a letter in the mail from a creditor saying that I can settle the bill if I pay 55% of the amount due. I am finally getting finacially stable and am wondering if this is the best thing to do for my credit? I think that I read somewhere that when you settle on an overdue bill it makes your credit even worse. What shuld I do? Should I pay this now or there an alternative route I should go to help improve my credit?

Answer 1

what can you pay infull is what you look at.if you can pay the 55% in full then call them up give them a lower number and see what else they can settle on.ask them if then their going to take it off your credit report.and tell them to send you the paper work on what the agreement is NOW.the final payment in full ..ALWAYS GET IT IN WRITING.  good luck do that before you send them anything.cause they can always say what conversation. then wait a few weeks and go talk to your bank about small loans that improve your credit.i do know you have to be at your job for at least a year before they will give you a loan with out collateral

Answer 2

call them up and offer to settle for 40%.

if you pay it off, it will make your credit better, not worse.

Answer 3

If you were to pay off the total due, then yes it would improve your credit rating, but a settlement does not.  It will show on your report as paid in settlement and list the remaining amount owed as charged off.

If they are offering a settlement than no doubt this debt is fast approaching your states statute of limitations or has already done so.

This if the reason many creditors make you an offer, if you accept, it resets the state SOL and they could still sue you in court for the balance.  If they put it in writing that the settlement satisfies the debt and they release all rights to further civil actions, then go ahead and pay it if you like.

If the debt is "time barred" (beyond your states SOL) then this means that they can not take you to court to collect, can not garnish your wages, or seize your accounts.  They have no legal recourse.  They can still ask you to pay, but that is all.  You can send them a "cease and decist letter" informing them that you know it is a time barred debt and they usualy will go away.

The debt will drop from your credit report in 7 1/2 years (this reporting period runs 7 1/2 yrs from the date of last delinquent payment.(Running of Reporting Period - Section 605 [15 U.S.C. § 1681c]

You can find your states SOL on debts at this link

http://www.bcsalliance.com/statute_of_li...

Whether or not you pay the settlement,  it will remain on your credit report, once it drops off, they can not report it anymore and your credit will improve.

Hope this answer is of help to you

LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice

Answer 4

The older a negative item is on your credit report, the less damaging it is to your credit score.  Paying off a collection account will actually lower your credit score, because settling with them will show the negative item to be more recent.

When a collection agency tries to settle like this, it usually means the statute of limitations has passed, or is very close to running out.

Check the statute of limitations in your state.  If the debt is too old, it may be a time-barred debt.  If this is the case, don't pay them anything!

If the statute of limitations has not passed, ask the collection agency to provide you with proof that you owe the debt.  By law, they have to provide that information to you within 30 days.  If they can't provide sufficient proof, there's no way they can prove it in court.

If you do decide to settle with the collection agency, see if they will agree to a "pay to delete" agreement.  In this case, you will ask the collection agency to delete the collection account from your credit report in exchange for payment.  Not all collection agencies will agree to this, but some will.  Make sure you get an agreement in writing before settling.

Answer 5

You do not mention if this is your only outstanding debt. If your credit rating is of major concern, then you should pay this 55% requested and write thanking the creditor for coming to your assistance in that manner. Indicate that as soon as you are able to do so, you will pay the other 45% to clear the debt completely. Then repay the balance as quickly as you can.

It is difficult enough in business to make a profit and one cannot really afford to discount debts at the rate this creditor has offered you. Many people in business today are just surviving.

You bought the goods or services from this person and they extended you credit in good faith. That creditor is allowing you to have a reduced legal responsibility by paying 55% of the debt, you still have a moral responsibility to pay the full amount. You will also have a better feeling about yourself once you have fully repaid this debt.