What’s the best action for a credit card debt settlement letter?
My husband and I recently purchased a house. Right before our purchase we found out about a delinquent credit card. To make a long story short, it was a credit card that was in my husband's name that he was to use when he was in college that his mom was supposed to be paying for. My husband had no idea that there was a delinquency until we were notified by our lender. The account has been closed since 2002. It states on his credit report that the "account closed at consumers request, charged off account, bad debt; placed for collections; skip." We do not want to bother his Mom about this. After no communication with Discover, for 5 years, we have now received a letter from Northstar Location Services, a collection agency (not from Discover), for a settlement amount which is 40% of the debt. What should we do, contact Discover, deal with the collection agency, or something else? I realize everything needs to be in writing beforehand, but can anyone advise me on this at all?
I will check out your other posts, Studly, thanks…as far as my concern with it, it is mainly because of the recent contact with the collection agency now after so many years. We were still able to get the loan for our house, so I am not really concerned about that part of it. Since it "technically" wasn't our debt, but my mother in law's, the bank didn't really care. Actually the amount was pretty significant, 00 with an offered settlement of 00, which is why I'm extremely surprised that we were not contacted before about this. I believe the statute of limitation on credit cards is 3 years in our state. I know they can still take us to court over it but its probably unlikely since the statute of limitations has run out. I just don't want to settle on an amount and still have it show up on our credit history for another 7 years. I think this just may be a last ditch effort by the collection agency to get some money and I just want to make sure we make the right decision.
Tagged with: 3 years • bad debt • collections • consumers • credit card • credit cards • credit history • credit report • delinquency • delinquent credit • last ditch effort • location services • mom • money • mother in law • statute of limitation • statute of limitations
Filed under: Consumer Debt
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If it was a charge off that means the company tried to collect and wasn't able to so they wrote it off. This is just probably one last attempt to collect. I'd contact Discover and see if they sent this to the collection agency. 5 years is really too long for them to wait to send it to collections. That just sounds fishy to me. Like a private agency trying to collect, on a creditors charge offs.
Are you paying this because you want to improve your credit, or because of the recent contact with the collection agency?
Read some of my past answers, as I've addressed this several times. The fact that this debt is now 5 years old could put it over the Statute of Limitations, meaning they can not sue you for this. If the debt is small ($500 or less) they may not mess with it either.
I'm in the banking business and Discover is notorious for accepting extremely low settlements. Offer them somewhere in the ballpark of 10-15%, they will probably take it. Keep in mind, if you settle this debt, it starts the clock ticking on the credit reports again. Let's say for example, this account was charged off in January 2002. It is supposed to be deleted at 7 years, so that would be 2009. Keep in mind, if you settle a debt, it starts the clock all over again. So it will show "Paid in Full for Less Than the Full Balance" on his credit report. Also…if they forgive over $600 in the settlement, chances are they will file a 1099-C with the IRS. So, let's say you pay $1000 and they write off the remaining $2000, that $2000 is considered earned income, so you will probably have to give Uncle Sam a few hundred additional bucks next year. Good Luck!
Hi often the old debts are brought for a nickelon the dollar and the buying agencies try to recoup some of the money. You have a variety of choices, let it ride, and sipute the length of the debt in two years, settle and pay, but remeber the settlement will be reported as such."Account settled" or dispute the validity.
See I was married five years ago and my husband has an ex. well while deployed she wrecked a brand new vehicle with no insurance. in 2003 when I went to purchase my home, I found out there was a repo on his eport. Not gonna ruin my life. i got pen and paper and wrote that to evey one involved and all bureus and her. She did not of course want to assume responsibility for the debt, but no problem, the credi bureaus issued a dispute, the agencies did not respond within the time specified with justification of the debt, and the item was successfully removed.
Thats important because one issue can make the difference in a half percent on a loan. Over thirty years depending on the price of the home, that could mean thousands. Dispue, Dispute, Dispute, or pay, pay and pay.
Hope I helped.
Contact the credit card company and explain as you explained here they should be willing to settle for 40% also, if that was a legitamate offer.
what i would do is write this collection agencey and explain what happened you have 30days from the date of the letter to contact them and explain or dispute this matter.or they will proceed with futher collections.you also have the option of contacting discover and try to work some type of payment arrangement.but if this collection agencey is offering you;a cheaper way out than the whole amount and they are willing to take it off your credit report you should,pay it off if you can if not make payment arrangements and keep them and tell you are trying to purchase a home and ask them to give you something in writing saying this matter is being handled and will be closed out to give to the lender you are going through to buy your home. i hope you find this helpful.