HELP needed very URGENTLY

[grymoire]

I was not sure where to put this but I am facing a financial problem...

 

Basically I had an Amex credit card long long time ago. I went through a very bad patch when I graduated and missed payments. In 2004 the outstanding balance stood at $3377. They asked me if I am going to pay it or they are going to consider it as a charge-off. I could not pay it and Amex marked it as closed-chargeoff. This negatively impacted my credit history...

 

They did not bother me all these days... but now, after 4 years, and when I am just planning to buy my first car they called me up again and asking the outstanding balance of $3377. They said if I do not pay it they are going to send it to collections and that will again hit my credit history. I spoke to them for a while and they said that if I pay a Settlement Amount of $1857 as opposed to $3377 they will close the account as paid full. They are telling this will positively impact my credit. I have to give my answer tomorrow.

 

I do not know what to do. I can take the $1857 from the money I saved for car and use it to pay this debt off but I am wondering what is going to happen. Will it really improve my credit ratings? I am suddenly bringing to life an account that was marked as chargeoff 4 years ago..

 

Can some one plz advise me? I got to make a decision tonite

[RandomAdvisor]

This sounds shady. It is good that you are seeking advice but you should probably find a financial forum where people are more knowledgeable.

 

I've heard of similar situations where people are called up by creditors demanding only a fraction of the balance to mark it paid in full and those people are advised not to pay. However, I think in those situations the balance is more than 7 years old (in which case it is supposed to go off your credit history). I'm not 100% sure though. Definitely get an answer from someone who is sure though.

 

EDIT: This might be a good place to ask.

 

link removed

[renaissancewoman101]

You should make sure the debt is still within SOL (Statue of Limitations for Collection). In CA, credit card debt is only collectible within 4 years after chargeoff. You said the card was charged off in 2004. It is now 2008. They could be trying to collect before the SOL kicks in. If you can prove it is past SOL, they can harass you for the money, but they can't sue you and win in court, since SOL does hold in a court of law.

 

Before you do anything, have them verify the debt and how much you REALLY owe. Send them a letter (certified of course) and ask them to verify this debt as being YOUR debt and how much you owe. They have to be able to PROVE this is your debt and that is how much you owe.

 

Collection companies are notorious for tacking on outrageous charges onto what you owe.

 

This is a good forum to go to in order to get answers to your questions:

 

link removed

 

They also have a forum on there too, for you to post questions

[redhearts]

You need anything IN WRITING FIRST. You can also have them send you a letter of that agreement first, so it could buy you some time.

[KG]

This happened to my after my wife died...they agreed to settle for half the amount.

Which meant to me, we could negotiate..I got $5000 debt reduced to $ 1500...

Work with them, just don't take the first offer. If they are offering to settle, they may just want to get SOMETHING back. Stall, delay, say you have lawyers involved...

[renaissancewoman101]

first thing first, VERIFY.

 

Make sure they VERIFY the debt you owe, that it is REALLY YOUR debt.

[amipushy]

Whatever you decide..Get everything in writing.

[3boys]

If it is a company called NCO Financial...DO NOT PAY THEM A DIME!!!!!!!!!!!! I can not stress this ENOUGH!!!!!!!!!!!! My husband switched jobs in April 2008 and his previous employer screwed up his corporate AMEX account which was linked to his SS#. He thought it was AMEX calling and they promised him if he paid it off THAT DAY, it wouldn't negatively affect his credit rating. (He figured since he was still on good terms with the ex-employer, it wouldn't be a problem to be reimbursed) Needless to say, Amex still hasn't gotten their $$, it DID go on his credit report and the SOB's stole my identity and racked up a bunch of charges on the account (link removed, tried to register a few domain names, etc--thank god the credit card company's fraud division caught on quickly or god knows how much damage they could've caused), basically creating a nightmare for me. IF you are going to pay ANYTHING, make sure you pay AMEX direct!!!!!!

[KG]

NCO Financial is a scam....I got contacted by them too!

[watergirl]

First of all, they are LYING when they say it will positively affect your credit. The first thing you need to do is go online to a site like link removed (totally free, no fee, and you won't be forced to do some credit monitoring for 30 days). Get a copy of your credit report from all 3 bureaus and see which one the AMEX card is reported to, and see how it's listed on your credit report. You can do this instantly online.

 

The 2nd thing you need to do is find out whether it's AMEX calling you, or a collections agency. If it is a collections agency, DO NOT call them. Tell them to STOP CALLING you and you will deal directly with the creditor themselves. NEVER send any money to a collections agency. If they do not stop calling you afte ryou tell them to, they are breaking the law. If they call you again, write a "cease and desist" letter (you can find examples online). If they bother you again after you send the letter (send it certified), then sue them.

 

Third, a charge-off does not mean that you are in the clear. They ALWAYS come back to haunt you, and you still owe the balance. All a charge-off means is that the creditor labeled your debt as uncollectible, even though you still owe it., and this ALWAYS affects your credit report NEGATIVELY and will for several years. Sorry.

 

Then, what you do is call the creditor, in this case AMEX or whatever bank issued the card. ALWAYS deal directly with them. As the otehr poster said, document **every single contact** you have with everyone...creditor, collections agecncy, etc...and write the date, time and name of the person you talked to, and a brief summary of what was done/said. Try to negotiate with the creditor that you will pay the balance for a fraction of what you owe. If you owe $3300, you may be able to get away with paying about $1200, or 40%, but it will probably be more like the $1800 they are asking for--not bad, at 60% of the balance which is pretty industry-standard. See if you can get them to go any lower than that.

 

HOWEVER, the part where they lie to you is this: they may tell you that your credit report will say "paid in full". For all intents and purposes, it will. But what they DON'T tell you is that it will still say "Paid in full for less than the balance owed" and it may still say "charged off". It will, however, indicate this somewhere in the spot where that account is listed. Yes, the balance will show 0 but the negative indicator will still be there. This is a tough negotiating point--see if you can negotiate down to where they will put "PAID AS AGREED" in your credit report if you pay the balance off at the 60% immediately. That is the only way your credit will not be negatively affected--and this is kind of hard to get them to do. Again, keep a record of everything. Look up on the internet, "negotiating credit" or something of that nature, and you will find some sites that will help you. Be careful though becuase some of them are scams. Use your judgment.

 

Do not listen to them when they tell you it will positively impact your credit, because it WILL NOT. The good thing is that the balance will be at 0, but the "charge off" will still be there unless you are able to negotiate that with them.

 

The BEST thing to do is yes, take the money you were going to use for the car and pay this charge off because it will only come back to haunt you later. The last thing you want is to go all through this again with a collections agency. That will just prolong it. Best to get it out of the way NOW. think about when you go to buy a house, or refinance somehting, or get some credit--you won't be able to because this collections account will come back to haunt you over ad over and over again. If you pay it, you will not have it hanging over your head.

 

Then your credit score, assuming you pay the rest of your bills on time and keep credit balances very low, will go up. A paid charge-off is better than an unpaid one.

 

Good luck!

[watergirl]

True, and they have to verify within 30 days. If they don't, or can't, it legally has to drop off your credit report.Sounds like they are trying to collect before the SOL runs out. Watch out for loopholes though because the SOL only applies for the state where the debt was originally incurred, I think--so if you didn't live in Cali when it was charged off, it might not apply. Check the laws.

[JadedStar]

Gry, if this already hit your credit report for seven years and then has fallen off and it was charged off they can't put it back on your credit report again. Research this because that sounds very shady. This has got to have passed beyond the statute of limitations in that regard. They have the right to still try to collect the money but not to put it back on the credit report...besides when banks send something to collections the collection agency buys the accounts and it now belongs to them. If Amex is trying to get it back from you i think you are being scammed somehow.

[grymoire]

Thank you very much for your kind and detailed responses.

 

Here is some additional information.

 

My AMEX account became charged off in 2004 at around this time (October). After that I never heard from them at all...

 

The person I spoke with today said she is calling from AMEX and not a Collection Agency. She said I can repay the balance in regular payments and get a new card. I said I do not want a new card and only want to pay off the balance. Then she mentioned the Settlement Amount of $1857. She asked me to fax her a letter saying that they can send me the details of my credit card and the balance. I did and she immediately faxed me a letter that showed my AMEX credit card number and the outstanding balance.

 

She mentioned that if I fail to pay the balance now then it will be turned over to a Collection Agency. I said I need some time and will tell her tomorrow. I asked her where she is calling from and she said she is calling from India

 

I actually did a credit check last week from Equifax and I still have the report. That cerdit report is NOT showing AMEX account at all

 

What do you think is going on here guys?

[GoldenHillGuy]

Watergirl has some good advice. I'd also tell you NOT TO SETTLE. It always sounds like such a deal, but your credit report will reflect it like watergirl said.

 

I paid all my credit cards off, some after being in collections for 5 years. But, I paid EVERY dime I owed. Now, my credit report shows PAID IN FULL, but still has all the late payments. Still better than settling.

[renaissancewoman101]

I'm surprised that AMEX waited so long before asking you for the money WITHOUT having sent you to a collection agency. Most places, once your acct is charged off, they will send you to a collection agency within a few months.

 

As for SOL, it applies to the state that you are currently living in right now. I know that because I've read about it in some of the topics posted on that messageboard that I linked to on my last reply.

 

Before you pay a dime, make sure you VERIFY the debt IN WRITING. That way, if you do decide to pay it off, a few years down the line, someone doesn't come after you and say you still owe XXX amount of money on that acct.

[thejigsup]

This is simple my friend. After 4 years they have to write off the loan with no legal action if you do not pay it. I had this happen recently about an old Wells Fargo account I had forgotten about. My bf is an attorney and he told me about this law. Not everyone knows about it and gets scared and pays it. If you can pay it, do so. But nothing will happen to you if you don't. It's just been 4 years and this is their last chance to collect. Don't fall for it. If you don't respond, you're in the clear!

[grymoire]

I did not give them a call today and I did not receive one from them either.

 

This account was charged-off around this time in 2004. Now they are asking me to pay the Settlement Amount. If I do not pay this they say it will go to Collections Agency. If I pay they say it will appear positively in my credit report.

[thejigsup]

It may hurt your credit rating, but if it's under about 10k, they don't bother you legally. My bf has a collection company to whom he sends the names of clients that don't pay him. In all the years I've known him, they haven't taken one solitary person to court. You have to owe big bucks for that to happen they told me.

[grymoire]

It may hurt your credit rating, but if it's under about 10k, they don't bother you legally. My bf has a collection company to whom he sends the names of clients that don't pay him. In all the years I've known him, they haven't taken one solitary person to court. You have to owe big bucks for that to happen they told me.

 

I am worried about my credit rating getting hurt. I have worked very hard to improve my credit so that I can buy a new car. Right at this moment these ppl are asking for the money...

 

My question is its been 4 years since the charge-off. If I refuse to pay the Settlement Amount now will they again send it to collection?

[deleted-account]

I am worried about my credit rating getting hurt. I have worked very hard to improve my credit so that I can buy a new car. Right at this moment these ppl are asking for the money...

 

My question is its been 4 years since the charge-off. If I refuse to pay the Settlement Amount now will they again send it to collection?

 

How about you buy the new car before this hits your credit? Also, be sure to check the SOL as others have stated.

[BeStrongBeHappy]

Gry, haven't you said you make $80K now? I think you should just pay off this debt and get that paid in full. You have a very decent income relative to lots of people, and should try to get yourself straight financially any way you can.

 

Unless you've talked to a debt collection attorney in your state, if they do have the legal right to send it into a collection agency, that does go on your credit report which has information about whether any of your accounts have been to a collection agency (which is considered a step worse than late payments, and will lower your credit score).

 

You need to just bite the bullet and get yourself to zero, then you can start working on getting new purchases in your life. Paying off that $1800 won't kill you since you have the money, and it might help improve your rating.

 

If you have any real doubts, make a phone call to an attorney that handles these kinds of things, or do research on collection agencies in your state and what they can and can't do to your credit.

 

I am continually stunned by the number of people on message boards who justly blythely tell other people to blow off debt because the debt isn't 'convenient' or the person wants to spend the money on something else. You took out that debt, and honestly, if you can pay it, you SHOULD pay it. That is one reason credit cards rates are so high, because of the number people who don't think twice about racking up debt they don't pay, even when they have the money to do so.

 

No matter what anyone tells you, the best way to improve your credit rating is to show that you can AND WILL pay off your debts, and do so reliably and consistently.

 

So man up and pay your debts, and your credit rating will improve.

[GoldenHillGuy]

PAY IT IN FULL BRO!!!! Don't pay a settlement. It's not that much. Tell your credit card company you will pay it in full in 3 or 4 payments.

[grymoire]

PAY IT IN FULL BRO!!!! Don't pay a settlement. It's not that much. Tell your credit card company you will pay it in full in 3 or 4 payments.

 

is there any specific reason to pay it in full when they are coming up with a settlement amount? what is the advantage?

[GoldenHillGuy]

because when you pay in full, that's exactly how it's put on your credit report, with late payments of course

 

when you settle for an amount less than the balance, it shows that.

 

You don't just magically get out of paying money with no consequences.

[grymoire]

because when you pay in full, that's exactly how it's put on your credit report, with late payments of course

 

when you settle for an amount less than the balance, it shows that.

 

You don't just magically get out of paying money with no consequences.

 

yea.. i realize that... actually when talking to them i said i will pay off the balance in installments... and they said they are gonna give me a new Optima card... i knew that if i get a new credit card now it will hurt my credit score and so i declined the card offer... that's when they came up with the Settlement Amount...

 

why would they offer Settlement Amount when i was willing to pay the whole balance?