Chargeoff or Debt Settlement? - Credit Forums

bxtom · #1 (**permalink**) 08-01-2007, 09:29 PM

I'm wondering if I should attempt to offer say, 25 cents on the dollar to the credit card company I owe a balance on. I'm not sure what this is exactly called, I think it's "charging off." Will it work? Has anyone tried this before?
I'm also wondering if this action negatively affects my credit rating. (Not that it's not negatively affected right now anyway)

Erik · #2 (**permalink**) 08-02-2007, 06:29 PM

I've heard of people doing this though not sure if it's only urban legend or not. Have you tried contacting them about it yet? It may not hurt to ask and see what you can find out.

As for affecting your credit, I don't think this would because there's no special designation for this type of thing as far as I'm aware.

Let us know what you end up doing and good luck!

inverito · #3 (**permalink**) 09-17-2007, 03:38 PM

The only thing creditors can report to the bureaus is late payments and collections. If you agree to new terms they can't report that as a negative issue as far as I know. So..... what do you ahve to lose!?!?!?!?!?

Hawaii FIC-O · #4 (**permalink**) 09-17-2007, 05:53 PM

Quote:

Originally Posted by bxtom

I'm wondering if I should attempt to offer say, 25 cents on the dollar to the credit card company I owe a balance on. I'm not sure what this is exactly called, I think it's "charging off." Will it work? Has anyone tried this before?
I'm also wondering if this action negatively affects my credit rating. (Not that it's not negatively affected right now anyway)

How is it reporting? Is it 180 days late? 180 days late is usually when the account will charge-off and this establishes the date of first default. From DOFD, this charge-off and/or soon to be collection can report up to seven years.

If you want to offer a settlement do so with agreement the creditor will delete the bad account. Make sure you have an agreement in cojent, lucid English on the creditors letterhead...verbal agreements are a no no! You stand to gain nothing with a paid charge-off or collection on your credit reports. Rather paid or unpaid, collections on your reports are equally bad according to FICO scoring. The same cannot be said about a derogatory trade line such as a charge-off, paying on a charge-off might move your scores up, down or not change. The goal is deletion!

Erik · #5 (**permalink**) 09-17-2007, 08:32 PM

Another quality post from Hawaii FIC-O

Hawaii FIC-O · #6 (**permalink**) 09-18-2007, 06:43 PM

I try my best!

Greg · #7 (**permalink**) 10-04-2007, 08:27 PM

If you are negotiating to pay off a reduced balance it is called a settlement. You pay less than the full balance for the creditor to consider the debt paid in full. However, when you do this your report will reflect they accepted a settlement for less than the full balance.

This will improve your credit score. However, paying it in full will increase it more but when you settle and they reflect the balance paid even if through settlement you are on your way to deletion.