NOT file BK and just settle after a year to keep good credit???

[Beeheery]

hi everyone, i stopped paying all of my credit cards in december 07. the majority of my accounts were either charged off or sold to debt buyers. i have started to receive settlement letters for approx .50 on the dollar. has anyone on here ever waited it out until the settlement offers were like 0.20 on the dollar? i figure if i wait it out long enough, i would agree to pay off my debts with them with the agreement that it would state on my credit report "paid as agreed" so that i wouldn't have a poor credit score nor a bk on my credit report for 7-10 years. it seems like a simple easy solution but im sure im missing out on something or everyone would do it. any help would be appreciated. thanks so much!

[magyar123]

Most scumbag CAs will not agree to state "paid as agreed" on credit reports.

[debtmonster]

Then there is no point of ever settling.

[magyar123]

Well, there is - if they threaten to sue.

[justbroke]

This is the old game. They will only say that they'll "update your report to indicate that you paid". They will never update your account to read "paid as agreed" or an R1 or other indicator showing a good account.

[NowImDownInIt]

They will never agree to that and actually follow through.. And what's worse is if you did it and they didn't hold up their end of the bargain there is really nothing you could do about it.

[PoGirl]

So, what do they typically show on your credit report?

[justbroke]

So, what do they typically show on your credit report?

If you paid it, it will show as a PAID collection, with $0.00 owing. The fact that a collection is on your credit report, lowers your score. The more of them you have, the worse your score. They will also have other derogatory information as well, like was past due 12 times at 91+ days... this is the single worse entry you can have, in my opinion.

[PoGirl]

Will it show as Paid Collection if you settle?

Does an item showing as "paid collection" look better or worse than "IIB"?

Back in the day . . . anything that was over two years old, excluding BK, was not looked at while underwriting. The most recent two years is what really mattered. Now, I haven't been a loan officer in a VERY long time, so I have no idea how that works now. And, this was back before there were auto-decisioning tools that were based solely on credit score.

I think some of my old lending days are what has kept me from facing the inevitable for such a long time.

[Overmylimit]

This is the part that is confusing me, how do some people stop paying credit cards/lines and it goes a year and then gets charged off? I am behind 3-4 months and they are all seeking Judgments...does it have to do with the amount of the debt?

[justbroke]

I don't think anyone, except for Fair-Isaac understand the FICO score and what exactly one lever does versus pulling a different lever.

I will tell you that collections are just about the worse thing on there.

I just had a bunch of accounts go from 90+ days past due, to IIB... and my score went up 45 points.

No one understands at all how the FICO score really works.

[jessegirl]

Also, if they settle with you, will you get a 1099 at the end of the year, showing the amount that they forgave? I think so, right?

[PoGirl]

Overmylimit,

I think multiple factors are at play - amount of debt, number of accounts that are being dealt with (I would think higher balances would be worked first), etc.

I know when I started calling on my past due report (secured loans), I went for the ones with the bigger payments first, because the entire loan could tank quickly if the borrower starting geting 2, 3, 4 months behind. Usually if I could get that 30 day late payment up to date through some type of extension or workout, the borrower could get back on track.

[justbroke]

Also, if they settle with you, will you get a 1099 at the end of the year, showing the amount that they forgave? I think so, right?

I've never heard of a credit card company issuing a 1099. If they did this, they couldn't sell the "junk" debt and issue a 1099. Although I'm sure they'd love to be able to do that.

More than likely, they'll sell the debt to a junk collector who will pursue you for the whole thing.

[PoGirl]

Also, if they settle with you, will you get a 1099 at the end of the year, showing the amount that they forgave? I think so, right?

That's my understanding.