Can unpaid portion of settled debt be sold?

[beachchick]

If I settle a debt of $5000 for $3000 with a credit card company, can the remaining $2000 be sold to another debt collector?

[justbroke]

This is why you need to be sure you have the right language in your settlement agreement that includes some sort of statement indicating that the remaining portion will be forgiven and that no collections will occur!!!

Some unscrupulous companies will in fact sell the unsettled portion, just as you are afraid of. This is why a settlement needs to be negotiated and the terms clearly written down and signed-off on by both parties to the settlement!!! That's why I would prefer an actual document known as the settlement agreement which outlines the terms of the settlement.

[jribe]

If I settle a debt of $5000 for $3000 with a credit card company, can the remaining $2000 be sold to another debt collector?

yes- that is usually what happens. Most companies won't give you anything in writing say that they will settle the account as paid in full and not pursue further collections or sell it to another company.

This is how most of the junk buyer debt collectors get their business. They but these for pennies on the dollar and go after you again.

That is why it usually doesn't work to settle.

[frogger]

And if you're going to try to settle, you can probably do it for less.

[Dst1]

I'm of the opinion as well that it's rarely a good idea to settle especially for low amounts. Even if you have a formal settlement agreement they still can sell the debt anyway. Then the JDB comes after you and it could cost you just as much to go to court to get the JDB to stop as the amount you settled for. To my mind, the risk is just not worth it most cases.

[jwmc1]

Sometimes this can happen, but if you get a letter from the creditor stating that what you are paying is settling the account in full, there isn't much they can do. Make sure you ask for a letter stating what the settlement is up front and that the amount will settle the debt "in full." They will likely tell you that they cannot do that until you pay, to which I have responded, "well then I guess I am not going to pay. Either figure out a way to do it or I will not do it." They will then figure something out. I have not settled anything without first getting the deal in writing.

[GotNoMoney]

Heck even if you pay it off you can end up with debt that just keeps coming back over and over. It is truly one of those thing where the right language in the contract will help you, but unscrupulous JDB's do what they want anyways. Anytime you are dealing with JDB's it is like the wild wild west. The problem comes with, yes you have an "agreement" but how much does it cost you to defend it. This is where they make $$. They make it so for them to go away it always costs less than if they were to sue you (since they wouldn't win) but they slap it on your CR and then your stuck) and typically you find out about it when you need your credit. So then it becomes (this is from my own personal experience) a matter of what is faster and easier? To pay them a couple hundred bucks or do a C&D, and file disputes with all the CRA's and wait for them while your mortgage refi sits in limbo... while the JDB will for a couple hundred remove the item from your CR that day. Ya, it is extortion but until it is better regulated not much you can do if you need it fixed right away. This is why you need to pull your CR once every six months at least so it is clear before you need to use it.

[justbroke]

The term for this is called "zombie debt". Debt that is dead, but just won't go away! The Congress needs to do something about this, and it should have been part of the BAPCPA changes, since that was all about "consumer protection". Think about it... every consumer protection piece of legislation that has come out of the last 5 congressional sessions... has been pro-banking.

(And for those who would turn this into a political debate, please don't. There is plenty of blame to go around.)

[anykey]

I think one can settle at a batter price then that.

[GoingDown]

Sometimes this can happen, but if you get a letter from the creditor stating that what you are paying is settling the account in full, there isn't much they can do. Make sure you ask for a letter stating what the settlement is up front and that the amount will settle the debt "in full." They will likely tell you that they cannot do that until you pay, to which I have responded, "well then I guess I am not going to pay. Either figure out a way to do it or I will not do it." They will then figure something out. I have not settled anything without first getting the deal in writing.

Yes, this wording is very important and must be in the letter they send to you when they agree to a settlement of the debt. Don't pay them anything until you get a letter from them with this wording it.

And yes, you can get a better settlement offer than that. I wouldn't offer them anything over 1/4 of the balance at first, and see what their response is. And I have found that making your settlement offer in writing is usually more effective than trying to work out a deal on the phone.