paying back an old credit card debt to a debt buyer agency

[sukumara]

I have arrived at a settlement amount ( 60% of original debt) with one of the debt buyers to whom the debt has been assigned by the card issuer bank. It is an one-time structured settlement.They have agreed to receiving payment towards full and final settlement of the credit card debt in question. Can I opt to send a banker's cheque to the party or prefer to send a demand draft for the amount?

[justbroke]

Never send a draft from a bank account! Not that there are unscrupulous debt collectors out there, but I'd never give banking information to them (by either issuing them a paper check with my routing information, or a draft from my account). You need to make sure the settlement is legitimate and that it is actually full payment. You need to be VERY certain that they are not going to re-sell the remaining balance to someone else; it happens all the time!

In my opinion, 60% seems like an awful lot for a settlement of an old debt.

[DebtHater]

Like justbroke said, do not sent anything with direct ties to any account of yours. Send a cashiers check or money order only. Also before you send anything, get the settlement in writing. If you only have a verbal agreement it's their word against yours and can come back after you for the balance. Get it in writing so if there is an issue you have proof of the settlement.

[sukumara]

Good advice

Thanks a lot for the nice advice from your end. I will see to it that every conditions earlier talked over is adhered to strictly.

[sukumara]

In fact they have agreed upon issuing me a settlement letter ,the draft of which clearly specifies FULL and FINAL settlement.The 60% I have mentioned is the one on available credit limit shown in the monthly statements by the original credit card issuer bank.

[GoingDown]

60% is way too much to be paying a junk debt buyer. They probably paid anywhere from 3 cents to 7 cents per dollar of the original debt.

Please also keep in mind that the remaining 40% of the cancelled debt will be reported to the I.R.S. in the form of a 1099-C, and unless you are insolvent by IRS rules (much more strict than bankruptcy rules) at the time of cancelation, it will be treated as income to you, and you will be hit with a nice big fat tax bill next year.

If you file bk, this will not happen.

If you do choose to settle, get it in writing before you pay them anything. And hang onto that letter forever, because it is not unusual to hear from a new junk debt buyer years later trying to collect the same old debt you already settled years ago.

And yes, if you do pay it, then pay it with a cashier's check or money order, and keep a copy of it along with the settlement letter. If you use a postal money order, you can get a document from the U.S. Postal Service showing that the money order was cashed by them. Keep this, too.