I received a letter from Chase Cardmember Services offering a settlement of $1,303 on a debt of $5,211. The account was charged off as a bad debt three years ago. I've hit hard times because of my health and cannot pay the full amount, but I finally am able to pay the $1,303, after saving the little cash I have for those three years.

Quoting the Chase letter: "...we will accept a reduced payment of at least $1,303 if you respond by (date). When you pay this amount, your account will be reported as settled to the credit-reporting agencies upon completion of your settlement. Payments or credit in excess of this amount will be applied against your entire outstanding balance.... We are required by IRS to provide information about certain amounts that are discharged as a result of a cancellation of a debt on a form 1099-C. If we are required to notify the IRS, you will receive a copy of the form 10999-C that is filed with IRS."

I've read lots of posts that have taught me to make sure everything is in writing and I use a cashier's check or money order. I'll send a letter with the money, and won't give money over the phone.

Questions:
Is there any way I can get Chase to report the debt as paid in full? If not, what can I do to get the most favorable note on my credit report about this? Why do they say "discharged as the result of a cancellation"? Does that mean they won't try to collect more later?
If I am able to pay the balance later, will I get my tax money back for taxes paid on the amount reported on the 1099-C?

Working at a collection agency that deals with Chase and BOA, I can tell you that if you pay those funds by the date indicated on the letter, they will not go after you for more money, you just need to hold on to all proof that its been paid as well as the offer letter, within 30 days of paying that amount, you need to request the letter that states the debt has been settled. As far as having it reported in a favorable manner, you can speak with Chase directly about that and explain your situation. No guarantees that they will report that way, but it doesn't hurt to try. If you're already in 3rd party collections, the agency doesn't have the authority to change how it is reported, it is up to chase. I can also let you know that if this offer is directly from a Chase collections dept and not a 3rd party, you will not get a lower offer, once it goes into 3rd party, the offer to settle is higher. I would take them up on the offer regardless of the outcome on how it will be reported.

I got a 'Let's Settle" offer from Chase last year for 5% of my balance owed. I ignored it and the calls from the collection agency started. I mailed a letter to the collection agency to stop calling my home. Two months later, I got another "Let's Settle" letter from Chase that was less than the last one. Will I wait again? I don't know.