In Texas, how do I word an offer to settle an original credit card debt that has been bought by a junk debt buyer and a collection agency is using a law firm to sue me for the original debt plus interest and lawyer fees. The suit for summary judgement was denied and now mediation has been requested by the plaintiff. I want to offer a cash settlement against the original debt only not including interest or lawyer fees. Also, I want to ask that the original debt not be reported in any way as earned income on my IRS tax return. I don't know the legal wording to use and I need help. Thanks!
Sincerely,
rawhide

Why would a debt be reported as income?

As for the settlement offer, its simple:

I will agree to a payment of $xxxx to settle the debt owed <insert details of debt>. This amount would settle the debt in full so that no future collections efforts will be made and no entries on my credit records will be made.

I'm not completely famialiar with Texas collections laws, but I was a trainer for a collections agency that handled quite a few accounts in Texas.

With credit cards we would "charge-off" accounts that have had no payments made over the course of six months. What this means is that the account would go back to another department to be worked and interest would stop accruing. They would then contact the customer from that department with settlement options, many of them having hardly any interest on them.

But, if they offer you a settlement that is as low as they determine they can go and you don't pay it there is almost no way that they will let you off the hook, legally, if the balance is high enough. What I mean by high enough is that it is significantly more than the attorney/legal fees will be for taking you to court. They aren't seeking to get back everything that you owe them at this point, they just want some of their money back.

I worked for a creditor for a number of years in collections. First of all if your account has charged off the best you could expect to receive on your tradeline is "settled in full". Any debt that is charged off is reported to the IRS as earned income unless you have filed bankruptcy prior to the account charging off. And if you had filed bankruptcy then there would be no need for your question.

Offer 75% of the original principal debt if you can afford it. Expect to make this amount in one lump sum. You've already been given an opportunity to make payments on the card and you were unable to make them. Also offer to pay in 30 days in acceptance of the offer. Request verification in writing the arrangement and that your credit bureau will be updated within 30 days of receipt of the lump sum payment. Again they will only be able to update "settled in full". Once a charge off always a charge off until it drops off the bureau.

Call the creditor tell them you wish to submit a written settlement offer and ask where it may be faxed. If possible find out a contact to send the letter directly to. This way you can get confirmation that the fax went through and the person you will need to follow up with for information. You will need to include your account and contact information. Be sure to sign the letter as most creditors will not consider it a valid offer. You'll want to give reasons as to why you wish to settle (i.e. illness, family circumstances, young and didn't know what to do as I got over my head) Don't make up anything be forthcoming, collectors know the truth.

To Whom It May Concern:

I wish to resolve my outstanding debt with your company. After reviewing my current finances, I would like to settle my account for $xxxxx.xx, which is XX% of my principal debt owing. I can pay this amount within 30 days of acceptance.

If you wish to accept my offer in order to resolve this matter, you may contact at xxx-xxx-xxxx (give best time for contact) (make it reasonable).

A couple of things to remember since they have already had it out with an attorney, did you have representation? You can have your attorney send to their attorney on your behalf. If not represented you will need to find out if the creditor can even deal with you or you will need to contact their attorney.

If the collector appears to be unreasonable about discussing a settlement, ask for their supervisor. Please be sure to make a reasonable settlement offer and one you can live up to.

For whatever reason the summary judgment was denied could have just been a technicality as you didn't state the reason, however depending on the balance they could decide to pursue again. The sooner you can resolve this matter the better.

I'm not an attorney nor do I represent myself as one. I had been in creditor collections for almost a decade and aware of basic information. Information posted is not legal advice just information to assist you with dealing with your debt.

Best of luck to you!