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    npq's Avatar
    npq Posts: 11, Reputation: 1
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    #1

    Jun 5, 2008, 03:52 PM
    Settled credit card debts
    I want to settle a credit card debt with a collection agency and the credit card company still owns it. After we agree on a settlement, I will send them a letter of agreement that states they are authorized by the credit card company to do this and they will remove it from my credit report. I saw a sample letter on creditinfocenter.com called "agreement to compromise debt". Is this the best way to handle this?
    Also, will I have to pay taxes on the balance of the debt?
    I am also thinking about doing this with a collection agency that does own the debt. Is there any difference on the way that would be handled?
    tickle's Avatar
    tickle Posts: 23,800, Reputation: 2674
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    #2

    Jun 5, 2008, 04:26 PM
    npq, you really have to tell this collection agency the right way to go, and I don't mean to heaven. You can't send them any 'letter of agreement' because then you are settling on their amount owed which is the original debt plus all interest; there are NO taxes.

    They have you lassooed and are reeling you in. You have to stop it by INSISTING they show you court papers where it says you have to pay this debt.

    Get your spine in order and tell them to back off and come back when they can claim you own them money plus interest.
    npq's Avatar
    npq Posts: 11, Reputation: 1
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    #3

    Jun 6, 2008, 10:00 AM
    Quote Originally Posted by npq
    I want to settle a credit card debt with a collection agency and the credit card company still owns it. After we agree on a settlement, I will send them a letter of agreement that states they are authorized by the credit card company to do this and they will remove it from my credit report. I saw a sample letter on creditinfocenter.com called "agreement to compromise debt". Is this the best way to handle this?
    Also, will I have to pay taxes on the balance of the debt?
    I am also thinking about doing this with a collection agency that does own the debt. Is there any difference on the way that would be handled?
    I'm not sure what you mean by court papers. I am not being sued by them.
    I have been paying on these debts for several months to the collection agencies. They have sent their letters months ago stating I had 30 days to respond to them that I disputed the debt. I thought I couldn't legally dispute the debt now.
    Loan_Guy's Avatar
    Loan_Guy Posts: 83, Reputation: 6
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    #4

    Jun 6, 2008, 12:34 PM
    Quote Originally Posted by npq
    I want to settle a credit card debt with a collection agency and the credit card company still owns it. After we agree on a settlement, I will send them a letter of agreement that states they are authorized by the credit card company to do this and they will remove it from my credit report. I saw a sample letter on creditinfocenter.com called "agreement to compromise debt". Is this the best way to handle this?
    Also, will I have to pay taxes on the balance of the debt?
    I am also thinking about doing this with a collection agency that does own the debt. Is there any difference on the way that would be handled?
    npq,

    As I am not an attorney, I am only going to tell you what I would do if I was in your position.

    On the first item, deal directly with the credit card company. If you are going to settle, pick a figure and stick to it. Once you and they agree, tell then that you will send them a check for that amount as soon as you receive something on their letterhead that details the agreement and is signed by someone with the authority to make the agreement. I would also stipulate (if at all possible) that they agree to DELETE the file from your records and that the collection agency references be completely removed. Whatever you work out, you need to be able to pay right away for that to work. You will then not need the "agreement to compromise debt" letter.

    The collection agency is a different story. I would make then VALIDATE the debt. You should be able to find a good letter on the internet for that. Do not make ANY agreements until they return EVERYTHING you request in the letter. That may just throw them off.

    Make sure you keep good notes, copies of letters you send and any papers you receive. Mail everything CMRRR.

    As far as the taxes, I doubt you will owe anything unless you have a huge debt or they send a 1099.

    Hope this helps!

    LG
    npq's Avatar
    npq Posts: 11, Reputation: 1
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    #5

    Jun 6, 2008, 01:47 PM
    Quote Originally Posted by npq
    I want to settle a credit card debt with a collection agency and the credit card company still owns it. After we agree on a settlement, I will send them a letter of agreement that states they are authorized by the credit card company to do this and they will remove it from my credit report. I saw a sample letter on creditinfocenter.com called "agreement to compromise debt". Is this the best way to handle this?
    Also, will I have to pay taxes on the balance of the debt?
    I am also thinking about doing this with a collection agency that does own the debt. Is there any difference on the way that would be handled?
    Thanks again LG. That really helped me. If you wouldn't mind, I posted another question under "credit card not on credit report". Thanks.
    cheerry777's Avatar
    cheerry777 Posts: 11, Reputation: 1
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    #6

    Aug 20, 2008, 01:50 AM
    Quote Originally Posted by npq
    I want to settle a credit card debt with a collection agency and the credit card company still owns it. After we agree on a settlement, I will send them a letter of agreement that states they are authorized by the credit card company to do this and they will remove it from my credit report. I saw a sample letter on creditinfocenter.com called "agreement to compromise debt". Is this the best way to handle this?
    Also, will I have to pay taxes on the balance of the debt?
    I am also thinking about doing this with a collection agency that does own the debt. Is there any difference on the way that would be handled?
    Did you settle the debt yourself? How is that working out? I'm going through a settlement company, but they're charging 15% of my total debt. That's too much.
    npq's Avatar
    npq Posts: 11, Reputation: 1
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    #7

    Sep 5, 2008, 05:01 PM
    Cheerry777,
    You sound like you are in the mess we got in. Let me tell you what has happened to us and maybe it will help.
    We got in over our heads with debt and could not make the payments anymore. So we looked online and found a company called Integrity Debt Solutions and they made us feel safe like they would take care of us. That was a mistake not taking care of it ourselves but we were afraid and not thinking Sherry. They charged us 15% of the debt too and that was a lot of money but I guess compared to the bigger debt, it seemed small. Then a company called Debtxs and NAES took over. They did not want us to talk to the credit card companies or pay them anymore and they were having us save money (after they took their big chunk) to eventually settle with the credit card companies.
    Then after paying more than half, we woke up and decided not to pay them anymore but they would not refund the money. We have thought about suing them but are not sure if we will.
    We didn't know what to do and looked at all our options we thought we available. Then I decided to call the collection agencies that were hounding us and I told them jour problem and they let us be on a hardship program and we are paying them off with very low payments. They have all said they want to settle at anytime I have a chunk of money. The B of A did settle a $6,000.00 debt for $1,500.00 so we were happy about that but we do have to pay taxes on the remaining money which is a bummer. Now one collection company, NES, they were very rude and threatened us that we had to pay almost half of the debt immediately or the credit card company would sue us but we couldn't pay them. So they gave up and sold our name to another collection company and we sent them a letter demanding proof of the debt and we have never heard from them again. I wish I would have done that to all of them but for now, we are getting by. My biggest fear is being sued by the credit card companies for not paying. I have tried to find as much info as I could on the internet about what is the best way to go but I am still not sure. Budd Hibbs has a lot of info but it is hard to know what is best. If anyone has had any real experience that will help us both, please let us know.
    npq
    cheerry777's Avatar
    cheerry777 Posts: 11, Reputation: 1
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    #8

    Sep 6, 2008, 01:37 AM
    Thanks npq, for sharing your experience. So you have settled only with one creditor so far? If you don't mind me asking, how much is your debt and how many creditors you have to deal with?

    I have 4 creditors to deal with. I owe over $50K, probably a lot more than yours. I did as the settlement company told me to do. I stopped paying the creditors. Now I'm getting these automated phone calls from the creditors. It feels awkward to stop paying them.

    Why did you decide to discontinue the settlement program? I wonder how it would turn out if they had help you settle the debt?

    I don't think the CC companies will sue you. It would cost them more money to have to sue.

    For the tax part, are you saying you have to pay tax on the $4500 that you have saved from paying B of A?
    npq's Avatar
    npq Posts: 11, Reputation: 1
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    #9

    Sep 6, 2008, 12:18 PM
    We have 4 creditors that we are dealing with now. Our debt was $60 k when we went with the settlement company. What is the name of your company? Have you googled them to see what other people have said about them? We stopped with ours after we googled them and people had complained about their services. It was going to take us 4 years to settled everything. The problem I see is you pay them this huge fee but now I am doing what they were doing. You don't need those people to do it for you. The collection agencies and the credit card companies will work with you. You don't need a third party and that is our big regret. I can setlled with my creditors at any time. But they want to have the money at one time for settlement.
    I don't really know what the answer is because anyway you go, there are the positve and negatives to it. And yes, we have to pay taxes on the $4500 that we saved from paying Bof A. You better check with your settlement company because ours NEVER told us that. We are upset about that but we learned about that after we did it.
    Let me know if you have anymore questions. I do wish I culd find advice but I'm not sure where to get it.
    npq
    slowandeasy's Avatar
    slowandeasy Posts: 353, Reputation: 14
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    #10

    Sep 6, 2008, 05:50 PM
    Hello
    Personally I would not go with a debt settlement company. Look at it like this they are not doing this because they like you , they are doing it because they can make money.
    You can work with the cc company yourself but before agreeing to any thing GET IN WRITING. Also if the debt is old the sol may come in to play. That does not mean you don't owe it it simply means they can't take you to court to get it. Check the sol's in your state to see.

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