Outstanding Debt

water1111 · #1 (**permalink**) 10-23-2006, 05:20 PM

I have been working really hard at reducing my debt so I can increase my credit score...........Right now my score is in the 500-600 range which is horrible!!!! Here is my question. I have an outstanding debt on my credit report which goes back to 2003. I haven't been able to pay it because it is a lot $7,000.00 and it was already sent o a creditor so I can't make payments on it.....It is a school debt! Anyway, I am getting alump sum of money next month and I want to pay it off.............So here is the dilemma, I know if I pay it to the creditor - i will only have to pay $5,000.00 but it will be noted as a charge off. Then my credit report will be updated to 2006 and my credit score will go down. Who can help me-----what are my options?

Thanks for your reply

sweeps · #2 (**permalink**) 10-23-2006, 05:30 PM

My opinion, pay the debt, get it off your back. If they're letting you settle for $5K, get it IN WRITING that the debt will be marked as paid in full and that you will not have any further obligation, ever.

sweeps · #3 (**permalink**) 10-23-2006, 05:42 PM

Here is an interesting article you might want to read. This talks about the pros and cons of ignoring the debt, settling the debt and paying in full.

Fessing Up and Settling Up

water1111 · #4 (**permalink**) 10-23-2006, 06:09 PM

Hi Sweepsplayer,

Thanks for your response and I read the article. It was really informative. I think I will probably just go ahead and pay it off. If you do call up the creditor and ask them to not change the original posting date(for me would be 2003), do they usually agree to do it? And if so, do they follow through with it?

Thanks water1111

disneysteve · #5 (**permalink**) 10-23-2006, 07:34 PM

I don't see any options here. You incurred the debt. You now have the money to repay it as you promised to do when you borrowed the money. I think you have a legal and moral obligation to repay it. How that will affect your credit score is irrelevant in my mind.

poundwise · #6 (**permalink**) 10-23-2006, 10:02 PM

Good responses and good link Sweeps.

water1111, the question of the creditor 'following through' is resolved by the aforementioned advice of getting the agreement in writing prior to paying the debt.

Elgin526 · #7 (**permalink**) 10-24-2006, 02:25 PM

Quote:

Originally Posted by disneysteve

I don't see any options here. You incurred the debt. You now have the money to repay it as you promised to do when you borrowed the money. I think you have a legal and moral obligation to repay it. How that will affect your credit score is irrelevant in my mind.

But if the OP can pay it off AND not have it ding their credit, that's an avenue worth exploring!

disneysteve · #8 (**permalink**) 10-24-2006, 02:40 PM

Quote:

Originally Posted by Elgin526

But if the OP can pay it off AND not have it ding their credit, that's an avenue worth exploring!

Agreed!

water1111 · #9 (**permalink**) 10-24-2006, 05:45 PM

I wasn't even considering not paying the debt. I was questioning the best approach to take to have the least impact on my credit report.

Thanks for all your advice!

tener · #10 (**permalink**) 11-01-2006, 04:10 PM

if you can get away with paying just $5k you should ask yourself this question. is a good credit report really worth the extra $2k?

water1111 · #11 (**permalink**) 11-01-2006, 04:41 PM

maybe

autoxer · #12 (**permalink**) 11-02-2006, 08:34 AM

If you settle with the creditor for $5k, then it will report as a paid charge off. If you pay $7k then it will also report as a paid charge off. I don't see how paying an extra $2k will make the credit report better... am I missing something?

The creditor is willing to settle for less, because they bought the rights to collect that debt for much less than the debt... Paying them more won't help anything besides their profit margin.

And take sweepsplayers advice, GET IT IN WRITING that it will be marked as paid, so that it doesn't cause problems in the future. And check your credit report regularly to make sure it reports correctly.

vishenda · #13 (**permalink**) 11-02-2006, 10:47 AM

What ever you do DO NOT SETTLE THE DEBT, and by “settle” I mean paying less than what you really owe or on your credit report it will show settled for less than the amount owed. Is this a student loan that went into default? I only ask because you said it had something to do with school. Contrary to popular belief if this debt has been sent to a collector you can contact them and set up a payment plan. I would suggest called the collector (since you will be receiving a large amount of money soon) and set up a payment plan, something in which you can afford but that is a large enough amount to show them that you do mean business. Then take the money that you are going to be receiving make your first payment and put the rest in a saving account, so as you go it will accrue interest and you will be making money while you pay on the debt.
Been there, done that

sweeps · #14 (**permalink**) 11-02-2006, 11:02 AM

Quote:

Originally Posted by vishenda

What ever you do DO NOT SETTLE THE DEBT, and by “settle” I mean paying less than what you really owe or on your credit report it will show settled for less than the amount owed.
Been there, done that

If you get the settlement terms in writing, then that should never happen (or at least you would have legal recourse if it does happen). There are several good examples of settlement letters on the Internet.

Verbally agreeing with a collector to settle (or just paying an amount listed in a collector's solicitation) is not recommended.

vishenda · #15 (**permalink**) 11-02-2006, 03:09 PM

Quote:

Originally Posted by Sweepsplayer

If you get the settlement terms in writing, then that should never happen (or at least you would have legal recourse if it does happen). There are several good examples of settlement letters on the Internet.

Verbally agreeing with a collector to settle (or just paying an amount listed in a collector's solicitation) is not recommended.

ah talaga?ganun?