Settle in full or Paid in full

[BoringWes]

I work for a fairly prominent financial company. One that gives every kind of loan you can think of. Personal, auto, student, mortgage, Heloc, etc. Part of my job is accepting or declining a customer's (we call them either borrowers or debtors) settlement offer. The goal of course is get above 80%. The collectors will always try and strong arm you to achieve this goal. To reinforce the importance of getting a higher settlement my company offers commission for ever dollar they bring in. So they'll always push for a higher dollar amount, kind of like in boiler room.

Here's the thing, it doesn't matter if you settle for 25% or 80% it still shows up on your credit report the same "0- Balance not settled for the full amount". The terminology is a little different, I don't want to give away too much who I work for.

The percentage of what you can settle your account for depends on what portfolio it falls under and how long it's been in collections. If it's unsecured debt we'll go as low as 10% as long as you submit the offer right before we sell it to a company for 5%. We generally sell accounts about 1 year after it's charged off.

If it's secured debt then it will be handled a little differently. Most secured debt is not sold, but kept in-house. Some companies sell their secured debt and it's the biggest headache ever. The only time we really buy the debt is if we purchased the company.

But be very careful, when you do settle for less of the balance, because you will be given a 1099 at the end of the year for the portion you got away without paying. Being prepared for that is well worth not having to pay the full amount. Consult a tax consultant before settling your debt, he/she will definitely put you on a plan.

Now as far as the benefits for your credit rating on settling or paying in full your past debt is a different story. There are definitely more experienced people on these forums who can give you advice on that. I'm just trying to give you a little insight to the process.

BW

p.s. Companies will always make you validate why they should take such a low offer. So be ready to present documentation on your current financial situation. They don't have to be notarized or anything, but everything requires approval and for a collector to get something approved by an officer of the company (who approves all settlement offers) they'll need validation. Officers of the company are generally supervisors/managers.

[Seeker]

I work for a fairly prominent financial company. One that gives every kind of loan you can think of. Personal, auto, student, mortgage, Heloc, etc. Part of my job is accepting or declining a customer's (we call them either borrowers or debtors) settlement offer. The goal of course is get above 80%. The collectors will always try and strong arm you to achieve this goal. To reinforce the importance of getting a higher settlement my company offers commission for ever dollar they bring in. So they'll always push for a higher dollar amount, kind of like in boiler room.

Here's the thing, it doesn't matter if you settle for 25% or 80% it still shows up on your credit report the same "0- Balance not settled for the full amount". The terminology is a little different, I don't want to give away too much who I work for.

The percentage of what you can settle your account for depends on what portfolio it falls under and how long it's been in collections. If it's unsecured debt we'll go as low as 10% as long as you submit the offer right before we sell it to a company for 5%. We generally sell accounts about 1 year after it's charged off.

If it's secured debt then it will be handled a little differently. Most secured debt is not sold, but kept in-house. Some companies sell their secured debt and it's the biggest headache ever. The only time we really buy the debt is if we purchased the company.

But be very careful, when you do settle for less of the balance, because you will be given a 1099 at the end of the year for the portion you got away without paying. Being prepared for that is well worth not having to pay the full amount. Consult a tax consultant before settling your debt, he/she will definitely put you on a plan.

Now as far as the benefits for your credit rating on settling or paying in full your past debt is a different story. There are definitely more experienced people on these forums who can give you advice on that. I'm just trying to give you a little insight to the process.

BW

p.s. Companies will always make you validate why they should take such a low offer. So be ready to present documentation on your current financial situation. They don't have to be notarized or anything, but everything requires approval and for a collector to get something approved by an officer of the company (who approves all settlement offers) they'll need validation. Officers of the company are generally supervisors/managers.

While this is all very interesting, I'd like to know what percentage of callers actually are "successful" in negotiating any percentage settlement?

My DH declared BK in order to get out from "repaying" debt that he could not afford to repay. He had no means and he proved it to a judge who granted the BK on everything except the 40k+ student loan.

When I met him, he had nothing but the cot he slept in, the computer, a phone, a tiny refridge and a tiny microwave in the one bedroom that he was renting ($300/month) from someone in a townhome. He had a leased car because nobody would give him any kind of loan.

I met him at one of my workplaces and I left that workplace maybe three months after starting... literally six months after my leaving, 75% of that IT department was "outsourced." At any rate, we were dating at that point and I paid his car lease, while he went through a six month training period for another job in another field (because IT was rather difficult back then). His unemployment and meager savings covered the rent and food for that period of time. At any rate this all happened in the very late 90's -- a long time ago.

But ultimately, I don't think very many people are "successful" with renegotiating debt to ANY percentage repayment.... I would be curious to see stats on this.