How to make credit card debt settlement without affecting my credit?
I had some $2K balance with American Express. I have been paying them
3 years without late and for some reason, they did not receive a
payment in July 04 and the late fee and interest charges jumped from
prime to 27% and my account was assigned to a collection agency. I did
not notice until recently.
You didn't notice for FIVE MONTHS that your balance was too
high, that your payment had not been credited, that your interest
rate had jumped and your account was in collection?
Okay, we'll go with that -- but you have to realize that this
automatically loses you sympathy in any legal forum. "Got laid off
and can't pay my bills" is one thing; "couldn't be bothered to look
at five statements in a row" is pretty irresponsible.
Of course it will; that's what it is.
I'm sure you do.
You can ask them to include in the settlement offer that the status
be marked "paid on time" or that the collection and settlement not be
reported to any credit bureau. They'll probably laugh at you. Then
you can offer them a larger percentage in settlement in exchange for
written assurance, and they might or might not buy it.
The basic problem here is that you don't like an _accurate_ statement
on your credit report. Sorry, but you don't have a lot of negotiating
room here.
Take this as a lesson: from now on examine your bills promptly and
deal with any problems right away. The longer you wait, the worse
anything gets. If you had dealt with it up front, and your payment
record was otherwise clean, Amex might even have waived the late
charges or kept the old interest rate if you asked them nicely,
particularly if you were able to give them the check number and the
date you mailed it.
What you need to do is to secure a letter from the collection agency
saying that they will not ding your credit and all the rest of what they
are promising. That way, when they ding your credit, you will have
documentation to get the blemish removed. There is no guarantee that the
credit reporting agencies will remove the blemish, but you have a
reasonable shot if you have the committment letter from the collection
agency in hand.
I'm 99% sure the collection agency is lying to you about accepting a
settlement and not damaging your credit. It will take your 60% and then
demand the rest of the balance or just ding your credit. If all you have
are your memories of some phone calls, you have essentially nothing.
Lying is part of the collection process so demand that letter saying
that if you pay X dollars, all is forgiven. That letter along with your
cancelled check is good ammo to undo what the collection agency will
probably do to you after you pay.