What Should Be Documented in a Settlement Letter

[sschmidt88]

Hello,

Can anyone advise what should be documented in a settlement letter? I'm about to settle my debt with a collection agency, but want to make sure that he settlement letter they present has all of the information necessary to make sure that this does not come back to haunt me. They have offered to settle for 50% of the debt owed. They are sending over the settlement letter shortly, but I want to make sure that I go over it with a fine tooth comb to ensure that everything is there. Any help would be greatly appreciated.

[sschmidt88]

Also, is it possible to request that the item be removed from my credit report? Once settled, how will it appear on my credit report and is there any hope of getting it off?

[aaron]

You would want to document how the matter will be reflected on your credit report, whether they will be issuing you a 1099 after writing off the balance, as well as anything else you agreed to as part of the settlement. If you are trying to get a "pay and delete" agreement, you would want that in writing - but you should not expect that they will agree, particularly if you've already settled without bringing up that subject.

[sschmidt88]

Thanks for the advice. I called them back and they advised that they are acting on part of their customer and that they cannot do a pay and delete. They also advised that Citibank cannot remove it as well. If I want it removed, I have to satisfy the settlement. Once that is done, they report the settlement back to Citibank. Once it has been reported as satisfied back to Citibank, I can then write a formal letter to Citibank requesting that I want it removed. They can then report this to the credit reporting agencies and I can take it from there.

It sounds like they were actually being honest. Sounds like they don't have the power to remove it.

With regards to the 1099, they advised yes, this is issued by Citibank. Can you expound upon this. What is the purpose of the 1099? I thought 1099's were used for income reporting purposes.

Thanks.

[Davesbroke]

Thanks for the advice. I called them back and they advised that they are acting on part of their customer and that they cannot do a pay and delete. They also advised that Citibank cannot remove it as well. If I want it removed, I have to satisfy the settlement. Once that is done, they report the settlement back to Citibank. Once it has been reported as satisfied back to Citibank, I can then write a formal letter to Citibank requesting that I want it removed. They can then report this to the credit reporting agencies and I can take it from there.

It sounds like they were actually being honest. Sounds like they don't have the power to remove it.

With regards to the 1099, they advised yes, this is issued by Citibank. Can you expound upon this. What is the purpose of the 1099? I thought 1099's were used for income reporting purposes.

Thanks.

Before you do anything, read my thread:

http://www.expertlaw.com/forums/show...463#post121463

They're not always so "Honest"

[Madmanmike1972]

Anything they claim they can do for you, you can usually do yourself.

[debtdebt]

sschmidt88 titles the posting
”What Should Be Documented in a Settlement Letter?”
but aaron’s answer on 08-22-07 seems so vague. Can we get some verbiage?

The collection company that mailed to me wrote “We have received approval from our client to accept $_______.__, via certified funds payable to ABC Recovery Services, Inc. to be sent for receipt no later than…….”
And “our client” is not the bank that issued the credit card. It is their client, apparently another collection, recovery, or services company.

The collection company writes “Upon successful completion of this agreement, there will be no further obligation on your part for this debt to either, “ABC Recovery Service”, or “XYZ Capital Services, LP” “ but that seems sufficiently vague. Who cares about their “client”? What about the bank? What about the credit reporting companies?

They also write “Upon completion of this transaction, all collection activity will cease on this account and the client will be notified to update the settled status to the appropriate credit reporting agencies”. Once again, who cares how the client updates their records? I want to know how the original credit card or bank will update their records. I want to know how Equifax, etc will update their records, or how they will respond to my notification/verification of the payment.

In the header of this letter the original credit card account number is referenced as “Original account #”
The original bank that issued the card is titled/referred to as “C/O:”
(“care of”)

The “Client:”, as I said, seems to be just another collection, recovery, or services company. It is not the bank that did the issuing.

A previous letter that I got on this delinquency had text like

"as settlement in full of the above-referenced account"
(as opposed to this new collection company writing “settlement of your account").

"Upon receipt of cleared funds, ( our service ) and our client will consider this account settled with zero balance. We will issue a release letter stating this account is settled with no further obligation due".
(My current collection agency writes: “We have received approval from our client to accept $_____, via certified funds payable to ABC Recovery Services")

But the other collection company came right out and specifically said
"Your JLK Bank account has been purchased by our client, XYZ Capital Services....Our client has authorized (us) to accept $_____ as settlement in full of the above-referenced account".

My current collection agency does not say what they do in obligation after they "accept $_____".

I'm just worried about a wording technicality causing me to throw away all my hard-earned overtime, and tax rebate, and applying my money to interest and fees, instead of a full, true settlement.

(Tonight, I called the Bank that the credit card was originally issued through and the customer service person only would say "ABC Recovery Service is collecting on 'our behalf' for the JKL Bank account". They had nothing that they could fax to me. I have not received any letters from the bank that stated that ABC was authorized to settle the matter, zero the account, or remove the obligation.)

Specific wording anyone?