offered settlement, PFD?

[danie86]

I have a $3000 bill in collections, I was offered a $1600 settlement by the collection agency. Would I be able to send the collection agency a PFD letter if they offered a settlement? I thought with PFD letters I had to pay the full balance due??

Has anyone tried neg settlements with the collection agency perhaps by phone and sending a letter saying "per my conversation on 1/20/12 with Sara, I agree to settlement offer of $XX..." and then go on with a normal PFD letter?

Has anyone had a successful PFD with a settlement offer? I have several small things I can pay in full but I think it would be years before I got this $3000 one taken care of.

HELP!

[Lian]

"Paid" is a legal term that means the debt has been satisfied. How much the owner of the debt chose to accept in exchange for holding you to have satisfied the debt is a personal issue between the two of you. PFDs dont require full payment. They require satisfaction of the debt.

Settlement PFD offers are asking for two concessions on their part.... CR deletion and acceptance of a lesser amount as satisfaction. Depending upon your needs, increasing the $$ offer may decrease the reluctance to agree to deletion of accurately reported information.

Offering a settlement for less would most likely not improve your chances of acceptance.

[danie86]

Thank you for responding, I was thinking of offering $1700 for a PFD just a little above their settlement offer. What if they counter offer? Should I "haggle" for a PFD or stand my grounds??

[Lian]

First, consider what THEIR options are.
Is the debt still within SOL, or has SOL expired?
Motivation to accept a PFD will increase when they no longer have the legal ability to collect.
Your risk increases when they have that option.

[sophali]

Thanks for asking this question - I was considering doing a PFD for some credit card accounts that were charged off December 2010 - and offering very little on the dollar. But it looks like this might be the wrong strategy.

[Lian]

I am not saying it is the wrong strategy, only that it might be risky. Saying you can pay tells them that legal action, if taken and successful, would have money for them to attach.

A charge-off has the additional consideration that the creditor has already recouped part of the bad debt owed via the charge-off process itself. They shifted it from a receivable asset to a business loss, and took a tax write-off. That does not reduce your continued obligation for the entire debt. They can also recoup more of the loss by selling it to a debt collector, albeit for only pennies on the dollar. If they do that, you can no longer pay them period, let alone offer a PFD.

If they accept a PFD, they would then have to go back and amend their accounting ledger and tax returns, now claiming the full debt as a received asset, which would result in loss of their prior tax write-off. All said just to emphasize that, when PFDing a CO, your $$ may be less of an incentive than it was prior to their charge-off.

[sophali]

Thanks Lian! In that case, I'll rethink my entire strategy. In a charge off situation, do I just sit tight and see what happens? I posted a seperate thread with details on these three cards and would love some input.