Debt Settlements:
The term settlement or settle means: "to compromise"! Put another way, it's a an agreement to substitute, for an existing debt or obligation, some alternative form of discharging that debt. The term, " satisfaction" is the actual discharge of the debt by the substituted means. Compromise is an agreement to perform some action, while satisfaction is the actual performance. Satisfied means the fulfillment of an obligation or claim, such as the full payment of a debt. Using these definitions, we can clearly see that settling debts means that the original debt is not paid in full and that some lessor amount is accepted as a means of satisfying (or discharging) the debt.
BEFORE offering to settle ANY debt, ALWAYS check to see if the Statute of Limitations (SoL) to enforce the debt has expired. Not because you don't want to not pay or do your moral obligation it is because you don't want it reported as a new debt on your credit when you pay it. Which some unethical companies do that. You will then have it on there for seven more year!!!
If the debt is more than seven years old then it can no longer be added to your credit reports however, collectors who buy old debts, often report these old debts to the credit reporting agencies (CRA) as new debt. Reporting inaccurate information violates the Fair Credit Reporting Act Section 623. Getting collection agencies to remove the inaccurate information from your reports is difficult at best. You can and should demand they comply with the FCRA. Make sure you are educated of your rights under the FCRA, especially when dealing with a collection agency and not the original creditor. It is always best to try to settle and deal with the original creditor!
If you do take their settlement as everyone said get it in writing. If they accept your offer, put it in writing BEFORE paying! Debt settlement letter samples are on the net, check out the FCRA for your rights and a copy of sample letters. Knowledge is power, then you are always in control of your money and making the right choices that work for your family, budget and taking care of your obligations. Remember every time your debt is sold to a collection agency it loses value especially once it is past the SOL, not meaning you still don't owe but it is why they pay pennies on the dollar to buy it and you don't want to pay then have it restart the seven yr period, be on your credit forever or worse some who didn't get it in writing and paid a settlement had it then sold to another, who said the original was not satisfied and was a whole set of other problems.
Debt buyers will issue a 1099c.There is an IRS requirement for a 1099-C to be issued on unpaid amounts over $600.
Good luck to you. It does sound like a good offer to get it out from under you and take care of your responsibility. Just want to give you information so you can follow up, research and do it right so it doesn't haunt you later. I am not an expert in this field but again knowledge is power, put yourself in the drivers seat .
You can find more information, and sample letters to give them a settlement at:
CreditBoards.com - Credit Help, Credit Repair Tips, News, Forums
Good luck to you, and good job for dealing with these things to give you a fresh start.
source: FCRA information and fair debt collection.com
