Paying less than owed to collection agency

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Ironchef2
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Paying less than owed to collection agency

Postby Ironchef2 » Sun Jun 22, 2014 5:33 am

A collection agency for Capital One has made an offer to reduce a $600 debit to $300 and make three monthly $100 payment. If I accept this offer how will it affect my credit score which is at 608?
Well meaning friends have advised to not pay it off altogether. Saying nothing will change on the credit score.


rockyrock
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Postby rockyrock » Mon Jun 23, 2014 8:35 am

Chances are if it is a outside collection agency the damage is done. Unless you dispute it and win, the best you can hope for is to pay it off ASAP so you can start the seven year wait for it to drop off. Whether you pay $300 or $600 the strike on your report(s) will be there. As long as you pay it, it will say paid.

As always, YMMV. Good luck.
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MemberSince99
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Postby MemberSince99 » Mon Jun 23, 2014 10:00 am

Also you should expect to get a 1099 for the 300 of the debt that was forgiven, meaning you will be taxed on 300 in "income" by the IRS.

Ironchef2
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Postby Ironchef2 » Mon Jun 23, 2014 4:29 pm

Rockyrock, are you saying that it would not matter if I payed $300 instead of $600 ? How do I know if the collection agency is in house? The offer came from the collection agency. I did not ask for it.



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