Pjdc11 wrote:Hi All:
For those more experienced than I in this scenario, I had a question. If a credit card company previously sent your account to collections/ charge-off, what are the chances you can bargain with them on paying off the entire balance owed in exchange for them re-opening your credit card?
Long story short, I was stupid in college and a few of my accounts ended up as charge offs. I really re-built my credit history now, with a car loan, 3 credit cards that I pay in full and on time etc. Has anyone ever tried this before, re-opening a card if you agree to pay the debt owed in full?
All advice is appreciated!
My understanding, and someone correct me if I'm wrong, is that if the account has actually been charged off (and isn't simply still trying to be collected by the credit card company's internal collections department), then the debt itself is transferred. So in effect you would owe someone else now - whatever company bought the debt from the credit card company - rather than the credit card company itself.
Basically there's a whole collections industry out there that buys debt for pennies on the dollar from original creditors in return for the right to pursue the debt. So for example if you owe the credit card company $100 it might get sold to a separate collections company for say $12 (no idea what the actual going rate is, just hypothetically). Then that new collections company "owns" the debt and can start calling you up telling you you have to pay the $100. Then they may offer to settle for like $60 - because that would still be a profit for them. In general the 'second tier' collections (the ones after the initial creditor's own internal collections department) is a lot more aggressive, but also more willing to settle for a smaller amount.
Either way though the account is fully closed in the eyes of the creditor and it's highly unlikely they would reopen it - ESPECIALLY with it being a derogatory account, but I think it's pretty unlikely even with closed accounts that were in good standing. You'd need to reapply for new credit if you're wanting to re-establish a relationship with them.