So I didn't realize I still had an outstanding balance with my CapitalOne credit card as I moved in the past year. I found out today that a balance that was originally just over $1000 has ballooned to $2600. Somehow the CA (collection agency) found my parent's cell phone number and called looking for me as my number changed. Nice, huh? Anyway I called the CA back and eventually agreed to pay the full amount in installments beginning at the end of this month as I have extremely limited funds, but I want to minimize the damage to my credit report. Is there any point in sending a PFD letter to the CA as I've read through some parts of the forum, and it seems the CA cannot remove the OC (original creditors) entry?? Could someone elaborate on this as I'm not exactly sure what the difference is in a credit report? Capital One (the OC) automatically transferred me to the CA when I called them. Is there any way to get this totally off my credit report? What should my next step be: a) PFD letter, b) debt validation letter, c) just pay it in full as scheduled without any written correspondence, or d) other?
Ryan
Credit report tellt eh lenders and oterh how responsibel you have been with borrowing
It gives an indication to the lenders how credit worty you are.
You cannot clear this from your credit report immeditely
Once you pay in full, it will shaow as paid in full, but that defult will remain on yoru report for 7 years and after that it will go away
I see, so should I just take the settlement offer (about $400 less), or make a counter-offer? If I understand right then a settlement is pretty similar to paying in full when calculating a credit score? I have a very limited amount of money.
Oh, and I take it there is no point in sending a PFD or Validation letter?
I want my credit to be ruined as little as possible. :(
Hi Mrryanspace,
As I can understand from your post, the OC has already transferred your account to a CA. So, you have to deal with the CA. Have you already decided to pay off the full amount? You said that you have limited funds. Have you calculated about the amount you can pay? If you have done that, then I think you should first send a counter offer for debt settlement letter stating how much you can pay. Wait till they reply to your letter. Never pay any amount based on verbal agreement. You must have a written document.
Or else, if you have decided to pay the full amount, then you have to send a PFD to the CA stating that you will pay off the debt but they have to report it as "paid in full" or "paid as agreed" so that it does not hamper your credit score much.
Hi mrryanspace
If the debt is being reported by the OC then first check if the OC still owns the account or not. If they do, then you may try and strike a deal with them and try to negotiate with them about a PFD. They are not bound to delete your record from the report, but you can only make a request.
The OC may not even be willing to work with you, but all that you can do is give it a try. If the debt is being reported by the OC, there is no point in sending PFD letter to the CA. It is only the OC that can get it removed.
Hello,
Thank you for your responses. How do I check to see if the OC still owns the account? Capital One won't speak to me when I call them. Would would happen if I sent a PFD letter to the OC? Do they just ignore it or send a response such as, "sorry, too late to work with us."
I can comfortably pay only a fraction of the debt all at once (like $300). I would have to sacrifice and borrow to pay off the rest of the debt. Initially, I was going to do a pay in full, but after reading a number of posts is it correct that a "paid as agreed" (settlement) is pretty much the same as a "paid in full" when the bureaus calculate the credit score? If there is a pretty significant difference between the two, I would pay in full by borrowing and sacrificing as I'm 25 and don't want my life ruined. If the difference is minimal, I would try to make a settlement as I am financially strained at the moment.
I take it that in all likelihood the best result that I can achieve is a "paid in full" or "paid as agreed" entry in my credit report?
Hi Mrryanspace,
Pull out your credit report and check whether or not the name of the OC appears against the debt recorded in your report. If the OC still owns the debt, then you have to negotiate with them. However, if the debt is being handled by the CA, then you have to send a PFD to them.
You have to analyze your financial situation before planning to pay off the debt. "Paid in full", I think is a better option since it can improve your debt service ratio. The creditors will find you more credible and responsible towards paying your debts. However, in both these cases, do not expect your credit score to shot at 800. Improvement of credit score depends on a number of other factors too.
Justin, thank you for your response.
Well, I'm planning on sending a debt validation letter to the collection agency (hoping they won't be able to prove it). Anyway, I am scheduled to make a payment with the collection agency a week from now (I missed the first scheduled payment with a bounced check), and they are threatening possible legal action/public record if I miss the deadline. Is it still safe for me to send in the debt validation letter and cancel all scheduled payments for the 30 days that they have to respond?
Thanks everyone
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