Some of this depends on what state you are in... but in general this
is how it goes:
1. You fail to make payments to the credit card company.
2. They try to get you to pay the bill.
3. They have little luck and send your account to a collections
company... sometimes its an outside company and sometimes its a
division of their company
4. At this point you can try to negotiate to settle the bill.
Generally, the collections company gets a % of what they get from you.
Sometimes they won't budge, sometimes they "waive" the interest or
fees, and depending on what they think they can get from you... they
might settle for 40-80% of the balance. But most often they look for
70% or more of the debt. If you do make a settlement at this point
*** MAKE SURE *** that you get it in writing before you pay them. A
lot of these guys will lie, cheat, and steal... its more money in
their pockets. DO NOT BE OVERLY PRESSURED or they will be back for
more.
5. If you are unable to settle (can't pay) or you just ignore them...
then usually the credit card company will write the debt off... this
is a charge-off. They will report it as a charge-off to the credit
reporting companies. BUT this doesn't mean its all over. At this
point they sell your debt to another company that will try to collect.
In general they will sell your debt for between 10-60% of the
balance... it all depends on a lot of various factors.
6. Now this new company will try to get the money from you... and they
of course will try to get as much as possible... they will add on fees
and interest too. They might have no luck as well and even sell it to
another company.
7. At some point the owner of the debt will give up or will file suit.
If they file suit you need to goto court... if you don't they will
win a "default judgement" since you basically forfeit. This means
that now the court has certified the debt w/ the court. They can add
on legal fees, etc. and continue to try to get you to pay. A
judgement can be good for 20+ years. With a judgement they can go
after your assets... your car, your house, your bank account, anything
you own. They can also go forward and go after your wages. The
amount they can take all depends on what state you live in.
8. You can goto court and fight the default judgement... but you will
need grounds to do so and you need to do it in a certain amount of
time... usually within 6 months to a year.
*** I don't know why you say you had a "sympathetic judge"... because
he is limited in what he can do. Sometimes they are nice and try to
help settle the matter. But the judgement basically has been entered.
In your case you settled for 50%... and unless you signed something
they can't really hold you to it... and you can't really hold them to
it. But it is in the best interest for both of you to do so. But
realize that most likely you will also be required to pay taxes on the
difference. So you will need to pay income taxes on the difference
between what is paid and what is owed.
As far as your credit rating goes... the judgement is a public filing
against you... and won't be off your credit report for 7 years from
the date is was filed... even though the debt might have started much
sooner. Basically, the only way to get the judgement removed is to
have the default judgement vacated... and the judge has to do that...
and you need grounds. And if you had the judgement vacated everything
might just start from the begining down the road anyway.
Overall, you're better off to pay 50% and not have to have it over
your head... and just wait and your credit report will get better over
time.
Q & ANSWERS:
Q: How damaging is it if it stays on the public record even though it
says it was "Settled and Paid in Full."
A: It will be better w/ settled... and I am surprised they are gonna
put paid in full... but it is still very bad to have a public record.
On the positive side, sometimes the 3 credit reporting agencies don't
have their act together and they all might not list the public record
at all.
Q: What are the ins and outs of this whole process?
A: I think I answered this.
Q: What are the mark-ups? What Percentages can a cardholder negotiate
to? Is 50% standard or can one bring it down further?
A: 50% is good and probably the norm... 25-40% is possible.
Q: What happens if I pay the Credit Card company directly?
A: You can't... they nolonger own the debt.
Q: Can the company holding the debt be forced to notify the credit card companies?
A: No. They are just required to update the judgement. Officially
the credit card company is who put the bad records into the report and
only they can make changes. These bad marks will be removed in 7
years from date of entry... maybe sooner.
Q: What are the best ways to resolve this and similar cases. And how
does all this effect the Credit Reporting Company "score". How does
this all work?
A: Its best to deal w/ this before it gets to the default judgement
stage... and your score depends on a lot of factors.
*** I hope this helps you! |
