Q: Hi, I have rec’d an offer of settlement from a collection agency representing CitiCard for about 18% of the current balance.
When I asked to have the “line item” (delinquency) deleted from my record (credit report), the manager responded that: 1) it can’t be done; 2)maybe it could be done but only with a lawyer; 3)only CitiCard could do it (being they are only representing Citi, and would defer back to Citi, they could not do it, and won’t ask Citi.)
Obviously Citi won’t speak with me, as there is an agency representing them. He suggested I wait 30 days after paying and then ask Citi but I countered that once the horse is out of the barn, nothing will be done.
Is there any advice as to how I can get someone to delete this from all 3 credit bureaus? What are my options? Thank you very much for your help!
A: Agreeing to a settlement is such an important decision for many consumers today. While the biggest benefit is that in this case you’ll be able to eliminate 82% of your credit card debt, there are also several drawbacks:
You are right. Once you’ve agreed to a settlement, CitiCard is probably not going to agree to remove the reduced amount you paid from your credit history. There’s no benefit to them to do so.
The fact that you only paid 18% of your outstanding balance will remain on your credit history and affect your credit or FICO score for the next 7 years.
Lenders will take this into consideration before approving you for a loan. It will also affect the interest rates they’ll charge, your insurance payments, and your ability to rent or purchase a home during the next few years.
You could receive a 1099-C for the amount of the debt Citibank “forgave” since the IRS considers this forgiven debt as income. This means you’ll owe more when you pay your 2011 taxes.
While there may be organizations who claim to be able to wipe negative transactions from your credit history, most make false claims and charge fees for services they know they won’t be able to perform.
No one can change your credit history unless the information is incorrect. Before giving them any money, you will want to have the fee and the services they will provide in writing.
Also, check their history with the Better Business Bureau or your state’s Attorney General office to see if there have been any complaints filed against them.
We’re sorry there isn’t a better solution for you, but on the positive side, you’ll be able to begin with a fresh start in 2012 with much of your debt forgiven.
The next step is to do everything you can over the next couple of years to improve your credit score.
We hope this has been helpful. Don’t hesitate to contact us if you have any additional questions.