Monday, January 2, 2012

Reader Question: Citibank Charge-Off in Collections. Can I Settle?


I have a $7,500 credit card bill with Citi.  They just charged it off.  They asked for $2,500 to settle but I didn't have the money.  The date of charge-off was XX/XX/XXXX, but I didn't receive the letter until it was too late.  I want to deal directly with Citi but they told me the account was sold to a collection agency.  What can I do?  I want to deal directly with Citi.  Can they pull the account back from the collection agency?  Should I pay?  Who Should I pay?  Will I be sued?  Should I wait seven years?  How do I get the best entries on my credit report?  I don't know what to do.  Please help ASAP.  I want to call them immediately.



For future reference, when a credit card company offers a settlement you can always ask for a payment plan. I don't know a single person with outstanding credit card debt who just happens to have $2500 laying around that they can negotiate a settlement with.

The charge off date was fairly recent. At this point you should be able to work out a deal with the collection agency in which you pay off the debt in installments and they agree not to report the debt to the credit bureaus. If the company agrees, get everything in writing before you pay them a dime. Collection agencies aren't known for their honesty. It won't negate the charge-off on your credit report, but it will prevent you from being sued or facing additional credit damage when the collection agency adds its negative tradeline to your credit report.

I know that you don't want to deal with a collection agency, but you no longer have that choice. You can always call Citibank and explain that you want to pay the debt, but – and I'm being brutally honest here – the odds of Citibank agreeing to recall your account from the collection agency aren't good. Unless you walk in swinging the full $7500, you'll probably get transferred from rude representative to rude representative until you get frustrated and hang up. If Citibank will take the payment, however, go for it, but keep in mind that a payment plan is unlikely to be a possibility at this point.

As far as a lawsuit goes, the higher the debt, the more likely the lawsuit. In this case, the collection agency will pull your credit report, examine your employment history and decide whether or not to sue you based on that information. For example, if you have a full time job, own your own home and are not subject to any wage garnishments, you'll probably get sued over a debt as high as $7500 – and they'll sue for the full amount, not the settlement amount. If you're over 65, a renter and living on Social Security, however, suing you is pretty pointless since they can't garnish Social Security or place a lien on a rental home. Whether or not they sue just depends on your specific financial situation.

Waiting seven years has nothing to do with getting sued. The statute of limitations for debt collection lawsuits in your state determines how much time a collector has to sue you. The seven years just refers to the amount of time the entry remains on your credit report. Whether you pay it or not you still have to wait out the seven years for the charge-off to come off your credit report. If you can work out a payment arrangement with the collection agency before they report the debt to the credit bureaus, you may not have to contend with an additional negative entry.

Here's the rub: The longer you go without paying, the more likely the collection agency is to offer you a lower settlement, but trying to wait out the collection agency is a gamble if the debt is still within the statute of limitations because the company could sue you at any time. In my opinion, your best bet right now is to try and negotiate a settlement with the collection agency in exchange for the company not reporting the debt to the credit bureaus.

As far as your credit goes, just keep paying your bills on time. I could sit here and give you a breakdown of millions of little tips and tricks, but you can find that information anywhere. Your best bet is just to continue paying your current creditors and always pay on time. The more time that passes, the less the charge-off on your credit report will hurt you. Entries lose importance as they age.


Do you have a collection question you can't seem to find the answer to? Send your questions to and they may become the topic of a future post.    


  1. What do you do when collection agencies call you from all over the world demanding payment any day of the week, at any time of the day, night, when you know HAVE NEVER HAD a CITGO CITY BANK CREDIT CARD in your life, and even when supervisors tell you that your address is gong to be removed, and it's not. Last time I called the collection agency the supervisor asked for my social security number and my date of birth just to have my name removed, ????- she said, how do you expect me to delete you from my assignments when you dont verify all the information I am asking for. This is they way collection agencies operate,for what they told me, they find every single person in the world with the same name and send letters of demand, they don't care whose life they destroy with the complicity of City bank. There's a new collection agency calling me again (probably located in India). WHEN IS THIS GOING TO END, THREE YEARS OF DEALING WITH THIS IS ENOUGH! For your information City Bank, my credit score is 820.

  2. I have an old charge off with citiband for 19.900. it is still with the origianl creditor. we had financial disasters and my husband has been battling leukemia. we lost our home. it will expire to the 4 year statute of limitation next October 2013. however, we want to buy and house and must have a zero balance.

    should we ask for an investigation of the account to get it off the credit for a short time or try to settle? we dont have more than $1000 to give and have been approved for bankruptcy.

    We hope to buy in 2-3 months with a special HUD program but we cannot have any balances showing. The credit score is not the issue.

    What should we do?

    1. You are within your rights to request an investigation, but if the debt is legitimately yours, an investigation for an amount that large is close to pointless. Believe me, credit card companies and collection agencies alike are a heck of a lot more studious about proving a debt's validity when that debt in in the the tens of thousands of dollars rather than a few hundred.

      Settlement sounds like your best option but (and here's the kicker) you're a heck of a lot more likely to get a settlement deal after the SOL expires. Before the SOL expires, the creditor still has the option to sue you and collect the full amount by force. If you can hold on until the SOL expires, you're far better off financially. You did mention that you didn't have more than $1000 so I must warn you: Citibank isn't going to settle an almost $20,000 debt for $1000.

      If you settle, make SURE that Citibank agrees to WRITE OFF THE COMPLETE UNPAID BALANCE. If you don't, don't be too surprised if Citibank sells the unpaid portion of your settlement to a collection agency. Best of luck to you.

  3. May 2013

    In 2010 I filed chapter 13 Bankruptcy. I had it dismissed March 2012. I filed 13BR due to bank trying to foreclose on me while I was applying for new loan(I had one of those neg amort type) Anyway I was diagnosed with Parkinson’s in 05 , tried to keep my home but could not. I was able to settle my debt, However, I still have debt with Citibank - Home Depot account in the amount of $8600. The loan is in collections with LTD financials. I offered them 25% in writing sent certified. When I spoke to the rep they said they have not received payment since 2010. I told them I was in BR13, they were surprised. I guess they did not know about it. However, they were certainly on the list of debtors when I filed. They want $3,400.00 I said all I have is the $2225.00. They want to give me a payment plan. I just cant do that I live on SSDI and my medicine is very expensive. When I reach the donut hole in August I will be putting out an extra $400.00 a month. The $105.00 payment they want me to pay is not doable. Do I have statute of limitations on my side What course of action should I take.?

    1. I can't tell you whether you have the SOL on your side because you didn't mention which state you live in.

      You don't sound like you can really afford to pay these people anything. What's the worst that could happen to you if you simply don't pay? They could sue, but your SSDI is exempt from garnishment--even after its deposited in your bank account. You don't have a home they can put a lien on and retirement savings are also exempt. So I ask you, what can they do if you don't pay? They could report you to the credit bureaus, but the BK already trashed your credit, so their report won't hurt you that much. They could sue but, once again, what do you have that they can take? Nothing.

      I'm not saying don't pay them. What I am saying is that I want you to sit down and think long and hard about whether its worth putting yourself in a dire financial situation to pay this old debt.

  4. Lee -

    I recently had my Citicard charged off and I just received a call from a collection agency named Client Services. I did not hide from them and I told them our situation and stated I would like to settle. They offered 35% settlement or a payment plan which was 35% + additional costs. In your experience, what is the lowest you have heard (Citibank) settlements to go? I know we will also get dinged for more money on our 1099 taxes for the unpaid amount, so I didnt want to go more than 25% if I knew it was possible.
    Are you aware of Client Services and thier affiliation to Citibank? I know they are a collection agency, but were they hired by Citibank to recover post charge off debt or does Citibank sell off the debt to them? Hard to determine from talking to them because they name drop Citibank, payments can be made to Citibank NA, but yet I feel Citibank is no longer attached to this debt after it was charged off and they are nothing more than collection agency sharks. It may help to understand this and how it may pertain to the negotiation process, as selling off debt is for pennies on the dollar and any settlement will be likely be profitable for Client Services.

    Difficult to work with collections, but can they threaten to add more fees (due to lost time since the took debt on)? For example, the amount goes up if I wait to pay it when I have funds in 2 weeks? This is a untruthfull tactic to retrieve more money, correct? If so, I will stick to settling the ~12k Amount owed to Citibank sans any fees or threat of fees.

    Another concern is the actusl settlement contract they stated they would email me. Any advice on what the contract should contain? Separately, I would like to ask they include and report to credit bureaus as "settled as agreed", "account closed" or delete the trade item completely. When asked, they try to say they didnt know or its a different department. While my credit is awful right now and I am not worried one bit about it whatsoever, I would like to insist they add "settled as agreed" verbage, so I can get a better start on my credit rebuilding.

    As far as payment, they want my bank account number. Thier defense us they do this kind of thing everyday and I shouldnt be worried. Well, I refuse. There must be other less intrusive ways to pay. Can I pay with a certified check and send with tracking? Also read that it may be good to add "by cashing this check, you authorize this account to be settled in full..." to the check.

    I would appreciate you expert advice and guidence. They cannot scare me with negative credit. My hope is to succesfully settle and proceed safely, so I am not swindled $ and then they turn around and resell the debt to someone else....or worse yet, a lawsuit for full amount by Citibank.

    Strongly believe many will learn from my experience and dialogue with you. Thank you in advance Lee and I look forward to your response.


    1. Your question was a long one, and so was the answer. Because of that, I have redirected it to a new post. You can find it here:

  5. I answered one/some of my questions from yesterday. Just received a statement from Citibank. Citibank is working through Client Services, but still has the account. Not sure how or who to proceed with.

  6. As of May 2013, I have had 4 charge offs applied to my credit report. Recently, I have been able to settle all but one account. The last account to be settled is the smallest account and it is just in the upper hundreds of dollars.
    My question is, after settlements are finalized and the creditor is paid, how do I go about repair my credit score and report? I understand there is a possibility that I may have to pay taxes on the forgiven debt, but the credit repair concerns me the most.
    By the way, I use to have a 780 credit score and I paid my bills on time up until last October-November. It was due to unemployment and then after taking a job that paid less money. And here is the kicker, 5 months after taking the job they put us on slow time( maybe not working 3 days a week!) so, what do you suggest concerning credit repair?

    1. The first thing I suggest is putting your settlement letter in which the collection agency agrees NOT to sell the unpaid balance to another collector in a safe place. You'll need it if they try to do just that. If you didn't request that letter, keep a close eye on your credit report. Collectors like to sell settlement balances to other collectors.

      Those collections will fall off 7 years and 180 days from the date that your original debt went delinquent. You have the right to dispute the debts. The collection agency may not bother to verify them since you've already paid. Disputing is an iffy process and often doesn't work. Your best defense is to simply live as responsibly as you can and pay all of your creditors on time. The negative accounts will have less impact on your credit report as they age, and you'll start to see steady improvement in your scores.

    2. This is obvious: "[L]ive as responsibly as you can and pay all your creditors on time." There are enough people who will say this to someone -- do you get a big warm feeling for chiding someone who, for whatever reason, finds themselves reading a blog called ""? I originally wrote this message laced with profanity, but decided that I didn't need to be gratuitous. It is very, very hurtful to be reminded at every turn how terrible of a person someone is for not being responsible.

  7. Citibank will settle very low if they are convinced you are "judgment proof." This means even if they take you to court, they'll never get their money. Today, a collection agency settled a credit card debt of $6,034.00 for $750.00, which is approximately 12.5% of the balance. They will tell you that they can only do this or do that, but it was all bs on their part. Although the debt was already charged off, I repeatedly held back and they finally relented with this extremely low settlement. So glad this is over.....