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 LeeEdwards@mail.com and they may become the topic of a future post.