My son in law has a debt with Citibank. A supposed “collection agency” contacted him, they negotiated he paid it. He did ask for a written letter that stated it was paid and wouldn’t affect his credit, that letter never came. My daughter and son in law were going for a house loan and on his credit report low and behold he has a charge off from Citi. He only owes I think around $1100. He can pay it but we need to make sure that charge off comes off. It also looks like on his credit report that Citi still has the debt. Should I have him send a “pay for delete” letter? Then he will pay off the rest of the debt? And if in fact it in in the hands of a collection agency should he send the pay for delete letter to them? I appreciate any advice you can give us.
When a big credit card company like Citibank charges off an unpaid debt, it usually sells it to a collection agency which then goes after the debtor for payment. If the debtor pays quickly enough, the debt doesn't usually appear on the debtor's credit report as an additional collection. The charge-off from the original creditor, however, remains on the debtor's credit report. It sounds like this is what happened to your son-in-law.
Once Citibank either transferred the debt to a collection agency or your son paid the debt to Citibank, the charge-off amount should reflect a zero balance. In this case, Citibank's tradeline on your son-in-law's credit report should also reflect that the debt was paid.
I'm not sure what method your son used to pay off this debt, but he should have some sort of paper trail. If he was conscientious enough to request a zero-balance statement from the collection agency, he was also probably conscientious enough to retain whatever evidence he had that proved he'd paid the debt (cancelled checks, bank records showing where he'd made an $1100 transfer to the collector, etc.).
Your son has several options. First, he could dig up some of the old paperwork he has on the debt that displays his account number, call the collection agency, give them the account number, explain the situation and request a zero-balance statement. Provided this took place relatively recently, they should still have this information on file. If he gets a customer service rep who's snarky with him and claims, "We don't do that," then he needs to continue calling until he gets someone helpful. Also, he can request to speak to a supervisor at any point during the conversation. Tell your son to remain calm and professional. Collection agents are used to dealing with rude and angry people. They're a lot more likely to help him if he remains civil.
Once he has the zero-balance statement in hand its time to call Citibank and ask to speak with a supervisor. He should explain that the charge-off on his credit report is reflecting a balance of $1100, but that his balance should be zero since he already paid the collection agency. They should then transfer him to the credit reporting department (I forgot exactly what Citibank calls it, but its the department that handles credit reporting issues and errors). He can ask for a fax number to fax in the information he has to back up his claim. Tell him to make sure he writes down the name of the person he's speaking with and the time of the call. Also have him ask that the rep he speaks with make a note of the phone call and his problem on his file. This way, if Citibank does nothing to fix the problem, a new rep will have proof that has, in fact, attempted to resolve the issue before.
While your son can work to eliminate the outstanding balance Citibank is reporting to the credit bureaus, he can't change the amount of money that was charged off or simply call and have the charge-off itself removed. The charge-off--whether paid or unpaid--will remain a part of his credit history until seven years from the day Citibank originally charged off the debt. If this reporting period has already expired, he can forget trying to have his account updated to a zero balance and instead demand that Citibank and/or the credit bureaus remove the entry altogether because its obsolete.
Also, you mention that your son-in-law "negotiated" this debt before paying it. Because he requested a zero balance statement I have to assume that he also got his settlement agreement in writing. Without a written settlement agreement from the collection agency, he has no real proof that the debt collector agreed to a settlement at all. It isn't uncommon for collectors to agree to a settlement and then turn around and try to collect the unpaid balance. Without a written settlement agreement from the collector, debtors have next to no protection from this tactic.
Even if there was a settlement in place, its unusual for the original creditor--in this case, Citibank--to report the unpaid balance a debtor owes after he settles with a collector. Once the debt is with a collector, they're not going to bother watching too closely. There's a 99% chance that $1100 was the amount the credit card company originally charged off. Either way, he needs to get that $1100 reduced to zero where it belongs.
Paying the debt all over again might be worth it if Citibank agreed to remove the entry afterward, but your odds of successfully negotiating a pay-for-delete with a credit card company are slim to none. If he decides to pay anyway, even without a pay-for-delete, its a good idea to stay on the phone with the rep, make an automatic payment and have the rep fax him a zero-balance statement right then and there. This time, he shouldn't let up until he gets it. If that means staying on the phone until he gets the fax, so be it.
But kudos to your son for paying this off quickly and avoiding having a collection agency show up on his credit report. Citibank isn't the most fun company to deal with, but resolving problems is often easier when you're dealing with a real credit card company rather than a junk debt buyer.
Best of luck,