Credit card charge off: pay in full or accept settlement?
August 3, 2009 12:11 AM Subscribe
Credit card charge off: pay in full or accept settlement offer?
posted by Nickel to Work & Money (5 answers total) 8 users marked this as a favorite
My 23 year old sister racked up some credit card debt during a low point in her life a few years ago and is now looking to tackle it and get her credit back on track. I am in a position where I can help her financially and would like to help her make the best decisions.
All of her credit card debt (~$7000) is charged off and sold to debt collection agencies. The agencies are offering settlement deals for a little less than 50% of the original amount owed.
1. I'm assuming that "charged off - paid in full" looks better than "charged off - paid a settlement" on a credit report. Is that right? Is it a significant difference or should we save the money?
2. How would these options actually be listed on her credit report?
3. If she does settle, can she ask that they remove the information from her credit report as a condition of settling?
4. If she pays in full, can she have the charge off removed from her credit report?
5. If I add her as an authorized user to some of my credit cards, will it raise her credit score? Will it lower mine?
NB. She talked to a credit counselor about a year ago, but couldn't afford the minimum due so they couldn't work with her. If you can personally recommend any counselors in the SF Bay area, I would appreciate it.