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I Am Attempting to Negotiate a Debt Settlement With Discover Card. – Evelyn

Evelyn

“Dear Steve,

Got involved with a debt elimination progam and it didn’t work. Attorney Berman’s office is suppose to be the attorney for Discover. Berman’s office got a judgment against me and I took them back to court in April and had that overturned by the judge since the judgment wasn’t valid.

Berman’s office turned around and started setting up an arbitration hearing. Whent the court notified me of that, I wrote Berman’s office asking if they would be interested in a settlement. His office called and negotiations started.

It was pretty much and one way deal and it was their way. We had reached an agreement, one which I thought was unfair, but better than paying the full price. I had written up an settlement agreement but Berman’s office said that they would not sign because that isn’t the procedure and it is illegal for them to sign any type of settlement agreement. I told them since they represent Discover, have them sign and they said this is how it works. I would send them the money order cashiers check…they wanted my acct. number but that isn’t happening..anyway, they would notify the court, I paid, then they would contact Discover then they would send me a letter of settlement. I am afraid if I send them the money without any settlement agreement, they will come back and ask for the rest of the money stating there wasn’t any settlement agreement made.

Berman’s office has started setting up an arbitration hearing but I asked the judge for continuance since I am trying to settle this debt. He gave me until August to get this done. I haven’t been able to find any attorney in this area who wants to adivse me on this. Simply because I believe they don’t know anything about how this all works. They just want me to file bankruptcy. I live in Pennsylvania. II don’t know if the laws are different for each state.

How do I get Berman or Discover to sign a settlement document before sending them any money?
I attached a copy of the settlement letter I want them to sign. I took out my information but you will get the idea.

Evelyn”

Sample Letter Evelyn Wrote

[My name] [My address] [Name of Bank
[ Bank address] [Bank account no.] [certified mail no.]

To Whom It May Concern;

Please find enclosed an agreement which outlines our discussion of [date]. I would like to resolve this matter quickly. As soon as I receive a signed copy of this agreement I will promptly sent out a money order in the amount of [the amount agreed on].

Thank you for your cooperation.

Best Regards;

Settlement Agreement

This is an Agreement between [my name and address and [bank name and address]

Although [my name] denies any liability and denies owing the alleged debt, in order to resolve the said debt of [bank name,[ account number], [my name] is offering to pay the amount of [amt. Agreed] no later than ten (10) days from receipt of [banks name] signed Agreement.

In return, Discover Bank agrees to:

1. Remove all negative credit entries to [my name] credit report.
2. Record the alleged debt as paid as agreed.
3. Discover bank shall not sell the amount of the alleged debt forgiven to any person or entiy

This Agreement reflects the complete agreement between the parties.

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The Answer

 

Dear Evelyn,

Wow, I’m proud of you for the way you’ve handled the matter to date. Congratulations.

I think you are asking too much of the Attorney office and Discover on this. The goal should be to resolve the debt. Often people ask for a creditor to remove negative information about their account in return for a partial payment. This is problematic at best.

A reporting creditor has both a contractual obligation with the credit bureaus and the Fair Credit Reporting Act (FCRA) to report a true and factual history. This would include the fact that at one time your account was delinquent.

§ 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

(a) Duty of Furnishers of Information to Provide Accurate Information

(1) Prohibition

(A) Reporting information with actual knowledge of errors. A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.

(D) Definition. For purposes of subparagraph (A), the term “reasonable cause to believe that the information is inaccurate” means having specific knowledge, other than solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about the accuracy of the information.

When settling a debt for less than the contractual amount due the creditor will be required to notify the IRS of the forgiven debt by issuing a 1099-C if the amount is more than $600. You will need to pay income tax on the forgiven amount just as if you earned it as income.

The portion of the debt forgiven will be reported as uncollectible and the portion paid will show as paid.

Debt settlement is not credit repair and you can’t expect to repair your credit with a partial payment. Debt settlement is best used to resolve a situation that would otherwise spiral into something else and a lump-sum debt settlement offer is the way to go.

I personally think that you could reduce all of this down and simply ask the law office to get from Discover a notice that a payment of $X will be considered as full and final satisfaction of the account.

You simply need correspondence so that when someone looks at the letter in the future they will be able to clearly see that the payment that you made fully resolved the account. It is always a lot easier to get the creditor to provide a letter that complies to their process rather than asking them to sign something that might have to make rounds through their legal department and never see the light of day.

I don’t know the limit of the authority Discover has given to the debt collector lawyer but it is possible that they are prohibited from acting as the agent of Discover to enter into any agreements. That statement by them sounds accurate. Just ask the lawyer to provide you with a settlement letter from Discover for the agreed upon amount. That should be doable without all these other pre-conditions.

Once you do settle, be sure to keep the Discover letter and proof of payment with all your other important papers. It could resurface years latter that they claim this was never settled or they never agreed to anything. It happens all the time. Showing the proof of payment and letter will resolve it. It the letter came from the lawyer and not Discover, Discover may claim in the future that the lawyer did not have the authority to offer the letter and this it was not binding.

Big Hug!

I Am Attempting to Negotiate a Debt Settlement With Discover Card.   Evelyn
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Evelyn

    Hi Steve,

    Thank you for getting back quickly on this matter.

    So, if I can get the attorney’s office to write me a letter stating that we agreed on x amount of dollars, it will be ok to send a money order or cashier’s check to them? The letter would be proof enough that Discover/Berman made a settlement agreement? I have tried to get them to come down but they aren’t budging. I think the attorney is upset with me because I had the nerve to challenge his judgment and take him to court so he isn’t going to negociate down much.

    Does statue of limitations hold much value anymore? I had been told that it doesn’t.

    Thanks again,
    Evelyn

    • http://GetOutOfDebt.org Steve Rhode

      Evelyn,

      I think this matter could be resolved within a week if you just ask the lawyer office to fax or send you a letter from Discover accepting your offer. Tell them that within 1 business day of the receipt of that letter you will pay. Getting a letter on the attorneys letterhead is going to be problematic and not as good as a Discover letter. Besides, it doesn’t matter what the attorney says that is important but what Discover actually agrees to.

      I think on the SOL angle you are SOL.

      Keep me posted.

      Steve

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