Received an agreement settlement for a debt on the second mortgage that is in collections.
How to know if this letter has enough in order to get the lien release and when I sign and pay, they can not go after the rest of the amount?
On face value, the letter appears to be typical or similar to other settlement letters. However, with that said, there are some precautions worth taking.
LCS Financial “is a full-service collection agency” and so they appear to be acting as the agent for Ocwen Loan Servicing for a loan that came from Litton Loan Servicing after it was originated by Countrywide.
My concern is not that you immediately discount the offer but that there is enough passing around of your loan there is a valid question if Ocwen Loan Servicing even has information to validate you really owe them the debt, to begin with.
If you are comfortable with that issue then having the letter in hand and proof you made the payment, the lien should be released. Two items to note:
- You should always keep this letter and proof you made the payment with your most important papers. It is quite possible you might receive a demand in the future no settlement arrangement was reached. Having the proof of the offer, payment, and acceptance is sufficient proof to deal with that issue.
- When you settle this debt you may be subject to a big tax bill. If you are not insolvent then you would get a 1099-C for forgiven debt and you would have to pay income tax on that amount. However, if your assets are less than your liabilities then you could file a special form with the IRS to avoid the tax liability.
The smart thing to do here would be to pay a local attorney to review the loan in question to make sure it is valid. Since I can’t see what was on subsequent pages in the offer, the local attorney should review the entire offer as well. You should find an attorney that is licensed to practice law in your state.
One place to find such an attorney is here.
You are saving so much money on the settlement offer that not paying a local attorney to alleviate all questions would not be a smart move.