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It Was Surprisingly Easy to Settle Our Debt with Chase Bank

“Dear Steve,

We have negotiated a $6,000 one time settlement with a CA (Client Services, Inc – St. Charles, MO) who are representing Chase. Chase charged off our credit card debt ($26,000) one month ago after 6 months of non-payment, but they still own the debt. We had tried to settle with Chase for $10,000 but they always refused.

Gettign the CA to accept $6,000 was surprisingly easy and took less than 3 weeks (3 phone calls). The settlement letter they emailed to us includes their name, Chase as creditor, amount of debt, account #, amount of settlement, due date, and contact info.

The actual language reads as “In an effort to resolve this account, your creditor has authorized our offices to extend a reduced settlement offer on the above balance due. The current settlement offer is outlined below. To accept this settlment offer, please make the initial payment by the dated listed. This offer is contingent upon timely receipt of payment”.

I told the CA I am not comfortable with the letter not containing language to the effect of ‘full and final settlement’ or ‘upon receipt… zero balance’ etc. and asked that such language be inserted.

They refused saying the are not allowed to amend the Chase-approved letter in any way. Is the letter legit? I am nervous that the CA or Chse still have recourse to come after us for more after we make the $6,000 paymnet? Waht do you think?

The $6,000 is coming from my sister overseas, she’s an attorney (overseas) and does not liek that language in the letter but is unsure what is cinsiderd acceptable in the US. We want to accept the settlement – its 22% of debt- but the language of the letter makes me nervous. Also – can we ask (and expect’ hat the letter (or another) state the account be reported as ‘settled’

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Many thanks!”

My issue with the letter is not the reporting, but what it doesn’t say.

Your settled debt should actually appear as two line items on your credit report. The amount settled will show paid and the amount forgiven will show as a bad uncollectible debt. After all, that is a truthful representation of the event, isn’t it?

The missing part of the letter is that it does not appear to contain specific language that the settled amount is for full satisfaction of the debt and the remaining balance is forgiven.

I’ve seen too many cases where years later a creditor or debt buyer says the balance forgiven was never really forgiven and is now due. I think if the letter gave you clarification on that issue, primarily, it would be better for you.

Before you rush to settle, make sure a settlement addresses your entire debt situation. It would not make logical sense to settle this one debt but to still have remaining debt that is unmanageable. If you are going to be in a position that you are going to owe your sister, let’s make sure the loan really fixes the overall problem and isn’t just a knee-jerk reaction to this issue.

Remember, if you accept this settlement and it leaves you in a solvent position, meaning your assets are greater than your liabilities, you will have to pay income tax on that amount of the forgiven debt.

Please post your responses and follow-up messages to me on this in the comments section below.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

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.

1 Comment

  • You need the language that says the debt is settled in full. Think of how it could go down in the future if the debt is sold. Someone else sues you on the debt and you appear in court with this letter. Is it enough to defend you or is it questionable? Make sure you set yourself up on the front end to win on the back.

    If you’re paying a lump sum in full satisfaction, you need that in writing, together with proof of payment, and you need to keep it forever.

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