Settlement w/ Hooters...Opinions Please

[MsDana]

After weeks of working on my repairing my credit and having that darn Hooter's charge-off staring at me, I bit the dust and called them about a settlement.

 

The representative was very nice and offered a lump sum payment for settlement of $467.00 (original amount is $1.347). He even offered to let me make 3 monthly payments. He is sending the full agreement in the mail today for me to sign and fax back.

 

He said that once I pay this lump sum, the account will reflect "Settled in Full" instead of "Charged Off". My question is this: Will this change in status help my credit score since the account is over 4 years old?

[IheartLoopHoles]

It won't say settled in full unless you pay the full amount. It will likely say settled for less than full amount. They can even sell the balance to a CA, so it will continue to haunt you, or they could send you a (1099?) tax form so that you will have to claim the remaining balance on your taxes.

 

Most people say don't settle unless you can get a PFD, since a paid charge-off has just as bad affect on your credit as an unpaid one.

 

I would suggest pay nothing unless they agree, in writing, to delete it.

[MsDana]

I already asked for a PFD. However, the rep did specifically state that once I pay the settlement of $467, the status will read "Settled in Full" instead of "Charge Off". Trust me, I know when to ask for specifics.

 

I will have to wait until I get the agreement letter from him before I pay anything. If the agreement is not as he stated, I simply won't pay.

[IheartLoopHoles]

As long as you realize that paying it will likely have zero affect on your scores, which I thought was your original question. Good luck!

[MsDana]

Ahhh! That's the answer I was looking for!!! I wasn't entirely sure it would have a positive effect on my scores since it's that old. Thanks!

[IheartLoopHoles]

It's not the age that prevents paying it from helping you, it's the status. A paid charge off does pretty much the same damage as an unpaid one. As they get older, their affect on your scores gets weaker. But a charge off is a charge off is a charge off. Paying it is like putting lipstick on a pig!

 

The only reasons I could see for paying it is 1) if your morals/ethics dictate that you must or 2) you are trying to buy a house that will likely make you pay it anyway.

[MsDana]

Ok, now I'm confused.... LOL

 

If the status changes from "Charge off" to "Settled in Full", it wouldn't be a charge off anymore, right? If I'm not correct, then I certainly am not going to put any lipstick on a pig

[MsDana]

Gonna bump this for my clarity. This was charged-off in 2008, so am I understanding that whether I pay it or not, it won't help my credit scores?

[Repairerer]

If it's affecting your utilization, then that's the only way paying it is going to help much.

[MsDana]

Thanks, Repairerer. My util is 7%, so it doesn't seem like it will help unless I decide to buy a house! LOL

[knightimer]

Why don't you ask the creditor for a PFD?

[radi8]

Ok, now I'm confused.... LOL

 

If the status changes from "Charge off" to "Settled in Full", it wouldn't be a charge off anymore, right? If I'm not correct, then I certainly am not going to put any lipstick on a pig

 

It will always be a charge off. If you pay it, it will be a paid charge off. FICO couldn't care less if it's paid or unpaid, the fact it was charged off is what hurts- but human reviewers do care.

If you owe it and you feel the settlement is fair, pay it and move on. Get an agreement that it is settled IN FULL, with no balance to be sold or collected. If you can work in improved reporting, go for it.

Your scores won't change either way, but your report will look better on human review, and you won't have to worry about it bouncing from collector to collector once they sell it.

That is the real danger, the JDB's waiting in the wings. The OC's tradeline will age but the collectors they eventually sell it to will place new negatives that are nice and fresh. Sometimes paying a settlement prevents a big fat mess you'll have to clean up later.

[MsDana]

Why don't you ask the creditor for a PFD?

 

I already did, and he said no. I even asked a "manager" and she, too, said no.

 

Thanks, radi8. I am going to wait until I get the settlement letter where the represented stated that the account would read "Settled in Full".

[Gronnie]

It's not just going to read "Settled in Full", it will also say "-was a charge off.)