Credit and Debt Blog

(Brett from Nevada) Ford has offered me a 50% payoff on $9000.00 owed after a repo. They say they will report as fully paid yet they cannot remove the chargeoff on my report as it is illegal for them to do so. they have sent me a letter stating that the account will show as paid in full. Is thus a good deal?
Dear Brett:

This can be a pretty good deal if you can afford to make a lump sum payment. For older accounts in which the statute of limitations (varies by state) has expired, you might prefer to ignore the request and wait until it drops off of your credit report entirely. Here is how you might decide which is best:

• A settlement might be beneficial if you might otherwise be sued by the lender. If you believe a judgment is imminent, then a settlement that satisfies an account can prevent that legal action against you. Recent repossessions tend to fall into this category.
• You might be better off ignoring an older debt. You can beat a lawsuit if the statute of limitations has expired. For this reason, most debt collectors will not even pursue an older debt in court. This limit varies by state and by the type of contract, so seeking legal advise may be recommended. Any negative records must be removed from your credit reports once the date of last activity reaches 7 years.

If this is a relatively recent repossession, then this could allow you to improve your credit report and avoid a possible court judgment. You might want to research a “pay for deletion” agreement. This is similar to what they are proposing.

Make sure that you do get the terms of your agreement in writing. While I cannot provide legal advice, I can say that there is much that you can negotiate with a creditor in order to satisfy a debt.

One suggestion that I do have is to ignore any offers from a debt settlement company. You can negotiate your own best deal. You may even be able to counter their offer with one of your own!

Make sure that you know when you defaulted on the debt so that you can determine the latest date that the lender may file for a judgment. If you have already reached this point, then you have to determine if the impact of showing the account as “paid in full” is worth $4,500. If you are planning a major purchase on credit soon, then you might benefit by improving your credit.