Debt Settlement with BofA/NCB

[Jay_Z]

Hey All,

Been reading through the forum - great info and resource.

Currently, I have a debt of 11k with BofA that has been turned over to NCB Management Services (debt collector).

I (fortunately) have no experience with this situation. Due to an unexpected career change and medical bills, I got into some financial challenges (after years of an 800 FICO score).

They offered 60% lump sum or, to make monthly payments toward a settlement. I've read that it's best to start with a low offer (10-15%). Is it reasonable to start with an offer of 1200? Or, is that ridiculous? What would you suggest? I don't foresee in the next 6 months a great change in my ability to pay.

Also, would it be advisable to send a letter of an offer to them? They guy that has been assigned my account is very unpleasant. Just thought I'd see if you'd recommend sending a letter, explaining the situation and that this is what I have to offer today and I know my resources will continue to be limited for the forseeable future - but, this will allow this situation to be settled today.

I'd appreciate your advice.

[dczech09]

The debt collector is unpleasant? Why am I not surprised!

Since the debt was sold to a third-party collector, it is reasonable to assume that the debt collector bought it for pennies on the dollar. Offering $1,200 for $11,000 is not completely out of line. But first, let me ask you a few questions...

What is your annual income? Amount in savings? Other debts?

Do you have any way of paying this off on your own without settlement?

Debt settlement is not for people who can pay off a debt, but just don't want to. Debt settlement is for people who legitimately cannot pay. If you are in a situation where you cannot pay, then debt settlement can be considered. Otherwise, if you CAN pay it off, get on a plan to do so.

As far as settlement goes...

You need to negotiate with the collector. They probably will not accept $1,200 right away, however they did say they would accept 60%, so at least you have a starting point.

What you need to do is spend some time saving up as much cash as you possibly can. Once you have (let's say) $3,000 saved up, you can start the process of negotation. Wait until they call you (because they will) before you negotiate. You may end up negoating a figure like $2,500.

Once a number is agreed, you need to get that in writing from the collection agency. You need it in writing that the agreed upon number will be accepted as payment in full. Once that has happened, then send them a money order or cashiers check. NEVER send them an actuat check from you bank account, and do not give them electronic access to your bank account. If you do, they will take more than the agreed upon number and there will not be anything you can do about it.

Keep in mind that even after you settle, you will have a derogatory remark on your credit report regarding the settlement. Your credit will be poor for a little while (like it already is I am sure).

Also, if the collector believes that you can pay the full amount but you are just not cooperating, they can potentially sue you for non-payment. So please make sure that settlement is really a last resort that you are considering; it is only a good idea if you cannot pay the full amount owed.

[LittleMissSplendid]

You don't mention how old this debt is, but I'm wondering if it is possible to deal directly with the original lender (BofA)? I had a debt with a company that was later sold to a collection agency and it was a year after that I gathered the funds to pay it in full. I didn't contact the collection agency at all, but instead called the original company directly and expressed my interest in paying in full. They accepted my payment and updated my credit reports to say "paid in full" which is probably a little better than settled or charged off.

[disneysteve]

You don't mention how old this debt is, but I'm wondering if it is possible to deal directly with the original lender (BofA)? I had a debt with a company that was later sold to a collection agency and it was a year after that I gathered the funds to pay it in full. I didn't contact the collection agency at all, but instead called the original company directly and expressed my interest in paying in full. They accepted my payment and updated my credit reports to say "paid in full" which is probably a little better than settled or charged off.

You were actually fortunate if that worked. Typically, once a company sells the debt, it is removed from their books and you must deal with the owner of the debt - the collection agency. The exception is if the agency is only working for the original company but doesn't actually own the debt, which could be what happened in your case. Many companies hire a collection agency to work on their behalf, usually on a contingency basis. For every dollar the agency collects, they get to keep a certain percentage of the money collected. The rest goes to the company.

[dczech09]

You don't mention how old this debt is, but I'm wondering if it is possible to deal directly with the original lender (BofA)?

This is pretty important. However, if the debt was sold to a third party debt collector, the debt collector has legal ownership over the account. Bank of America would have written the debt off as a bad debt expense and would have no legal authority to collect on it once the contract is sold.

I had a debt with a company that was later sold to a collection agency and it was a year after that I gathered the funds to pay it in full. I didn't contact the collection agency at all, but instead called the original company directly and expressed my interest in paying in full.

Are you sure this was a third party collector and not some department or subsidiary of the original creditor? That is a pretty odd situation.

They accepted my payment and updated my credit reports to say "paid in full" which is probably a little better than settled or charged off.

This will not necessarily improve your credit score (the damage was already done), however it certainly looks better on your credit report when it says "paid in full" versus "charged off."

Keep in mind that if the OP pays a settlement, then they will not get a "paid in full" remark, but a "settled" remark. And a "settled" remark is better than "charged off" but not as good as "paid in full."

[LittleMissSplendid]

You were actually fortunate if that worked. Typically, once a company sells the debt, it is removed from their books and you must deal with the owner of the debt - the collection agency. The exception is if the agency is only working for the original company but doesn't actually own the debt, which could be what happened in your case. Many companies hire a collection agency to work on their behalf, usually on a contingency basis. For every dollar the agency collects, they get to keep a certain percentage of the money collected. The rest goes to the company.

Interesting, I hadn't realized companies/lenders do that. It does make sense from a cost savings standpoint though and it is entirely possible the third party was affiliated with the original company.

Are you sure this was a third party collector and not some department or subsidiary of the original creditor? That is a pretty odd situation.

What I recall is getting mail from what looked to be a third party collector regarding the debt. They didn't send me anything stating they were affiliated with the original company and the original company didn't send me anything saying my account was being transferred to a partner company or anything. It is entirely possibly they were hired by the original company as disneysteve suggests and their affiliation was not at all obvious from the documents they sent me.

Around that time I was following chatter by Rodney Anderson on debt and collections agencies and he was explaining that sometimes working with third parties is a waste because they don't actually settle the debts, but are scams or something. I didn't fully understand how all that worked, but I figured it couldn't hurt to try working things out with the original company and it seems I did get pretty lucky.

This will not necessarily improve your credit score (the damage was already done), however it certainly looks better on your credit report when it says "paid in full" versus "charged off."

Keep in mind that if the OP pays a settlement, then they will not get a "paid in full" remark, but a "settled" remark. And a "settled" remark is better than "charged off" but not as good as "paid in full."

Right. My focus was not so much on my credit score, but doing the responsible thing and paying off the debt. They were willing to let me settle, but it just didn't feel right and I had the funds to pay in full so I did.