Dealing with Capital One, I am 48 hours from charg

Dealing with Capital One, I am 48 hours from charge off. I have been out of work since last May and everything got behind, lost my house, moved my kids and I in with my parents, and last week my engine blew in my vehicle. Sad to say all of that is true. Anyway, once I was finally able to deal with Cap One, I went back and forth many times.
FIRST in many phone conversations, they refused to send/fax me a settlement agreement letter.

It took many phone calls to finally get them to agree to fax one to me. (the guy had to walk all the way across the office twice in order to make it happen... I was supposed to feel bad for him!!) So the settlement was for $11000. The principle balance $15713 and the balance with all the late fees and interest was $16995. In wanting to get this nightmare behind me I was hesitant to tell Wayne I would agree to it because of the following verbage:
Upon completion of the settlement, the remainder of your account balance will be written off and your credit report will be updated to show the account as settled with an outstanding balance.
Also because I saved over $600 in the settlement , by accepting the settlement I will receive the IRS form 1099 C in which I have to report the balance as income.

I was going to settle it today but just got a very uneasy feeling and then after googling about Captial One, Im glad I waited.
Is this agreement, the account is settled with an outstanding balance worth taking this offer? Will they come back for the balance? Will they sue for the balance?

I had to do so massive borrowing and selling of furniture and other things to get the settlement amount but do not know now if I should settle this all at once due to the agreement verbage.
I do not know how long my kids and I will have to stay in the one bedroom my parents have for us if I pay this off in full and then they still come after me!

6 Answers

It's best to let Capital One accounts charge off prior to settling, otherwise they require a ridiculous amount of money to settle.

After the account charges off, it will go to a collection agency, who will be more cooperative than Capital One. But, don't expect any really low percentages - usually 40%-50% of the balance will be required to settle your Capital One account in full.

As far as the remaining balance is concerned, you will not be liable for this. Your account will be considered settled in full, with no further balance owing. Just make sure you get it in writing before forwarding the funds to the collection agency.

Regarding the tax issue, sorry, but I'd rather face the possibility of a tax liability, which is going to be much less than the account balance - especially if you let it linger, and acrued interest and fees will be a problem).

Good luck!

Marie Megge

If you can prove you were insolvent at the time the settlement was made (IRS Form 8453) then you won't pay taxes on the forgiven amount. Go to IRS website for further info.

Don't you also have to worry about taxes
In reading the tax code it seems they want to use the charge off as taxable income?
don't quote me on this but look into it
It seemed like foreclosure amount was deducted but credit card debt wasn't

Does anyone know the real 411 on this?

My settlement letters stated "settled for less than amount due". If you feel uncomfortable, go back to them and tell them your attorney is not comfortable with the wording and see if they will change it. Tell them you won't do the settlement without the wording being changed. or ask to speak to someone with higher authority.

Sorry I couldn't be of greater help to you.

Aubrey, what I'll I've been reading in posts is that because of that verbage, Discover ends up selling the balance of the debt and then you end up in collections further for the balance that was the agreed settlement. Its like the one word is their 'out' to it being a 'real' settlement. Still leary.

Capital One is impossible to deal with. If you are dealing directly with Capital One, you should be okay. You have the letter stating settled and that, I believe, is the key word. I would hold on to this should you decide to settle, just in case.

As to the 1099c, that is the procedure. However, at the time of settlement you are basically insolvent, so there should be no income to claim.

There\\\'s a special form you have to complete and attach to your return, but you won\\\'t have to worry about that until 2012. The insolvency is calculated when the actual settlemet is done.

Hope this helps. If it were any other credit card company than Cap One, you could have done a lower settlement.

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