I live in California and have saved some money to settle old credit card debt. My last payment on one account was in 2020, and it was charged off and sold in 2022. The collection agency has been reporting it since then, though I have never talked to them. I just got a settlement offer for 15% of the balance if I pay by the end of the month. I have three other accounts from the same time, all sold to another debt buyer.
Why would they offer so little? Can I get them to take even less, and will paying it restart the statute of limitations?
—N.
Short answer
A settlement offer that low is likely because the debt is past your state’s statute of limitations to sue, even though it can still show on your credit report. A single payment settlement will not restart the statute of limitations. Be sure to get the settlement agreement for a single lump sum in writing before you make the payment.
Key points on this page
- A very low offer on an old debt is likely because it is past the statute of limitations to sue in your state
- The account can still show on your credit report after the time limit to sue has passed
- Taking a single payment settlement will not restart the statute of limitations
- Calling to shave a bit more off an offer that is already 15 percent of the balance is possible, but 15 percent and lower on every account may be stretching what is realistic
- With several collections to settle, prioritize the money you have around the newest ones
- Get the agreement and its terms in writing before you send any payment
You would not restart the statute of limitations if you took advantage of a single payment settlement.
The reason a collector offers something this low is likely because you are past the statute of limitations to sue in your state, which in California is 4 years. But the account is still within the 7 years it can show on your credit report.
Can you settle for less than 15 percent?
Calling to shave a bit more off a settlement that is already 15 percent of the balance is possible. If you want to settle several accounts, you should try to get as good a deal as possible on each. But 15 percent and lower on all accounts could be stretching what is realistic.
If you cannot get the deals done for an amount you can afford, or can live with, and you are not pressed for time, you can call the next month and see if they are willing to loosen up a bit.
Settling several old collections
Look at the other collections on your credit reports. Are any newer than this one? If so, when were the payments on those missed, and what are the balances owed? With that information, you can prioritize the money you have to settle accounts and get the newest collections updated to show paid or settled, with a zero balance owed on your credit reports.
Some debt buyers own each other. Even if you cannot get all of the accounts handled through one of them, do the math and negotiate openly with each company, so they know you only have so much money and it has to knock down all of the accounts.
Get it in writing before you pay
I would not send any payment without the agreement and the terms you negotiated in writing first. Read getting debt settlement letters and agreements before you go ahead. Once you have the written agreement, you can decide how best to pay in a way you are comfortable with. I prefer people follow the method I outline in the best way to pay collectors after negotiating a settlement.
