How much should I settle for?

by Robin
(Nashua, NH)

I first became late with a Dell Financial payment in 2005 I believe. I did pay sporadically after that. Unfortunately, I am a stubborn person, the computer broke during the warranty, and Dell would not help me without charging me. That made me mad. My last payment was in April of 08. Apparently in 11/08 they wrote off my debt and I was never contacted by anyone until 5/09.

In 10/09, I offered them $400 on a $1600 debt. They countered by sending the computer printout of charges/payments, and I calculated I had paid almost $3000 (a bit more) on a $1400 computer because of the interest. They then sent me (a month later) a settlement letter for $970 with no mention of not selling my remaining balance or deleting from my credit report - which I had asked for in my settlement request. Within a week, I was contacted by another collection agency and have not heard from the first one since.

Apparently they didn't want to wait too long for my response to their offer. Now, the second one calls me constantly, and I don't want to answer since I am not sure how to handle this second one. Could the first one be waiting for this to be settled to then say I still owe money? Should I get something in writing from the first saying they sold it?

I want to settle with the second, as I do feel I have a moral obligation to pay something, but what should I start with? The first CA obviously sold the debt for more than my $400 offer or they would have taken it from me. Any help would be appreciated. If it wasn't for the fact I know these CAs paid pennies on the dollar, I would just pay the full amt.

Comments for How much should I settle for?

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Dec 15, 2009
Dell account turned over to collections
by: Gerri

I can completely understand your frustration.(I've been there with my Dell mini netbook!) Now you have to figure out how to resolve the mess.

First, make sure you are keeping a file with every piece of correspondence, and notes from every conversation with the collector. You can use our Free Debt Collection Worksheet for taking notes.

Second, I wouldn't worry too much about both agencies trying to collect. Deal with the most recent one. (You should make sure both are not showing up on your credit reports, however, and creating duplicate collection accounts for the same debt.)

Third, as to what to settle for...that's really up to you. Normally I say pay as much as you can afford. But at this point I must admit I feel some sympathy for your situation, having paid more than twice the cost of the computer already.

Because the debt is older and has been sent to two collection agencies, you can likely work out a very good deal with them. Unfortunately, though, if they settle the debt and "forgive" more than $600 in debt, you'll be sent a 1099 showing that amount as income. You'll have to talk with your tax advisor to determine if you can wipe out that liability, but it really does add insult to injury.

Since you seem to be up for the fight here, once question you may want to dig into before you pay is whether the collectors have illegally inflated the debt with fees, interest, etc. This is not uncommon unfortunately. How much they can charge depends on state law, so you'll need to talk with a consumer law attorney familiar with state law.

You can talk with a consumer law attorney with experience in debt collection cases. Learn how to get low cost or FREE legal help with your debt collection problem here. Your state attorney general's office may be able to help too.

If it turns out they have illegally inflated the debt it will change things completely - so it may be worth looking into.

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