Question regarding what you can have a CA remove from credit

[jellybean]

hey guys,

i have learned by way of this forum on how to deal with a CA. I am ready to work on settling my debt with them and wanted to know what kind of information i should request be removed from my credit report once we agree. my file is now with the 3rd collection agency (same debt that has been passed on). if i settle with the one who has it now, can they remove any info regarding any other creditors that this went to?

my credit was perfect up to this point and i'm sure it has gone south big time now. when they remove it, will my score go back up? how will it appear on my report?

sorry if this is posted in the wrong forum...i couldnt decide wheter to post in the credit section or here.

[liz417]

Hi Jellybean,

Just becareful with settling with the creditors/CA agencies, because I thought that I read somewhere that the difference of what you owe and what you settle is taxable.
Someone with more knowledge will chime in soon.

[Flamingo]

Be careful as to debt settlement/forgiveness. If you settle on a debt (say the debt is $10,000 and you settle for $5,000, the forgiven $5,000 is considered income to you for the tax year in which it is forgiven and you will receive a 1099 from the creditor for your taxes). They may not mention that to you so ask questions and do your homework.

Secondly, your past due payments or nonpayments that are on your credit report do not get removed up to the point you pay off your debt. The same applies if you file BK. Late payments or nonpayments prior to the filing date will not be removed by the creditors if that account was included in the filing. After the filing date, it will be so noted that it was included in BK. Bad credit is bad credit - it is not removable or easily removable.

[treehugger1]

There are many myths related to a 1099 involving debt. A good CPA can help you out here. It is my understanding that debt you owe is to the original creditor. A third-party CA who "owns" the debt cannot send you a 1099 unless they "forgave" a debt that they paid more for then what they are willing to settle for. Again, the myths abound.

In addition, there is an insolvency clause with the IRS that suggests you do not have to pay taxes against a forgiven debt from an original creditor under some circumstances of insolvency.

In terms of having something removed from your credit reports, you need to deal with each CA/Creditor on an individual basis. Good luck if you have accounts that have been passed through several CA's. Try disputing each creditor/Ca repoirt with each reporting agency (TU, EQ, EXP) and see what happens.

[jellybean]

thanks everyone. i dont mind the 1099...i have plenty of expenses i can write off. i suppose i will negotiate with the current CA to remove them from my CR and then go back to the other 2 it went to first and see what i can do.