"paid in full" check to creditors-charge off?

[rharsanyi]

As I stated in a previous letter I had sent a letter to my creditors attached with a check, explaining my current financial situation and explaining that if they agreed to the terms set forth in my letter and endorse that check that it cancels my debt to them or return the check to me and I would continue to make minimum payments. 2 out of 4 cashed the check, mind you this note was also included on the endorsement side of the check, now on my credit report these accounts have listed "charge off for $ on date" what does this mean ?

[tinroofrusted]

That means that they are not honoring the agreement and are breaking the law.

[HHM]

LOL. I want to know where people are getting the idea that this works, because whoever is putting this crap out should be sued for fraud and practicing law without a license.

These "paid in fule upon endorsement" or "agreement by endorsement" clauses are wholly unenforceable against credit card companies. Most credit agreements contract around this scenario and most, if not all courts, have settled this issue in favor of the credit card companies, nice try, but futile.

All you accomplished was paid part of your balance and put the bank on notice that you are repudiating the agreement between you and the bank, hence the charge off.

[rharsanyi]

"paid in full"

I got the idea from an insurance settlement check I received, it was imprinted on the back of the check. It seemed like a good idea, everyone tells me what a load of crap it is, but no one can tell me why.

[mark]

What happened to the two checks that were not cashed? Did they return them? What was their response?

I once received a $7000.00 check in the mail from some stupid loan company. On the back it said that by endorsing this check you are entering into a contract for a personal loan. Is that any different as the law is applied?

[Karla]

This may or may not help but NEVER, NEVER, NEVER, send money to a creditor without having in your hand a letter from them that states they will accept this amount as "paid in full". If you send them any money they consider this as an attempt to collect the debt and will NOT remove it from your credit. I must say that some creditors are "nice" and will do as they say but a large majority will NOT. Be safe, make them send a letter to you first and then mail them a check. Two reasons #1, you now have proof in your hand they they said they would settle. #2, you have a cancelled check to prove they cashed it. Don't wire the money, don't pay over the phone, send a check for proof. You can then send this to the credit bureaus and make the bureaus correct your credit report. Always have proof from the creditors first. Or you will get burned.

Karla

<link and email address removed>

[HHM]

I got the idea from an insurance settlement check I received, it was imprinted on the back of the check. It seemed like a good idea, everyone tells me what a load of crap it is, but no one can tell me why.

Read the terms and conditions of the bank that issued the credit card.

Also, in most circumstances, there is no dispute about how much you owe the credit card company, so when you offer a settlement in the manner you described, you are "breaching the contract", which allows them to call the whole balance due and any payment received by you only gets credited to the balance due...but make no mistake, its the entire balance unless you receive a letter from the credit card company offering to accept less than what is owed.

If you don't beleive us, go talk to an attorney, or take the credit card company to court and see what happens....

[HHM]

What happened to the two checks that were not cashed? Did they return them? What was their response?

I once received a $7000.00 check in the mail from some stupid loan company. On the back it said that by endorsing this check you are entering into a contract for a personal loan. Is that any different as the law is applied?

Those are considered "firm offers of credit", and are generally ok so long as they make the proper disclosures in the proper way.

[robivi3]

Its sort of like buying a car from your neighbor for $2000.00 and having a written agreement. Then you don't pay him but later you give him a check that says "paid in full" for $200.00.

No one twisted my arm, I knew full well my debt load was to high, sorry, but but I'm with HHM on this one.

[rharsanyi]

Thanks

I finally got the answer I was looking for. This has been very helpful.

[Robert7]

restrictive endorsements

Restrictive Endorsements are perfectly legal depending upon the state you live in. I know for sure that Texas allows it. There are many other states as well. This link contains lots of information regarding this topic.

http://www.carreonandassociates.com/articles/4settle.htm

Hope this helps!

[Robert7]

I found a list of the states that allow restrictive endorsements.

Arkansas
Kansas
Louisiana
Maine
Nebraska
North Carolina
Pennsylvania
Utah
Virginia
Wyoming Colorado
Connecticut
Georgia
Michigan
New Jersey
Oregon
Texas
Vermont
Washington

[HHM]

You probably should have read the article more closely, most restrictive endorsement laws specifically except the debt/collection scenario, and I can almost guarantee that every credit card agreement exempts restrictive endorsements (you can contract around statutes).

If your point is, are restrictive endorsements legal, well yes; but that still doesn't mean they will work in any given scenario.