Take a risk and send check with settlement offer.......?

[Flatbroke1]

I have 3 credit cards, 1 with BOA and 2 with DISCOVER. I have lump sum amount of money held aside that I have thought of offering to my creditors prorated in proportion to what I owe. The amount I have would give each credit card a 5% settlement. I have read on this forum of some who have received 10% settlement offers. I would send a check marked front and back, "IN FULL & FINAL SETTLEMENT CREDIT CARD ##### (BOA or DISC) OWED BY JOHN DOE AND JANE DOE".....or something like that. I would also send the check certified with a cover letter, saying more or less, "....I am herewith enclosing our check #### in the amount of $$$$$ which constitutes a full and final settlement offer to you. By settling with you I understand that:
• Cashing this check constitutes payment in full
• My account will now show settled on all 3 major credit reporting agencies
• Since this is now settled it will not be sold to other collection agencies, nor turned over for any legal remedy
• Full and final payment of all obligations under and any agencies assigned to it….
• I request that this be processed as a paper check and not by EFT. No automatic deductions from my account, either now or in the future, are authorized. This agreement for debt settlement shall be binding upon BOA /Discover and their successors and assignees.
If my understanding is correct and if you are in agreement with the above, then kindly cash the check. If my understanding is incorrect please return my un-cashed check to me...."

My letter would also contain a chart showing both of my creditors, balances and and what both were being offered, that way they know openly that they are getting the same percentage and prorate share. What are your thoughts? Is there a chance it would work? Would I be opening up a can of worms? Would I just end up with them cashing the check and still trying to collect or selling to other collection agencies. At the moment I am still with the original creditors. Since I am presently working over seas as a missionary I have had no collection calls from anyone and no contact at all from Discover. A few pieces of mail from BOA. I am presently going to 180 days past due. I am also prepared for the tax consequences if this does work. I am working overseas so it is hard to take time off and go back to Texas to be in town to file and attend the 341. I'd like to get this over with and get on with my life and get a secured card and try to rebuild credit with the hopes of someday returning home and getting a house, car and NO more credit cards!

[AngelinaCatHub]

Personally, I disagree with your plan. You may try it on just one little one and see if it flies, but I doubt it will. They can cash your check and give you a 1099 for the forgiveness of debt and then you got Govmint on your back. Five % is nothing and they will probably laugh at the offer.

I understand you are over seas, and cannot respond to a suit and attend a 341 meeting, but with all the defaults they are getting, yours will be ignored regarding any legal option you are offering. This is only my opinion, and a personal choice for you. Try one first, but the back of a check statement is not a legal contract even if they cash it. It is only a remark or memo. Not a condition. 'Hub

[HHM]

Don't do it.

Writing on the CHECK in no way obligates them, these restrictive endorsements on checks HAVE NO LEGAL EFFECT. They can take the check, cash it, and all that crap you wrote doesn't mean anything, I am amazed that this "myth" still survives into the 21st century. About the only restrictive endorsement still recognized are a time limit (i.e. this check is void after 90 days), or for deposit only.

But, if you want to research more, these issues are governed by the Article 3 of the Uniform Commerical Code. Whatever website you got that from is basically having you do a seperate writing and then reference the writing on the check (which you can do under UCC-3), BUT, the cashing of the check cannot be the manner of acceptance.

The only way to legimately settle a debt is to have the bank agree, in writting, to accept less.

[Flamingo]

When there is settlement of debt, there is usually an agreement that is drawn and prepared for signature between both parties as to the agreement. Your sending this check to them is probably a total waste of time and energy on your part, they will not cash that check due to legal and contract issues (not a binding agreement) and you will continue to accrue late charges. Remember, it is you who are in breach of contract, not them. Your best bet is to contact them directly, explain your situation and see what they might do for you since you are still with the original creditors.

You mention you would have a hard time attending a 341. Do you know that if you are overseas that an attorney represents you and could be there for you if you are not stateside at that time? All it takes is some documentation for the trustee.

[AMISLANDER]

Yeah, you'll love getting the 1099 and increasing your income...don't do it.