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Pay or settle?

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kiloohm View Drop Down

Joined: 06/August/2016
Points: 3
Post Options Post Options   Thanks (0) Thanks(0)   Quote kiloohm Quote  Post ReplyReply Direct Link To This Post Topic: Pay or settle?
    Posted: 06/August/2016 at 6:08am
I am trying to help my partner deal with his credit and it is definitely a complicated matter. I’ve been reading a lot on the subject but there is confusing information everywhere, especially because the rules seem to differ slightly in the US and Canada.   

I’m hoping that someone can shed light on the best way to proceed, understanding that there is no magic solution here.

This is the relevant information from his credit report:

Credit Information

Only contains a single entry for a secured credit card, up to date, no late payment (this was step 1 in building credit)

Collection Accounts

  • MAESD Student Support
  • Date Assigned: 2014-09
  • Date of Last Payment: 2014-06

  • York University
  • Date Assigned: 2014-12
  • Date of Last Payment: 2014-11 

The total balance owned is fairly small (less than $1500) so he can pay it in full. What I’m trying to understand is what is the best approach to take here. My understanding is that as it is, these collection entries will drop off the report in 2020.

These are my questions:

  • These debts are close to being statute barred so should he wait an extra couple of months before reaching out to these collection agencies?
  • Should he try to negotiate a settlement offer or pay in full? This would reset the date of last activity and show up until 2022 but with a balance of $0.
  • Is there any difference in terms of impact between settling and paying in full?

Thanks for your help

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Johnny View Drop Down
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Joined: 05/November/2003
Location: Canada
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 08/August/2016 at 2:44pm
If he is able to pay it in full then he should do so. Only if he is able. Limitation issues however, they are quite sensitive and dangerous to people if they are not managed properly.  If the debt is paid in full then there is no risk because it is being paid in full and that will close it. 

If a debt is owed to York University the limitation period that relates to recovery and legal process is different than that of student loans. The standard limitation of actions and proceedings legislation would apply bringing the limitation period down to 2 years from the day it was discovered to be due and payable. 

Limitation issues, and exercising a right to that protection saves a person 100%.  Settling a debt out for less saves you whatever the percentage "off" is. Paying in full is what it is. Again, if anyone is able to pay a debt in full where it will not cause further hardship and-or undue harm and effect, then paying in full is the honorable thing to do. 
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.
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kiloohm View Drop Down

Joined: 06/August/2016
Points: 3
Post Options Post Options   Thanks (0) Thanks(0)   Quote kiloohm Quote  Post ReplyReply Direct Link To This Post Posted: 17/November/2016 at 5:21am
The situation has evolved and is not less confusing. The laws don't make it easy the general population to take care of their debts should they wish to do so.

So fast forward to October, my partner decides that he wants to do the right thing and he sends a one-time payment for the entire sum owned York University to the collection agency (D&A). Keep checking his credit report and no update that the debt was paid in full (there is only a collection entry, no trade).

Contacted D&A and they confirmed that everything is paid off, no more money owner and that they notified York. They said they can't update/remove the collection entry as it was put there by York and to contact them.

My partner managed to login to his York account to see that:
- Last payment (when the debt came in default) was April 2010
- They made a account adjustment bringing the balance to $0 in April 2012 with a note "Due to York - refuse all services"
- They received payment from D&A in November 2016 and made another adjustment to revert the note refuse all services

So this debt has been in default since April 2010, was posted in collection to Equifax in December 2014 (more than 4 years later). It should have been completely removed from collection in April 2017 but now that he paid in full, what can he expect? At best it will stay on his credit report as a collection for another 6 years now that he made full payment?

Realistically, what the point in paying a debt that is has been in collection for 5-6 years and is stat barred if after that it hunts you for so much longer?

He is really trying to understand what's the best with the second debt because it likely has similar dates (no payment since 2010). It's small and has the money but it seems paying it off will do more harm than good.
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