Personal Finance

Just got rich, need help with bad debt - Pay For Delete?

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  • Apr 28th, 2012 12:43 pm
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Apr 26, 2012
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Toronto

Just got rich, need help with bad debt - Pay For Delete?

Hey all, I have personal debt that has been unpaid since 11/2008 and 07/2009. The 2 entries appear on my Equifax report, and the total amount is about $1400 (between 2 credit items, an unpaid overdraft and a credit card), and i have been offered recently by creditors to settle for half.

I was looking for advice on what i should do, i dont consider waiting for these to fall off my report a viable solution as my fiance and I have recently received a windfall, and are looking to purchase a home sometime in/around the next 2 years with %20-25 down. This bad debt is holding us back.

Also i have heard about "Pay For Delete" through American forums. The premise is, you offer a creditor the amount in full, and they remove the debt from your credit report.

Questions:

1. Is Pay for Delete an option in Canada? If so, how would i go about doing this?
2. I've been mulling over settling for half, getting a secured card and trying to repair my credit. Is this the best option?
3. What do you think the BEST plan of action is for my situation?

Im just looking to repair my credit as quick as possible, and any advice is appreciated, welcomed, and begged for!

If these questions have been asked before and you have links to relevant threads please share.
35 replies
Deal Fanatic
Apr 16, 2007
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Financial District B…
Pay to delete does not exist and is not an option in Canada

If you're getting a winfall your best course of action is to settle the accounts as best as you can and have them all reported as 'settled' with no outstanding balances or active collections.
I'm pretty sure you can still achieve a mortgage approval with settled collection accounts. Rate? well that'll be a whole different story
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
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Apr 26, 2012
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mikeymike1 wrote: Pay to delete does not exist and is not an option in Canada

If your getting a winfall your best course of action is to settle the accounts as best as you can and have them all reported as 'settled' with no outstanding balances or active collections.
I'm pretty sure you can still achieve a mortgage approval with settled collection accounts. Rate? well that'll be a whole different story

Thats weird, I only seen the first line "Pay to delete does not exist and is not an option in Canada" in the post, but when i reply with quote i see the rest of what you wrote... odd.

Anyway, thanks.. i feared as much! Settling seems like the best/only option so far then...
Deal Addict
Aug 4, 2006
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BennyBP wrote: Thats weird, I only seen the first line "Pay to delete does not exist and is not an option in Canada" in the post, but when i reply with quote i see the rest of what you wrote... odd.

Anyway, thanks.. i feared as much! Settling seems like the best/only option so far then...

He edited the post 1 minute before you posted a reply. And I agree with what he said.
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Dec 1, 2011
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BennyBP wrote: Thats weird, I only seen the first line "Pay to delete does not exist and is not an option in Canada" in the post, but when i reply with quote i see the rest of what you wrote... odd.

Anyway, thanks.. i feared as much! Settling seems like the best/only option so far then...

yep, settling is your best bet. Although you'll probably get turned down for any other types of credit regardless if you settle or not, your chances of getting approved is better if you pay. Mortgage, I can't comment on that one, but with a large enough down payment, I can't see any reason why you would be denied, as long as the lender figures they can recoup what you owe them, should you default.
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Apr 26, 2012
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wayne74 wrote: yep, settling is your best bet. Although you'll probably get turned down for any other types of credit regardless if you settle or not, your chances of getting approved is better if you pay. Mortgage, I can't comment on that one, but with a large enough down payment, I can't see any reason why you would be denied, as long as the lender figures they can recoup what you owe them, should you default.

My hope is that if i settle, between the 2 of us (my fiancee and I) and our down payment, we should be able to get A mortgage, maybe not necessarily the BEST rate at first, but a mortgage nonetheless. I did not mention that i make minimum wage, full time hours, and she is on maternity leave. Not the best income situation, but do have 110k+ in the bank.

Am i reaching?
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Apr 26, 2012
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I spoke with the creditor 'MJR Collections' just now. Whats owing is roughly 630 + 710 = 1340.00, they are willing to settle at %50, and are offering 673.00 final settlement to be paid to them. They promise to report to EF and TU, and will send it in writing on Monday.

He was really trying to sell me on paying in full, saying that it looks better on my report, and we can "work on" the first debt of 630 if that's all i have.. funny.

I said I'd call back, what do you guys think of settling vs. paying in full? does it make a difference at this point, enough of a difference that i should consider paying in full?
Sr. Member
Dec 6, 2006
674 posts
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I might have misunderstood the plan but it appears as though the OP is considering getting a 400-500K$ mortgage with a 20% DP and little to no income?

If that is the case, I highly suggest that you look at something less expensive if you really must have a mortgage. You would be looking at borrowing almost 20x your net salary (!!).

Sorry if I misunderstood your situation.
Deal Fanatic
Apr 16, 2007
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Financial District B…
BennyBP wrote: My hope is that if i settle, between the 2 of us (my fiancee and I) and our down payment, we should be able to get A mortgage, maybe not necessarily the BEST rate at first, but a mortgage nonetheless. I did not mention that i make minimum wage, full time hours, and she is on maternity leave. Not the best income situation, but do have 110k+ in the bank.

Am i reaching?

You know what I find really funny. And this is quite common too....
That people who have a lot of delinquencies always seem to have an excess of cash just sitting in the bank or somewhere else.

Just think where'd you be if you actually paid all your creditors as agreed and on time. duh!
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
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Apr 26, 2012
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guigz wrote: I might have misunderstood the plan but it appears as though the OP is considering getting a 400-500K$ mortgage with a 20% DP and little to no income?

If that is the case, I highly suggest that you look at something less expensive if you really must have a mortgage. You would be looking at borrowing almost 20x your net salary (!!).

Sorry if I misunderstood your situation.

Looking to spend max 200k on house, in 2 years, and am fully aware of the financial implications our current income situation imposes on our ability to purchase on credit.
mikeymike1 wrote: You know what I find really funny. And this is quite common too....
That people who have a lot of delinquencies always seem to have an excess of cash just sitting in the bank or somewhere else.

Just think where'd you be if you actually paid all your creditors as agreed and on time. duh!

And i agree with you, i think the reason behind this is that everyone makes mistakes at a young age, and few subsequently inherit money shortly after. Makes for an interesting situation, but rest assured i have put several months of thought into what i am doing, and also have not spent a dime of the windfall in over 12 months. Now i just need advice to align my thoughts!
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Jun 25, 2008
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I have recently received a windfall
This looks like a disaster waiting to happen, but good luck!
Newbie
Jan 29, 2012
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Edmonton
If you're rich, why are you worried about your credit? Just don't take on any debt.
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pinkpanda wrote: If you're rich, why are you worried about your credit? Just don't take on any debt.

+1

A credit-free lifestyle costs a lot less than buying on credit as well, for consumer purchases.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Sr. Member
Dec 6, 2006
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BennyBP wrote: Looking to spend max 200k on house, in 2 years, and am fully aware of the financial implications our current income situation imposes on our ability to purchase on credit.

Boy, am I relieved! When you mentionned a DP of 20%-25%, I had assumed that you had intented for the entire 100K to be the downpayment.

Since you have the money on hand, I would highly suggest that you go for a 25% DP in order to save CMHC.

It could still be tight, but at least you would have a large emergency fund in case anything happens.

On the bright side, since you have a minimum wage job, you can't really get less than that (assuming that you can retain your position).
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Apr 26, 2012
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guigz wrote: Boy, am I relieved! When you mentionned a DP of 20%-25%, I had assumed that you had intented for the entire 100K to be the downpayment.

Since you have the money on hand, I would highly suggest that you go for a 25% DP in order to save CMHC.

It could still be tight, but at least you would have a large emergency fund in case anything happens.

On the bright side, since you have a minimum wage job, you can't really get less than that (assuming that you can retain your position).

I think by putting "Just got rich" in the title i might have attracted the wrong type of attention. We didnt quite get rich by today's standards, and i think that this thread might have gotten a bit off topic.

I agree that it would be tight, i crunched the numbers and they wont crunch any further... Will be looking at supplementing with rental income from the basement most likely. But thats another thread.

So i think its settled then? Noone really posted how they felt about the offer that was made here:

BennyBP wrote: I spoke with the creditor 'MJR Collections' just now. Whats owing is roughly 630 + 710 = 1340.00, they are willing to settle at %50, and are offering 673.00 final settlement to be paid to them. They promise to report to EF and TU, and will send it in writing on Monday.

He was really trying to sell me on paying in full, saying that it looks better on my report, and we can "work on" the first debt of 630 if that's all i have.. funny.

I said I'd call back, what do you guys think of settling vs. paying in full? does it make a difference at this point, enough of a difference that i should consider paying in full?

whats everyone's thoughts on this?
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Nov 25, 2010
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If you actually got rich, just rent a nice condo
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SnoopDop wrote: If you actually got rich, just rent a nice condo

Tell that to my wife-to-be.. lol.

------

I'll pose the question one more time, as we are on a new page:

I spoke with the creditor 'MJR Collections' just now. Whats owing is roughly 630 + 710 = 1340.00, they are willing to settle at %50, and are offering 673.00 final settlement to be paid to them. They promise to report to EF and TU, and will send it in writing on Monday.

He was really trying to sell me on paying in full, saying that it looks better on my report, and we can "work on" the first debt of 630 if that's all i have.. funny.

I said I'd call back, what do you guys think of settling vs. paying in full? does it make a difference at this point, enough of a difference that i should consider paying in full?
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Oct 29, 2006
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BennyBP wrote: I'll pose the question one more time, as we are on a new page:

I spoke with the creditor 'MJR Collections' just now. Whats owing is roughly 630 + 710 = 1340.00, they are willing to settle at %50, and are offering 673.00 final settlement to be paid to them. They promise to report to EF and TU, and will send it in writing on Monday.

He was really trying to sell me on paying in full, saying that it looks better on my report, and we can "work on" the first debt of 630 if that's all i have.. funny.

I said I'd call back, what do you guys think of settling vs. paying in full? does it make a difference at this point, enough of a difference that i should consider paying in full?

I don't quite understand, you can settle for $673 or pay in full $1340?
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Jun 26, 2011
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Maybe I'm stupid, but given the difference is only about $600, I'd pay it in full just on principle.
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Apr 26, 2012
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philharmonic wrote: I don't quite understand, you can settle for $673 or pay in full $1340?

Yes, the accounts have been outstanding for 4 years.. The creditors will take %50 of what is owed and report to the credit reporting agencies that the account is "settled". If i pay %100 of what is owed, they will report to the CRAs that the account is "paid" which he was trying to sell to me as being the better option.

Im wondering what the difference is.

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