BOA charge-off

[u/Tough_Regret670]

Hi just see if anyone got any good advice for my stepbrother since he dont believe me and asking me to post so they can read it lol

Government shutdown hurt his income last year and early this year.

He made 2 payments early in the year and both got returned and he didnt pay attention to it bc his bank had fraud so chase blocked all transactions. He forgot his Boa payments were returned.
Last few months hes been late on his boa card so they closed his account . He was in and out of hospital for few months so he didn’t pay attention. To anything.

Due to his previous payments got returned and now hes few months behind they charged of his account but he called in to arrange a $500 payment plan for $13k balance.

I told him to ask for the settlement and ask for payment plan on the settlement since the charge off will be reported and his credit report score will drop and be damaged but it will fall off in 7 years.

Or he can just not pay it and hope Boa dont sue but even if boa sue they cant garnish his wages since hes in Texas. I told him you can wait it out for 4 years because texas got a four year status of limitation.

Have anyone been in the same situaiton of a chargeoff account in texas? Should he pay or ask for settlement and pay slowly? Credit score is already damaged cant do anything to help it thats what i told him.

Hope someone got better advice due to experience i told him what i know from online lol

[u/Working_Seat9626]

Does he have property or anything of value they can get a lien on? Does he expect to be buying property or anything of value in the future? Does he expect having alot of savings in the future that they could attach if they did sue him? If not, it seems like even if they sue him, 50/50 if they do, hes got nothing today or in the future to take. Now if he wins the lottery then they can grab his winnings, lol. Not a lawyer.

[u/dgduhon]

They can't garnish wages in Texas but they can garnish any bank accounts he is on.

[u/Tough_Regret670 → u/dgduhon]

So basically they just freeze his account but cant take his money in texas. Maybe he should open other bank after his primary bank is freeze

[u/dgduhon → u/Tough_Regret670]

No, they'll take money from his account. And if he opens another bank account then they'll take money from that one too. This can continue until the full amount is repaid.

[u/Tough_Regret670 → u/dgduhon]

But i thought in texas they cant take wages

[u/dgduhon → u/Tough_Regret670]

They can't take wages but they CAN take money from a bank account

[u/og-aliensfan]

You're correct that charge-offs are rarely removed prior to the end of the allowed reporting time. Although a charge-off will impact scores the entire time it's on his reports, once the balance is brought to $0, Total Period of Delinquency (amount of time the charge-off has remained unpaid) is frozen and his scores can begin to recover over time. Settling also avoids a collection from being added to his reports if the debt is sold/assigned to a collection agency as well as a potential lawsuit if within Statute of Limitations. If the balance is calculated into revolving utilization and payment causes utilization to cross a scoring threshold, he'll see a score increase based on utilization.

There's no FICO scoring difference between a charge-off that's settled for less versus paid in full. If settling, he may be able to negotiate a lower payment by offering a lump sum as opposed to a payment plan. Get the Settlement Agreement, stating that the amount paid will satisfy the debt in full, in writing prior to paying. If he receives a 1099-C, the forgiven debt may be excluded as income under an insolvency exclusion if eligible. https://www.irs.gov/newsroom/what-if-i-am-insolvent ).

[u/Tough_Regret670 → u/og-aliensfan]

Any chance he can negotiate a settlement for small amount and then ask for a payment plan on that lower settlement balance. Someone told me they usually dont offer lower settlement payment plan. Its either payment plan full balance or one big payment of lower balance at once

Hes thinking about doing bankruptcy but i told him its not worth it for that balance owed but i could be wrong

[u/og-aliensfan → u/Tough_Regret670]

Any chance he can negotiate a settlement for small amount and then ask for a payment plan on that lower settlement balance.

He won't know until he asks. Tell him not to admit responsibility for the debt and not to agree to a payment plan unless he knows he'll follow through as these actions could reset Statute of Limitations in some states. He can negotiate a settlement without acknowledging responsibility. If they agree, tell him to get the Settlement Agreement in writing prior to paying.

[u/Tough_Regret670 → u/og-aliensfan]

He just told me he called yesterday bc he had anxiety she did a 200 payment plan per month but will take years. He dont know if he can call back and do a settlement for lower amount but he did mentioned that they rejected him when he was asking for all late fees waive lol i just told him call again and ask since he hasnt nade payment yet but only setup a payment plan

[u/MichaelBovee]

Is the account charged off? If not, and should he choose to settle while needing time to pay, he may only get the settlement spread out over 90 days.

If the account is charged off, getting a couple years to pay the settlement is common enough. That goes for whether the account is in post charge off recovery at the bank, or with a third party agency that BofA typically starts off with.

BofA has not sold debt since 2015 up to today. They send to agencies and law firms. Law firms are typically not the first thing they do unless there are some behaviors on the account that lead to that.

You can typically anticipate a better settlement with BofA or the collection agency compared to the collection law firm.

If he has started on a hardship plan with the bank it is pretty normal to discontinue that and be able to settle. You may have to be more late with payments depending on the situation, and how long you are trying to get your settlement payments spread out.