An Expert Guide to Credit Card Debt Settlement

The debt settlement and negotiation sections make up the largest portion of the debt relief and credit guides published on this site. That is because debt settlement does not fit into a tidy package like consolidating credit cards, consumer credit counseling, or bankruptcy. I thought it important to have an introduction to debt negotiation due to the amount, and variations of content, you will find here.

The concept of settling unpaid debts like credit cards is not overly complicated, though it is certainly something that cannot fit on a single web page. And once you introduce the different stages of debt collection; and how to negotiate with debt collectors vs your bank; or outline what you can do when settling collections in the court; the content for the debt settlement guide grew larger, and continues to expand.

Credit cards are the most common type of debt that can be negotiated and settled for less than the total balance owed. Much of the debt settlement guides focus on this from of unsecured debt for that reason. But there are many other types of debts that the guides can be applied to. You will find guides related to settling business debts, medical bills, personal loans, and more, throughout the site.

How to get the most out of the debt settlement guides.

We highly recommend you read through the debt settlement program using the order we have placed all of the topics in. This will allow you to gain the maximum level of understanding of what credit card debt settlement is, how it will work in your specific situation, when settling debt works best, or even why you will avoid debt settlement all together. This recommendation includes any of you reading that may have committed to settling credit card debts that you stopped paying some time ago.

Following the recommended outline for settling credit cards is suggested because:

  • Debt settlement as it is explained by the media, and what is probably more than 10,000 websites, often does not scratch the surface of the topic (it cannot be explained sufficiently in a single article).
  • A debt settlement company selling their program to anyone who will listen will often fail at giving you a detailed outline of what they are trying to sign you up for. Opting instead to put profit or sales commission goals in front of your need to be adequately informed.
  • You should understand the fundamentals of settling debt so you can weigh the benefits and the drawbacks with clarity – before negotiating and settling debt yourself, or hiring a professional.

Following the way we have laid out this section, no matter what stage of collection you might be in (and especially if you are still current with payments to creditors), puts you in the best position to succeed with debt settlement.

Once you complete your review of the debt settlement guides you will know more than the majority sales people who are the front line for selling debt negotiation to the public.

As you progress through the debt settlement sections there are links to supplemental reports. These reports describe a particular topic or concern in detail. The reports are critical to review if you choose, or have already chosen, debt settlement as your path to debt relief. Click and read them as they are referenced throughout any of the debt negotiation guides, or read them after you have completed your review.

Before you jump into the rabbit hole that is debt settlement.

CRN advocates settling credit card debt as a personal financial solution. We have provided debt settlement education and debt negotiation services since 2004. We are good at it. We have made our customers, members, and readers good at it. We are also not your Aunt Mildred’s debt settlement company (no offense Mildred).

We have decided to create and publish the online debt relief program for many reasons. We may fully lay out more of the reasoning in a later update to this section, but for now, here is some of the consideration we have in doing this:

Debt settlement works for the right person and the right situation. Debt settlement does not work for the wrong person, nor does it work well for the wrong situation.

There are people who want to take your money to help you settle your debt. There are creditors and debt collectors who want you to pay them, and they are willing to take less than what you owe.

We decided to create and publish the CRN debt relief program so that you can tell the difference between whether settling credit card debts is right for you, and if it is, when, why, and how much of your money to put into this method for resolving debt. We hold nothing back. We offer our support freely to the public through dedicated feedback in the comments on virtually every page of the site.

If we can save you from making uninformed debt and credit decisions that can hurt, rather than help you, we want to. If we can save you money when you settle credit card debts, we will.

Continue on with the debt settlement guide with – What Is Debt Settlement

If you would like to talk with me about your situation, and whether debt negotiation and settling for less is right for you, you can reach me at 800-939-8357, press option 2, or you can submit a consult request. And as you will see throughout the site, I respond to reader questions and comments throughout the day, so feel free to post yours for feedback..



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  1. Linda says

    Hi, what if theres a possibility that she suscribed to something and they charged and she went down to t-mobile awhile back and told them if they can take it off or stop it and the women said she would at t-mobile but i don’t think she ever did since we got that debt letter from MCM. Does that mean we still have to pay it or do you think they’d cancel the debt?

    • Michael Bovee says

      Linda – You have a comment string going about this issue over on this page:
      I like to try and keep as much of the comment exchanges as condensed as possible. If you can copy and paste your comment over there, I can move this one over there afterward.

      If there was a discrepancy in the billing that your sister can prove is in her favor, and that means the debt should have never been sent out for collection or sold off to a debt buyer, settling the debt would not make sense, but your sister is going to have to be ready to fight this. Once accounts have reached the point they are sold off to a place like MCM, T-mobile is not going to be all that motivated to work with her. Especially if she is not a current customer.

  2. Melissa says

    Hi, I just had a question about a judgment. It was entered in June of 2008 for $724. I called the law firm to pay it recently and they told me they could not accept payment, as it had been recalled by the original creditor. The original creditor is showing a balance of $1044, with a past due of $167. What is the best way to go about this? I was hoping to settle with the creditor, but I also don’t want the judgment to start collecting later. We are hoping to finally buy a house, so I would like to get these cleared ASAP. Thanks for any help you can give me!

    • Michael Bovee says

      Melissa – If your goal is to pay off the judgment you will need to contact the debt owner and set that up. Be sure to get the agreement for payment in writing. With a judgment in the court record, you need to be certain that a satisfaction of judgment is filed with the court.

      Once you pay off the judgment debt (with documentation), and make the payment, keep a record of that payment with the other documentation in case you need it later. But the record of judgment satisfaction in the court is all you would need to direct anyone’s attention to if there were any later attempts to collect on a resolved debt.

  3. Jennifer says

    I need help settling with a debt collection attorney. They would not accept my offer for a settlement. Should I just go to court and try there. I tried to settle a 13,000 debt for 10,000. The attorney would not accept it. He told me if I paid it off I would still have to go to court too. Is he trying to get me to pay for court fees as well?

    • says

      Hi Jennifer. Settling a credit card debt with collection attorneys can sometimes come with an increased difficulty level. Settling early on with creditors is like a somersault. Getting a debt settlement from a typical collection agency is more like a front flip. Settling debt with an attorney can sometimes be like a double back hand spring with a tuck.

      I noticed that you submitted a consultation request form at the same time you left this comment. You can get into the details you need to about resolving your debt with the CRN specialist that will be reaching out to have that consult with you.

  4. Khalid says

    Hi, I owe more than $10,000 in credit card balance. I reached the point I cannot pay the minimum amounts due. In total I have like 6 credits cards with three creditors. What is the best options in this case consolidation or settlement. Thanks

    • says

      Khalid – What is the actual total of your combined credit card debts? Are you late on any of the credit card payments? If so, post how far behind. Name who the three credit card banks are along with answers to the other questions in a comment reply. I can then better help you make the comparison between credit card debt settlement and debt consolidation.

      • Khalid says

        Hi Michael,
        The total debt is $14,000 owed to Chase with 3 credit cards and Capital one with 1 credit card. Thanks for your help.

        • says

          Khalid – I estimate your monthly payment with consolidating credit cards with Chase and CapOne to be roughly 280.00 a month. If you are confident you can make an estimated 280.00 payment in a consolidation that would be the path of least resistance and headaches compared to settling.

          I estimate you will need to come up with about 5600.00 in order to settle your credit cards with Chase and Capital One. Depending on the balance of your Capital One card, that estimate can swing higher. If you are not confident you can afford a lower payment of 280.00 when consolidating the credit card bills, you should then focus on how long it will take you to pull together the 5600.00 needed to settle. Settling with Chase and CapOne means not making your monthly payments, so some of the money you need to settle will come from saving up monthly. But you can and should look to accelerate your debt settlement plan by pulling money together from whatever sources you can in order to get the debts settled quickly.

          If settling makes more sense for your situation, you should determine what your options to raise the estimated 5600.00 to settle in the next 6, 12, or 18 months will be.

          How do you view those two options given my above feedback?

          • Michael Bovee says

            Khalid – Start off with calling 888-317-8770 and get a direct quote about how low your monthly Chase and Capital One credit card payment can go. That call is free. Be ready to answer some basic income, expense and budget questions. You will be talking to a licensed credit counselor about consolidating your credit cards using a debt management plan. If you determine that is a good direction to go, that is great. If you learn something from that call that suggests debt settlement is better option, come back and post an update and lets go from there.

          • Khalid says

            If I consolidate am I going to loose other credit card, like American Express and Bank of America. I am very concern to keep those credit cards. Also after consolidation how long it takes for my credit score to be good.

            • says

              Khalid – Keeping accounts open and using them when you are in a debt management plan, or settling some credit cards and not others, is not common. You have more flexibility to do that if you are settling than by consolidating (unless you are using a consolidation loan). Perhaps you should call in and talk to a CRN specialist about your situation in order to get into the details further. Call in an talk to us at 800-939-8357 ext. 3.

  5. sherron says

    I have been called at my job , threatening me that a warrent is being issued out and I have 30mins to money gram payment to they office , for a payday loan that I settle two year ago with someone else calling foing the same thing ..And I can fine the receipt because I did it with a prepaid card …. How can I solve this problem and they still calling to collect this money

    • Michael Bovee says

      sherron – Do you know who the debt collector is that is calling? Any identifying information about the debt they are collecting, a number from caller ID? What state do you live in?

      Legitimate debt collectors do not make threats about warrants being issued if payment is not made in 30 minutes. A scammer will do that though.

      Post answers to my questions in a comment reply and I can provide some additional feedback from there.

  6. Nancy says

    Got a collection letter from a collection agency last week on a $5,400.00 credit card debt from Bank of America. Is it too late to make a settlement agreement with them?

    • Michael Bovee says

      Nancy – It is virtually never too late to settle an unpaid credit card debt. How much you settle your BofA credit card debt for, getting time to pay and other nuances can change during the life cycle of a debt.

      How long has it been since you last made a payment to bank of America?
      What is the name of the collection agency that has the account now?

      Post your answers in a comment reply if you would like some additional feedback about targeting amounts to settle for etc.

    • Michael Bovee says

      Nancy – A realistic range of targets for settling your charged off Bank of America credit card with CCB Credit Services would be between 30 and 45% based on today’s trends. There are reasons accounts settle for the lower end, and even exceptions to the range. There are payment alternatives in this situation as well. What amount of money can you pull together to settle with CCB in say, the next 30 days?

        • Michael Bovee says

          You can get this done. Are you up to doing this on your own? If so, would you prefer to have an expert guide you through your own successful DIY settlement, or are you confident enough to skip the one on one support?

          • Nancy says

            Not sure how they wpuld try to handle me offering only 2k… I guess something is better than nothing. Who can help? Does that cost as well?

            • Michael Bovee says

              We do offer a membership program that will provide you the ability to work one on one with a CRN specialist who will guide you through the process of settling your BoA account yourself. The CRN membership debt relief program is what we are known most for. You can learn more about it on this page – CRN membership

              If you are ready to fund your settlement, and the CCB credit services is the only account you need to contend with, you can be through this in as little as a couple days. If you are considering membership, it is also a good idea to call in to us for a free consult in order to be sure you have all question answered first, and also to establish whether membership offers you a value. Call 800-939-8357 ext 3.

  7. Annie says

    Hi my husband and I have been with a credit repair company for the past year, they have been able to get some things taken off our credit reports, but about 10 collection accounts still continue to report. We have sent out as many as four validation letters asking for proof that these collection accounts are our, but have only received settlement letters as responses. These accounts are all past the SOL. We got per approved for a mortgage but the final approval has to be done pending the removal of these collection accounts. At this point I would like to settle if that would mean them being removed form our credit report. Any advice?

    • Michael Bovee says

      Annie – Settling credit cards and other debts in collection will not generally get the entries removed from your credit report. By settling you do get the entries to reflect that there is no longer a balance owed, and that can help get your loan pushed through. But if you were expressly told that your loan approval was contingent on the debt collection items being “removed” from your credit report, you will not likely succeed.

      Speak with the broker/loan officer and be certain that removal is required, or if settling the debts and getting them reflected as resolved is sufficient to meet your goal. If settling will indeed get you over the goal line, post a comment update. I can then offer more feedback and will want to know who you owe and how much in order to offer some tips and settlement targets for each.

  8. Judine says

    I am looking to settle a National Grid utility $2,982.00 debt with the National Recovery Agency linked to my foreclosed home. I recently tried to settle and was told that they do not settle utility bills whatsoever because its thier policy. Off course I do not believe them because, to me, once a bill gets to a colleciton agency it makes perfect sense for them to try to recovery what they can get. What are my options? How can I best arm myself to negociate when I call back so that I can get this settlement off my credit?

    • Michael Bovee says

      Judine – How long ago was the bill last paid or considered current? What do you mean by getting the settlement off of your credit report?

  9. Jay says

    I have 2 cards with Bank of America and have been communicating via email. Bank of America sent me a letter stating that “Your account is eligible for settlement, you must call this number to make arrangements.” After watching your Settling with Original Creditor video, i decided to call. The Agent asnwered and confirmed my name, date of birth, and asked for the reason I am falling behind. I said my hours got cut at work. I had some health problems and not being able to work much. She said for my $10k card, settlement is available for $2600 and for my $6k card, settlement is available for $1600. I said ok. Can you send me an offical settlement letter stating that after paying these amounts my account will be settled in full. She said they cannot send any letters. They can send letters after the fact, after settling the account but not before. I said I cannot make any payments without having anything in writing. She again said they cannot send any letter. I said ok then have a nice day. She said, have a nice day. Charge off date is in 93 days. What just happend and what to do from here? Sounds like a red flag, people say if you don’t get it in writing, it did not happen and they will just post the money as a payment to my account rather than settling.

    • Michael Bovee says

      Jay, If you want to take advantage of the offers and settle these Bank of America credit cards, review the guide laid out in this post about getting settlement letters kicked loose.

      I would also recommend reviewing this post about recommended ways to pay the settlements you get.

      A couple of ways that are effective to get the settlement letters, or the negotiations completed with confidence at this point:

      1. Let the person at Bank of America internal recovery department know that you are having to borrow some of the money, access money for another sources (or something similar). Without a letter showing that the amount you are paying is the final payment, you will not be able to access the funds. You are willing to set up the payments for say June 29th for ach payment direct from your set aside account, which allow the time needed for them to mail the letter outline the settlement agreement.

      1a. Raise your discussion to the next level with a collection supervisor at Bank of America.

      2. Record the call. Be upfront about the fact you are doing so. And that the reason you are dong this is in the event a letter evidencing the settlement is not mailed out by Bank of America, the recording is your only proof of the agreement. Ask for the recovery persons full name, what office are they working out of (State and city – bank of America has several collection and recovery locations).

      3. Let the accounts progress further in delinquency and call BofA about every 2 weeks to assert your ability to accept the offer, but need the letter to access the funds.

      Bank of America, and other original creditors, have become a bit protective of sending out the offers without a payment amount and date set up in there system. #1 above addresses this in most instances, but there are instances where you do have to escalate your concern to supervisors… repeatedly. Also, I do have files that have recorded the calls, funded the settlements on schedule, and later received the letters outlining the settlement and that the debt is resolved.

  10. Richard says

    Hi Michael,
    I have about 40k in credit card debt. Everything is current and all of my interest rates are relatively low (2 – 7 %). My credit is in good condition, around a 700 Fico. I have some assets I could sell and possibly raise enough cash to pay off half of the amounts owed but I can’t eliminate it all. Since my credit is good and the interest rates aren’t bad, am I better off paying down 50% and working on the rest over time, rather than debt settlement. Obviously with debt settlement, I could possibly eliminate all of the debt but then I will lose the good credit that I have fought to maintain and would prefer to keep….Thanks

  11. Richard says

    Addition to last post……
    I forgot to mention that the current issue for me is that my income has been to low to cover the monthly payments due to the recession….so dipping into retirement savings. I’m working on turning that situation around and hope to do so soon but unsure of that timeline.

    • Michael Bovee says

      Richard – If you pay down your credit card debt to 20k, will your monthly cash flow support your ability to make the lower payments at that point, or will you still struggle with that based on current income?

      If after paying down half of your credit card debt load, you would still struggle with payments, it would be a good idea to estimate the total costs of settling; how long it will take based on trends with your creditors; and what that timeline will look like set beside your credit score concern, and access to new credit products in the short to mid term. I can help you with those estimates once you determine what your cash flow will support.

  12. Jay says

    I have a Discover card owe $5200 on it. I was communicating with Discover via mail, and offered to settle for 25%. I called Discovered and they said my account has been sent to an attorney. I got a call from CIR Law firm, they talked to me, I explained my situation that I cannot make any payment but can settle by borrowing money from family. I offered 25%, they said, they will not take anything less than the full amount. I recieved a letter on June 24th stating that I owe $5200 and I have 30 days to request validation, if validation is not request within 30 days, my account will be states as valid. In case validation is requested, a validation or judgemennt will be obtain and sent to you. [Question 1] How likely is that I will get sued?

    Someone people have ask me to opt in for Arbitration with JAMS but i do not know much about Arbitration. I really need advice with this soon. All I have to do is send them a CMRRR saying that I dispute this debt, request validation and elect arbitration with JAMS to resolve this matter between us. [Question 2] Is this right? or do I need to also call or do something with ?

    I want to settle people have told me that the debt collectors will have to pay for arbitration and usually when they have to pay, they run for the hills, let the debt go or offer to settle. [Question 3] What happens if they do elect to arbitrate, will i have to pay the full amount?

    • Michael Bovee says

      1. If you are in a state where CIR is licensed I think it highly likely you are sued at this point. Are you in Southern California?

      2. Depends. Your comment suggests you want to settle and are averse to being sued. The approach you outlined so far is more about:
      a. Increasing the likelihood you are sued.
      b. Dodging the debt because you lack resources to settle.

      3. If you lose in arbitration they will get an award for the full amount which could then be reduced to a judgment.

      If your goal is settling with Discover Card 25 percent is not a realistic target amount, and certainly not now that the account has been placed with an attorney.

      • Jay says

        How should I do? I am staring from 25% but like to settle anywhere to 50% or even 75%. This is beacuse I am scared of being sued. What would be the best approach in this situation?

        • Michael Bovee says

          Jay – Settlement targets with Discover Cards placed with collection attorneys can settle at 50 to 60% lump sum. There are instances where an account is flagged (cash advances or high balance of charges made just prior to payments being stopped), where settlements do not go below 80%.

          You will need to call the law firm and discuss the fact that you are broke, and barely able to afford a roof, power, and food. Basically just outline the hardships that led to your inability to pay and that those conditions remain. You think you can raise a little money (loan from family friends etc), but only if it resolves the debt. Do not speak about anything other than a hardship condition as it may apply to you (e.g. hours cut, lengthy unemployment, medical, depression, family issues, mortgage reset etc). Get any negotiated agreement in writing before payment. Check out some of these critical reports about settling debt.

          If you run into any trouble with your efforts, or would prefer to have a specialist guide you through the process, consider calling in for a consult: 800-939-8357 ext 3. I suggest you make the call to the collector and give this a shot on your own first.

          • Jay says

            Thanks Michael,

            I did talk to the agent once and explained my hardship and did mention that I can settle the debt by borrowing some money from my dad but the agent said he cannot give me any break and the amount is due in full. I can talk to him again when he calls next.

            I have been talking to some folks on creditinfocenter and people have mentioned that i need to file an answer to their mail by saying that i dispute the debt, request validation, and elect private arbitration via Jams. They say, this way the CIR Law cannot sue me and when CIR have to pay for arbitration, CIR will offer to settle. Currently I do no have any bargaining power. I got the letter on June 24 and it states i have 30 days to file a reply. How likely is that they will start arbitration? if they do, i will likely loose as they will most likely validate the debt and I have to pay the full amount. But they they don’t file for arbitration and offer to settle at 50% then it will be in my favor.

            You think i should talk to the agent again or you think i should send this letter?

            • Michael Bovee says

              Jay – Our comment exchange inspired a new post about your situation and resolving your Discover debt.

              I wanted to give you my perspective using what you have shared so far, which I assume is what you are looking for and why you are posting here to begin with. What I have to share is too long for a comment reply. The post linked above is a bit blunt, and required some assumptions. It is not something I wrote dedicated just to your situation. I offered some broad commentary in the post because there has not been an opportunity to do so in the comments on the site to date, and there will likely be others who can read and benefit from the editorial and any additional comments.

              Before you decide whether to follow through with the dispute/debt validation/notice that you will elect arbitration you read on the CIC site, I would encourage you to consult with the experienced debt defense attorney I sent you contact info for in an email. He will be a better resource to answer your questions. He can also likely provide direct assistance to help you accomplish your goals.

              I encourage you to post in the comments on that new article. If my assumptions about your sending a canned settlement offer letter to Discover is not accurate, please correct me on that, and add anything else to the page.

  13. Richard says

    Michael….. thanks for your reply.
    In order to help me with the estimates you referenced, do I need to sign up for a membership or is there an interim step, since I’m not yet sure that debt settlement is the right choice for me. Please advise how I may go about this……Thanks.

    • Michael Bovee says

      No requirements or membership necessary. This site is a free resource. You can just post the creditor name and a rounded balance amount for each. I can provide the estimate, and offer some realistic expectations for you in a comment reply.

      You do have the option of consulting with a CRN specialist to go over the details on the phone: 800-939-8357 ext 3. That is free too. If settling turns out to be the better path to debt relief, you can circle back and work with that specialist one on one to guide you through the negotiation and settlement process, or continue to participate through the comments and get online help at no cost.

  14. Richard says

    Thanks Michael,
    Here’s what I have:
    5K with Advanta (now a defunct bank)
    5K with Partners Credit Union (formerly Vista)
    2K with Citi
    19K with Citi
    7K with Chase – account closed by me with 2% interest- payoff in 4 years
    All accounts are current, nothing is behind. I also have several other active credit cards with basically no balance. I’m at retirement age and need to protect my savings and assets which are not very extensive and my current income is not covering these bills. So this is why I am investigating debt settlement though I’ve been reluctant to trash my good credit, which I may need for mortgage reasons once business turns around…..Thanks for your input.

      • Richard says

        No…nothing else with the credit union. I do have a car lease with Honda with 12 months left….Thanks

        • Michael Bovee says

          Okay, here are some estimates and some timing questions:

          Without including the Partners Credit Union account I estimate you will need to pull together about 12.5k to fund settlements with Advanta, Citibank and Chase. This estimate is based on settling within about 6 months of having missed payments. The estimate would change if you could not raise the money in order to negotiate and pay the deals in that time. How long would it take to raise that amount?

          I left out the credit union account because the net benefit from settling that account is not great. If you do take the settlement path for debt relief, I am going to have more to share about some strategic ways to deal with the credit union. Your answer to my first question above will change that feedback. Do you maintain a checking or savings account at any of the banks listed above (other than Advanta)?

          How you set yourself up for success with your future credit needs is going to be based on some timing, income, type of credit product, and additional factors. When it comes to home loans after 1/1/2014, there will be more to your debt to income and getting approved for a home loan, than in the past. If you want to dig into the credit score and credit approval discussion, please take that discussion to the comments of this page: Debt Relief and Credit Stuff, as our comment exchange about the particulars will be better for readers to learn from on that page than this one.

          • Richard says

            Thanks for all this information…really helpful. I can raise the 12K right away but from everything I’ve read here it sounds like I have about 6 months for the best result.
            I do not have a checking account with any of these banks.
            One thing I wasn’t clear on was if you are saying it’s will be easier or harder to get a home loan approval after Jan 1 2014 with regard to debt to income.
            Thanks again…..

            • Michael Bovee says

              The 6 months is generally correct. There can be earlier opportunities though. Also, while there may not be an settlementagreement reached and funded for several months, there are things to be doing, and not doing, in that time frame.

              After the effective date of the qualified mortgage rule, it will become more difficult to qualify for a mortgage when DTI is weighed down by the costs of monthly credit card bills.

  15. Jane says

    I recently negotiated a settlement with Chase for two credit cards for my mother. They were actually pretty good to work with at first. After several calls and a couple of months we agreed on the settlement amount and that she would pay it the next day at the branch where she lives which she did. Several days later I called to check the balance and ensure everythign was done. When I listened to the automated system the accounts still had a balance so I spoke to a customer service rep. I was told I was no longer on the account even though my mother did not remove me and the accounts were not settled. I asked for it in writing and was told all I needed was his name and ID number. I’m ususally not usually so dumb and I feel terrible i got my mother in this situation. Its a shame businesses don’t have any morals or ethics anymore. Does she have any resourse? She cashed out her 401K to pay the settlement and is now on a fixed income. the only other option I know of is bankruptcy. I just wish I would have had her do that before she paid them a dime.

    • Michael Bovee says

      Jane – I would like to help you look into the situation you posted about. I want to be certain I understand what occurred. If you are open to speaking with me about the details, send an email to the same address you get this comment notification from.We can connect via email and speak over the phone at a time that works well for both of us.

  16. Melissa says

    My Capital One credit card has a balance of $11,000. I have stopped the pmt for 2.5 years. I received a settlement letter with a reduced balance of $6750, to make 3 pmts of $2250. $6750 is about 60% of the full balance. I have been saving money to settle the credit card. If I settle this one, my saving will be almost completely depleted. My questions are:
    1. Is this a good settlement offer? or should I wait?
    2. Would it be a better to settle for $5000 in one lump sum?
    3. If all agreed and all pmt or pmts are made, and then the agency sensd a letter stating that the balance is zero, is that mean I no longer under any more obligation to pay or owe anything?
    4. Once settled, how long is this going to stay on my credit report? How long do I have to wait to purchase a property?
    5. If I do not settle this time, what’s going to happen? They sent collection letters before but never offer a reduction like this one.

    Thank you in advance for your reply.

    • Michael Bovee says

      1. 60% settlement with Capital One is fair with today’s trends. I do see 50% offers approved, so it may be worth following up on that offer the collector made and see if you can shave another 10% off. If you don’t get anywhere with negotiating a better reduction you may not want to let this deal slip by. Capital One is presently the most likely to sue on unpaid credit cards. See this review:

      2. See #1. I would not say 5k lump sum is impossible. With an account two and a half years delinquent, and a pre approved settlement letter, it could happen.

      3. Yes. If you settle and make payments inside of the written agreement, your obligation will be met. Look over the settlement letter carefully and compare the contents to this outline: I am considering putting up a link on this site and offering free debt settlement letter reviews. If you would like, I will start with you. Let me know in an email reply to this comment notification you get if you are up to it.

      4. The settlement will not stay on your credit report any longer than the original delinquency Capital One reported. This is going to be 7 to 7.5 years from the date of last payment. Depending on the rest of your credit report, debt to income, score etc., I have seen people refi or purchase a home within 6 to 12 months. Generally you can expect a 24 month timeline to make marked improvements to your credit and access to new credit products.

      5. If you do not settle you run the risk of not having the same option later. And as has been the case for a couple years already, you run the risk of being sued for collection until the statue of limitations to legitimately file suit to collect runs out.

  17. T S says

    Hi Michael, I hope all is well. Thanks again for all of your help. I’m moving forward as you suggested previously and I have one more question. Is it safe to pay a creditor with my bank account information? Or does it make more sense to use a Cashier’s Check (considering it won’t have my bank account number and they can’t make unauthorized transactions). This could be me overthinking but I certainly don’t want them drafting my account without my consent. Thanks in advance

    • Michael Bovee says

      TS – Making electronic payments does not raise the same level of concern it did a few years ago. I do recommend that if you do authorize this type of payment on settlements you negotiate, you do it from a separate set aside account you set up specifically for the purpose. See this report.

      If you make payments via cashier check, it is best to get those from your bank and drawn from your account. This provides better tracking and access to the information about the payment being cleared should you ever need that later.

  18. PAMELA says

    I have a question ? My husband has an old credit card debt which was about 5000.00 now it has gone to two different creditors . The one who has it now is Tate & Kirlin which they told me that there client is LVNV Funding …which i had read bad thing about them. But anyway the credit card company wont deal with this and i want to settle for the original amount which was 5000.00 but now its up to almost 11000. 00 would i be able to do this and who do i speak to the credit card company or tate & kirlin about the settlement? They would even tell me the interest rate!

    • Michael Bovee says

      Pamela – LVNV is a debt purchaser. Once your creditor sells the rights to your debt you cannot resolve with them. You will be working with Tate and Kirlin or LVNV direct.

      The balance doubling suggests this debt has gone unpaid for quite while. When did you last make a payment on this debt? What state do you live in?

      The interest rate on collection accounts will often be a high due to the credit card companies default policies.

      You can settle this, and perhaps for less than the 5k you are targeting. But before you target an amount for settling, post answers to my questions. I will have more feedback to offer from there.

  19. Tim says

    I live in VA. Original cc debt was sold to Velocity Investments and the law firm representing them is Dominion Law Associates out of VA Beach. Judgement was awarded to them almost 2 years ago for 16,000.
    No further action from them since judgement. Debt and judgement only in 1 spouses name. Spouses name that the judgement is against is not main income earner and basically works part time for extra money. Steps have been taken to protect bank accounts and cash, and home and autos are titled as “Tenants by the entirety” so I think they are safe. I went to local courthouse and pulled file and all papers/procedures seem legit. Judgement is for real. However, Judgement itself is not showing at all on credit report, but the original cc issuer file is still there saying CLOSED in March 2009 with comments of PURCHASED BY ANOTHER LENDER. There is not a separate account from Velocity, just the original cc account with last activity March 2009. A few questions seeking your opinion:
    Why do you think they have not tried to levy bank account and garnish wages post judgement?
    Why does this issue (Velocity and judgement) appear to be non existent on credit report?
    Assuming from previous posts I should negotiate with Dominion Law and not Velocity. In your opinion and this current situation, do you think Dominion Law Associates will settle for less than the judgement amount? Considering its been 4 1/2 years since they purchased the debt.

    • Michael Bovee says

      Tim – It is difficult to speculate about why the creditor or Dominion has made no attempt to garnish or levy. Collectors have to economize time and resources. Many will use software that spits out a collect-ability score – spending energy only on those who score over a certain threshold.

      I cannot say why Velocity, as the debt owner, would not report the collection account to Experian, Equifax, or TransUnion. But neither Velocity nor Dominion Law would be reporting the judgment. Judgments are reported to the bureaus by court record data miners. The judgment was either missed, not correctly associated with her credit profile, or some other reason. That does not mean it will not appear later.

      As far as who you may be negotiating and settling with, I would start off by calling Donimion Law and targeting 50% as a realistic settlement amount. In my experience, the longer a judgment goes unpaid, the more negotiable it becomes, and the more favorable the pay off. Ideally you will be ready to fund the settlement in one payment.

      After more than 4 years you may find that Dominion is no longer on file, or that Velocity no longer owns the debt – there is a market for judgment debts to be bought and sold.

  20. Rodney says

    Hello Michael, I am 19 years old with a few small debts but one in particular that I must pay off early next week in order to move forward in life. Jan 2011-July 2011 I was in my own apartment until things got ruff and I had to break my lease. :-/ with that I owed my apartment complex. Since I couldn’t pay, it was sent to a collection agency. They said my debt is around $2,200 but they offered to settle at $1,786 which is somewhere around 20%. I have saved around %40 of the total debt and will have more soon but I want to know if they would possible settle for 40% due to the debt being over a year old with no payment and the fact that I want to do a lumpsum payment. I can’t apply for a apartment until this is complete and I have a small time limit. Can you help with what I should do?


    • Michael Bovee says

      Rodney – Settlement is situational with something like this. Is it possible to settle a collection account like this for 40%? Yes, but it is not a gimme. Read more and watch the video about settling with a debt collector here.

  21. Jules says

    My husband and I have been with a debt settlement company the past 2 years. So far, we have had great success with settling 6 of our accounts. However, we recently received warning that Discover Card has commenced legal proceedings. When I called our settlement company to instruct them to start negotiations, they stated that we had no funds in our escrow account and were unable to start discussing settlement. They advised me to hire an attorney through them at a reduced cost. The attorney would only be able to advise us on how to proceed and not appear with us in court. Am I better off communicating with the lawyers representing Discover Card directly or stalling until my escrow account grows or hiring a local attorney to represent us personally. I’m looking for a number to make this lawsuit go away. I can afford payments over twelve months but I think it will be hard to get them to agree to these terms. Any advice would be much appreciated. I know Discover is aggressive and has a reputation for winning in court. I’m frustrated on my own lack of knowledge on how to proceed. Our escrow account will not start accumulating funds until January as the DS company is currently settling another of our accounts. Thank you again for any advice.

    • Michael Bovee says

      Jules – 2 year debt settlement programs are a stretch when you want to avoid being sued. Ideally you would look to pool together whatever resources you can to settle the suit with Discover.

      A couple of ways to manage this could be:

      1. Work with an attorney to answer the lawsuit with the intent to buy a few months time in order to complete the other deals that have been negotiated. Once you free up the monthly cash flow, dedicate those funds to settle the lawsuit. It is possible to do that over payments. What is the balance on the Discover debt? What are you sending to escrow monthly?

      2. Pool together whatever resources you can that are separate from what you send to escrow and settle with Discover. It can work to your favor to file an answer to the complaint prior to negotiating a settlement, but that is not always the case. Can you get your hands on additional funds quickly?

      Your strategy should take into consideration any remaining accounts that have not been settled. You want to be aware of other accounts that are higher risk to sue for collections. What are your remaining account balances? Who is collecting on those balances at this time?

      • Jules says

        Thank you for the quick response. Discover Card has a balance of $7,100. We have 4 remaining accounts waiting to be settled. Wal-mart $4800, 2 Chase cards totaling $2600, and a Dell account $1600. We pay $525 per month into our escrow account. We have no extra resources available to us at this time. However, I recently took on a second job. This will bring in an extra $600 per month. Discover card had sent me a settlement offer when we first started the program for a one time lump sum settlement of $5800. I believe the settlement company we are working with was trying for $4600 over 6 months. This was until another account settled so nothing was ever agreed upon. I was thinking of getting a lawyer, then stretching things out. However, should I continue to let our settlement company negotiate or try to resolve this on my own. I keep thinking they must have a number, and I’m anxious to know what is. I’m scared what a judgment in their favor could mean for us. Thanks again for your input. You’re extensive knowledge is very much appreciated.

        • Michael Bovee says

          Jules – The number for settling a lawsuit with Discover in a single lump sum payment can range between 50 and 80% depending on the circumstances. If you have sincere hardships and limited or fixed income, you could target the lower range in negotiations. Without that you are looking at the higher range. None of which applies given the fact your short of resources to negotiate with. You can get relief from a monthly payment agreement. That 600 a month you are adding to your monthly cash flow will get you there, but do not expect a negotiated balance reduction with the longer term payments of 12-ish months.

          I do think you can set up the payments on your own. You may be asked to sign a consent or stipulation to judgment now that you have already been sued. See this post for more about options when being sued for collection. You should consider taking this debt out of your debt settlement plan (and the others frankly), in order to keep from being charged a percentage of your enrolled debt fee by the debt relief company you are working with (if the fees are not based on a percentage of savings). You can settle all of your remaining debts on your own. I can help you do that right from this website. This would save you money in fees. You could then use a pro only if you hit a brick wall on some accounts. But I understand why you may opt to continue working with the company you hired. Who is it that you are working with?

          I would suggest working with your own attorney to answer the complaint in order to buy a little time. You can arrange a payment with the collection law firm now or later. If you are able to buy enough time to save up the 600 you have just added to your budget, maybe even do your taxes early (if you get a refund), add the 525.00 to your savings starting in January, you could knock this out.

  22. Melina Pereyra says


    Hi, Michael! Thanks for all the great answers!
    I was able to make a payment schedule with TD Bank Group (Meyer & NJUS P.A.) for $259 each month until December… Now the problem is that my husband lost his job and We can’t make the payment this month (15TH) and We are going to close our bank account since them take the $$ automatically … What should I do? Call the lawyers?

    • Michael Bovee says

      Melina – Was your payment arrangement part of a negotiated settlement? If so, how much was the original balance? What did you settle for?

      • Melina Pereyra says

        The payment arrangement was because TD bank USA was suing my husband for $1316.63 + fees (Total: $1553.63) Target debt.

        • Michael Bovee says

          If you are paying back the full amount than missing the payment will not cause you to lose out on any savings negotiated as part of a settlement. But did you sign a stipulation to judgment when you set up the payments? Was there a judgment entered in the court, and then payments set up?

          Missing the payment if you signed a stip would likely lead to the judgment then being entered and enforceable. If the debt is not recorded in the court already, this could lead to that, which will further impact your credit report.

          Calling the attorney to let them know you are not able to make the payment is fine, but it generally will not impact the chain of events that occur as a result of missing the payment date.

          • Melina Pereyra says

            My husband call the lawyers office (Meyer & Njus, P.A.) and They confirms the arrangement of $259 for 6 months (Ends in December) He already paid 2 months. They sent my husband a letter where He signed a AGREED ORDER TO DISMISS WITH LEAVE TO REINSTATE to not go to court.

            The court records show this:



            • Michael Bovee says

              Thanks Melina. You do need to be concerned about the suit progressing when the payment is missed. You could try to negotiate a lower payment now that your personal finances have changed. I have seen mixed results with that after collection reaches the courts.

              • MelissaD says

                Michael – Just curious if my new set of questions ever posted to the link you sent me?! I am not sure I presented the question correctly. Let me know if you ever received that. Thank you !


                • Michael Bovee says

                  No, I did not get them. If you used the ask Michael feature, it should have created a draft page behind the scenes on the site, and I would get an alert and go answer those. None of that happened. Rather than risk that happening again, go ahead and email all of that to me and I will create the page.

                  • MelissaD says

                    Is there an email address to contact you directly or would you like me to try the Ask Michael feature one more time? Thank you again!


                    • Michael Bovee says

                      It would be great if you tried the ask a question feature again. But if it does not complete the submission you can email back to the address I just sent you. Be sure to copy your efforts in the ask a question page so you can paste that into an email if necessary.

                    • Michael Bovee says

                      All set Melissa. Came through no problem. I will not be able to publish the new page today. When it goes live tomorrow you will get an email that your question has been answered and we can participate in the comments of that new page on those topics.

  23. James says


    This is a really great website – thanks! I am in Virginia and have two credit card judgments against me totaling about $30k including interest and fees. Both are about 6 years old. I have no garnishments, levies, liens, etc. and never did – it seems the law firm never bothered to try any of this, but I have also been careful not to leave myself vulnerable to any of these. A few questions:

    1. When you talk about negotiating a reduced payoff (say 40-60%), is that 40-60% off the original amount or the amount with accrued interest and fees?

    2. Based on the age of these judgments, what would be a realistic settlement amount?

    3. In another post you suggest offering 50%. Why not just ask them what is the least they’d take? Or start off offering 10% (or 1%) and letting them go up from there? Is there a downside to offering too little, other than more back-and-forth before a payoff amount is agreed on?

    4. I have the cash to pay off in full, but don’t want to part with that much money, especially considering I don’t absolutely have to settle at all – I’d rather clear up my credit, but don’t need it right now. If I do settle for less than the full amount, when the settlement is recorded in the public record will it show that I settled for a reduced amount or will it just say that it’s been satisfied? I don’t want it to show on the public record that I shorted my debt, but if it doesn’t indicate what I settled for then I’d want to settle for as little as possible. Also, if I do settle for less and the public record only shows that the judgment is settled, can anyone from the public call the law office and find out how much I settled for, or is this confidential?

    5. My credit reports from indicate that the judgments are set to be removed in another year or so. If I settle, and the settlement is updated on the credit reports, is the 7-year clock re-set, or will they both fall off after the 7-year limit? By this I mean is the 7-year time frame from the date the judgments were recorded (regardless of subsequent activity like payments plans, partial payoffs, full payoffs, etc.) or is it 7 years from date of last activity (meaning it would stay on my report for 7 years after I settle, regardless of how long ago the judgment date was)?

    6. When negotiating with the law firm, should I negotiate by phone or in writing? If by phone, and if a payoff amount is negotiated, what is the procedure for getting them to give me a written, binding commitment that if I send the funds they will release the judgments as satisfied?

    7. Once the judgments are paid/settled, do they notarize and record the Release of Lien document at the courthouse where the judgments were recorded, or do they send me a notarized document that I then use to get a Release of Lien recorded myself?

    8. Presumably, the credit reporting agencies will be notified by data miners about the settlement once recorded. Will this bring down my credit score? I ask because I would like to apply for a secured credit card through my bank, and I’m thinking I might want to wait until after the debt is settled but before it’s recorded in the public record – the one credit agency my bank uses to decide about credit cards doesn’t have either judgment on the credit report, but this might change once the settlement is recorded in the public record.

    Thanks again for putting together a great website!

    • Michael Bovee says

      1. Negotiating is generally going to start with the current balance owed, so inclusive of interest and fees.

      2. A realistic settlement on judgment debts this old can be 50%, but there is more to negotiating at this stage. There are variables such as:
      a. Who the creditor or debt owner is?
      b. Who is the attorney collection firm you may have to negotiate with?
      c. Does your credit report or other information sources available to a debt collector show you as more collectable (paying other unsecured debts, home, cars)?

      3. There are certainly instances where you can start with an extremely low offer. But starting off negotiations with something unrealistic is a waste of time, and can lead to some reverse gamesmanship. In your situation, if you are sincere about wanting to settle, you will want to try to go from initial contact to debt resolved inside of a few weeks. These debts being judgments could still lead to attempts at wage garnishment and bank levy.

      4. You will want your settlement agreement documented. With your situation you will want the agreement to outline the judgment creditors responsibility to file satisfaction with the courts. The court record, and thereby the public record section of your credit report, is typically not going to show this type of debt as settled for less. Just satisfied. I am not sure why you would get hung up on this though. Is there a special circumstance?

      5. If you settle these now they should still fall off the credit report 7 years from date of entry, so next year as you indicate. You do want to monitor your reports to see that this happens, and dispute the entries as older than 7 years if need be.

      6. Negotiating the deal is best done over the phone. Getting the settlement outline in writing is pretty standard. You would simply request everything verbally agreed to be sent to you in writing, including the fact that the court record will be updated to reflect the debt as satisfied. You can request that be mailed or faxed to you. I am seeing more written agreements being emailed as attachments, but not all collectors do that.

      7. Typically the judgment creditors filing is all that is necessary, but different jurisdictions have their own protocols. I would run this question by an experienced consumer law attorney in order to get a definitive answer. This is also the type of procedure question that court clerks are a great resource for.

      8. It can take a month or two for the newly updated court record to be reflected on your credit report. But then again, it could take less. I cannot say what your credit score impact will be without looking at your entire report. Even then I would be making an educated guess at the impact. You can expect the recency to have some impact, but it should be negligible. I completely agree that you should look to resolve this before submitting any credit applications or applying for anything that would result in a hard inquiry.

  24. Yasmin Ahmed says

    Reading question #5, if there is no settlement offered to the creditor and quitely waited till the 7 year timeline expired, will the debt still fall of without any repurcussions, or can the creditor come after you later in life?

    • Michael Bovee says

      YA – If a debt remains unpaid for 4 years in California it passes the statute of limitations for your son to be sued. But the debt is still out there and collectable. Debts like credit cards fall off the credit report typically 7.5 years from the date of the first missed payment.

  25. Richard says

    Hi Michael,
    If a person is “judgement proof” is there any purpose to doing debt settlement, as opposed to doing a complete default. My assumption is that debt settlement would put a resolution to everything, for a cost, and alleviate the lingering potential to get sued with resulting collection judgements that could be executed in the event of future monetary good fortunes. Is this correct and are there other considerations within this framework?

    • Michael Bovee says

      Judgment proof can be short or long term. If someone is judgment proof today, but with a reasonable expectation they will not stay that way, taking advantage of early settlement opportunities makes more sense. My comment here is based on years of experience. All those files later, I would estimate less than 100 could say the money they used to settle debts turned out to be regretful because they could have simply stayed judgment proof. Judgment proof files are often better off moving straight to chapter 7 bankruptcy and discharging debts, rather than negotiating settlements.

      There are other considerations, but they are not all monetary ones. The stress and bother of collections is often left out of the equation. Debt collectors calling a relative, employer, former employer (whether violating fair debt collection laws or not), are the types of considerations I am referring to. Length of time to be approved for fairly priced credit products again are another consideration. Negatives fall of the credit report 7.5 years after the first missed payment. But a judgment 4 years from now adds another 7 years (now a total of 11) to credit concerns.

      I could actually roll through a litany of things that become part of the equation when forced to dodge debt rather than resolve it when possible. But after I reread our comment exchange on this page, I have a question for you: What happened between your first post about credit concerns, to this one about being judgment proof? I completely support what I assume is simply your having continued your research, and reaching a reasoned and logical conclusion that your credit is far less a concern than being able to provide for and support yourself. But I am curious.

  26. Richard says

    Thanks Michael, for your detailed explanation…and your question. Yes I have been doing research and trying to find the right path and I very much feel I’m doing a balancing act on this situation. I’m semi-retired and have gone through a rough patch with my business. However I do feel I have the potential to make sizable amounts of money in the future, as I have in the past. But until I get my business back on track, I will be utilizing much needed assets to resolve these debts. So I may have too many assets to think about bankruptcy but doing debt settlement will diminish them significantly. And of course, if I do a complete default thinking I’m judgement proof, will I end up getting sued for the assets I hoped to protect….which really aren’t that much.

    Yes, I have always had good credit and would prefer to keep it in the best shape that I can but I realize I can’t have it both ways. If I understand you correctly, it sounds like settlement is a faster recovery than completely defaulting, which could drag on for a long time.

    So again, I’m just trying to balance out all the apparent options in front of me….realizing that I can’t afford my current debt load, aware that at my age I can’t afford to give up needed assets and also knowing the importance good credit, even if it is not for borrowing money….

    I did do an initial consultation with your company and will most probably follow up on that….Thanks

    • Michael Bovee says

      You are going about this in the best possible way. I so very much wish more people would be methodical, deliberate, and committed to researching all of their options and getting questions answered along the way. And there are times where not paying, not settling, and not filing bankruptcy can be considered an option. But it should be viewed as a temporary one by most.

      Negotiating and settling credit card (quicker the better), will absolutely be better for your credit than defaulting and leaving debts unresolved. An exception would be if you took 4 or 5 years to settle, get the credit reports updated that far down the road, and add a 12 to 24 month recovery time afterward.

      Glad to hear you connected with a CRN specialist. They are here if you need or want one on one support, or a direct service.

  27. TIffany says

    I tried to contact ARS regarding my Chase CC account from years back. I’m currently having them deduct a small amount from my bank account each month. When I asked if there was a settlement amount, the rep basically said if i settled for less than full balance, the bank will never let me reapply for anything/work with them again. This rep said she represents Chase. Is there such thing? And what other banks do this? I want to get some stuff paid off but now i’m afraid to do settlements because of this. I’d like to buy a home in the future and would be looking for home loans from banks so I don’t want to get blacklisted or anything. Thanks!

      • Michael Bovee says

        There are a couple of debt collectors with ARS for initials. What is the full name of the collection agency you are dealing with?

    • Michael Bovee says

      Tiffany – To my knowledge, Chase Bank does not black list people from future credit products if they had previously settled a debt with that same customer in the past. I have worked with people who have maintained Chase accounts (credit cards and otherwise), while settling other Chase accounts. Even if Chase were to do that, there are many other resources to obtain home loans from when you are ready.

      American Express has maintained a black list where people who have not paid them have found it impossible to get AMEX cards again. That is the only confirmed example I can provide.

      Settling a Chase account that went to a debt collector will often mean the account was already charged off. This means the credit damage is already done. Deciding whether to settle the debt at this point should be more about affordability and cash flow, not credit reporting.

      • Tiffany says

        Thanks Michael!

        I’ve contacted ARS again and spoke to the Chase rep I’ve been working with. I’m confused because I thought ARS is a collections agency that buys out old accounts from credit card companies. But she said she represents Chase and Chase didn’t sell my account yet, they just go through ARS to try to get paid? When she asked if I wanted to hear the settlement disclaimer, she went through the whole 1099 deal and also stated that because i’m not paying in full, I will be restricted to ever get an account/loan with Chase again. Maybe this is something new? Which is fine, I don’t intend to deal with Chase again but just wanted to see if this applies to other banks and if you’ve ever heard of it. Thanks!

        • Michael Bovee says

          No problem. If that is the case it would be the first I have ever heard of Chase making that disclosure, whether through a debt collector or by an internal employee.

          Chase does assign out to debt collectors while retaining ownership of the accounts (not selling to debt buyers) more in the last couple of years.

          • Tiffany says

            Got it.. Thanks! I’ll be returning to this site for more advice if I need any in the future. Glad to have found this useful site. =)

  28. Sam says

    I was wondering if you guys deal with an outstanding balance on a mortgage after its been short sell. My remaining balance from a short sell was directed to a law firm and I have been repaying them monthly. I just got a letter from the lawyer stating that they are no longer representing the creditor and my account is now being managed by another law firm. Can I settle this debt just like a credit card?

    • Michael Bovee says

      Sam – CRN specialists can help you settle debts resulting from a short sale. They can also help you settle on your own. I would recommend calling in for a free consult to talk about your situation with one of them. Call 800-939-8357.

  29. Jim says

    Hi, I was trying to settle a bank of america credit card. Its being charged off next monday and I have been in constant contact with them. They offered a 50% settlement last week but i was unable to come up with 50%. I contacted them today and they told me there was no settlement being offered at the moment. please advise. I can only come up with about 40%.

    • Michael Bovee says

      Jim – There are instances where BofA settles for higher amounts. We tend to see people we help through the process of settling with Bank of America on your own get between 30% and 40%.

      You may not have an opportunity to settle direct with them at this point if the account is set to charge off the day after tomorrow. You may have to settle with the debt collector, or purchaser the account is placed with. BofA may keep the account for a brief period in an internal post charge off recovery unit, or with FIA card services, and settlements here can get done at 40%.

      Also, you can often get the settlement amount split up into a few payments, so if you want to get the deal done, but are a little short, the additional time to pay can be negotiated.

        • Michael Bovee says

          Jim – I would call and try to get the settlement done each day. The worse that will happen is that they will tell you the same thing. But there is a chance you can still knock the settlement down. I have seen settlements with Bank of America on the last day before charge off.

  30. Leah says

    Hello Michael, Last week I was served a summons by the office of Rory W. Clark (located in Westlake Village,CA) on behalf of FIA Card Services in the amount of roughly $4700, for a cc that was initially issued by BofA. I live in SF, CA and understand that as it is a small claims matter, I am required to represent myself if the case goes to trial. I have 30 days to respond, and in the past week have been researching to figure out where I stand and see what my options are (and stressing out a great deal). I was recently laid off, and am currently collecting unemployment; I have no savings with which to offer a lump sum except for a retirement account. From what I understand it’s in my best interest to respond to the complaint, one way or another. But first, a couple things; I have two other cards with more or less similar balances that have been in collection for several years, that so far I have not been sued for; and, strangely enough, the amount I *am* being sued for by FIA seems low, by a couple thousand, compared to what I thought I owed. My question is, if I answer the complaint, should I request validation of the debt as a defense? Or do I answer hoping the case will be dismissed/dropped if I attempt to make a case? (FWIW, their office is 7 hours away, would they really travel that far??) Also, is cashing out a retirement account ever a good idea to pay off this kind of debt? I’m 36 and have some time to build that back up. At least then everything would be a clean slate, or, perhaps then the taxes I would owe on any reduced settlement amounts would be more than I could afford…Or at that point could I claim insolvency? I own no car/property/home, and am a renter. Do I sound like a candidate for Chapter 7, considering those two other lingering debts?
    I know there were a lot of questions in there, thank you so much for your consideration in advance.

    • Michael Bovee says

      Leah – Many collection attorneys will pay a local attorney to make limited appearances. No, the attorney listed that is 7 hours away may not show, but does not necessarily have to. Cashing in a retirement account in order to settle can make mathematical sense in some limited scenarios. But with early withdrawal penalties and tax implications, there would have to be some extenuating circumstances (cannot qualify for chapter 7, other assets to protect etc.), to make sense of it. If you can simply borrow from a 401k, it can make sense for some situations, but more for someone who is very confident in their job security.

      You can defend the suit to the best of your ability and keep your options open. FIA is not a debt buyer, so some of your best defenses are not on the table.

      Chapter 7 is indeed an option. But let me ask:

      What are the balances on the other 2 debts? Who is collecting on them now? When were payments last made on these accounts?

      I ask because currently I would only consider the Bank of America account as the driver to bankruptcy. And filing over that amount is not attractive unless it came down to a wage garnishment that would create a domino of other problems.

      • Leah says

        Hi Michael, Thank you for the response. I don’t know if I would want to borrow the money from the retirement fund, since, as you said, I’m not too confident about my job security for any time in the foreseeable future. So who knows when I’d be able to start paying it back.
        The two other debts are about $6000. The Citi card is collected by Capital Management Services, and I’m not sure who’s collecting on the Capital One card. I’ve been offered settlements from Capital Management Services for as low as 25%, which would be great to take advantage of, but like I said, the only way I’d be able to do that is to cash out my retirement, which I’m hesitant to do. But the question there is, is that worse than filing for bankruptcy? And who knows if FIA will be willing to come down low enough to make it worth it. There is only about 15K in the retirement account, and after the penalty and taxes, I’m guessing I’d see about half. Is it worth the risk? It’s been at least two years since I’ve paid either one. Does it make sense to get settlement offers from all three collectors, then look at retirement fund vs bankruptcy?

        Thanks again,

        • Michael Bovee says

          Thanks for the additional details Leah. I see a couple of paths for you to take.

          Given the limited unemployment income, and no assets, debt settlement on the BofA/FIA account, even when sued, can “maybe” see an optimized savings of 50%. Lets say that you settle for 2400.00. You still have the other 2 accounts out there. Capital Management Services is not high risk for suing, but Capital One is. You said the balances on those two were similar to the Bank of America debt. Assume you settle with CapOne for 2500.00 next (as you save up money, or tap other resources). Save Capital Management services for your last settlement for about half, so another 2500. Lets call it 7500 to settle all 3 accounts. You can early withdrawal your retirement and clearly avoid bankruptcy. Should you? I wouldn’t. But I completely understand why you would want to.

          The total cost of chapter 7 would be between 1500 and 2k (national average is 1800 – but San Francisco tends to be on the high end of costs). Lets assume you you pay 2k – that’s all court costs, attorney fees, etc. You preserve your retirement fund, as most are exempt; you eliminate all unsecured debts; and all stress associated with the collections; have access to most credit products again within 24 to 36 months (access to student loans could be 3 years – FHA mortgage underwriting 24 months). You cannot file for chapter 7 again for 8 years, and may hinder some very limited options for employment (certain types of jobs would heavily scrutinize the BK).

          As cash strapped as you are, I like the bankruptcy option from a purely dollars and cents perspective. If you were not currently laid off, I would have more to add to the debt settlement comparison, and some additional monthly budget and living expense questions, but that is not the case here.

          There are always other considerations for choosing other alternatives to bankruptcy. But when there is a collection lawsuit that could result in a judgment (that can lead to later wage garnishment and bank account levies), it causes something of a time crunch for decision making. I would suggest consulting with a bankruptcy professional now, and then weigh what you learn in that consult with what you can expect from debt negotiation. You can call 877-278-8117 for the BK consult. If you learn something that would give you pause from pursuing bankruptcy, or have more questions about settling, or even doing nothing for a while (until your job situation changes), post to this comment string and lets go from there.

  31. James says

    My wife and I have a Chase Credit Card with about 4600 on it…my wife just lost her job out of the blue and we have exhausted our savings down to nothing. We are not behind on payments but barely making minimums. I was wondering if it would be possible to settle our debt for less and be done as I have already gotten rid of so much to pay off other bills and shes in a competitive field so I dont know how long we will be in this spot?

    • Michael Bovee says

      James – Settling your Chase credit card would make sense if you cannot afford the minimums. Assuming you could negotiate and get Chase to approve a settlement of, say 1800, how long would it take you to raise that amount of money?

  32. Richard says

    Michael…. I’m wondering if you have been able to collect any hard data as to the average percentage of “savings” in settling a debt at the 6 month mark as opposed to settling in month 3 or 4 after the first missed payment. Once again, looking at the cost benefit of settling quicker, possibly sustaining less credit damage and getting back on track faster versus maximum savings…Thanks.

    • Michael Bovee says

      Richard – There is little difference or benefit to your credit, or limiting the damage to credit scores, by settling just after 90 days late, or just before charge off (typically 180 days late). The credit damage from late pays comes mostly from the 30, 60, 90 day late pays. The charged off is the next hard hitting event.

      The savings from negotiating settlements at 90 days compared to, say 150 days, is stark. Several banks will not even engage in negotiations at 90 days. Most 90 day settlement opportunities were occurring at the height of the recession, and took the form of pre-approved mailed letters to delinquent card holders that met a specific criteria. Citibank did a good amount of this, Chase and Bank of America a little (but were willing to settle at 90-ish days when calling in to negotiate). You just do not see the 90 day pre approved mailed offers to settle much now. And calls to negotiate this early now often result in paying a premium of 20% or more than would have been the case had settlements been negotiated just prior to charge off, or with an outside collection agency after that.

  33. Shannon says

    Hi Michael. Hoping to get your advice on how to handle some debt I have. Looking at my credit report I have a charged of Credit One Bank card that was sold to Midland Funding showing a balance of $1300 and a charged off Capital One card that has not been sold off to anyone yet showing a balance of $2210. The last payment made on each was on May 2010. I would really like to deal with them before they deal with me ( sue me). What the best way to go about it. I don’t have a lump sum of cash. Is it reasonable to call and ask for payment arrangements with both for monthly payments? Or will they both only take a larger payment to settle on full? I really want to avoid the lawsuit. I haven’t been served yet but I have a gut ….or guilt feeling it’s coming.

    • Michael Bovee says

      Shannon – Either of your accounts could sue you (reputation of both). But both will work with you to resolve the debts, whether with a payment arrangement, or negotiating a lumpsum debt settlement, or a settlement with payment terms.

      What can you budget monthly with confidence right now?
      If you get a good settlement offer, what amount could you pool together given a month or two?

      • Shannon says

        Thanks for rhe quick reply. Unfortunately I don’t think I could pool together too much until income tax return time. I normally efile and get it back pretty quick. .so I would have it the end of February maybe. In the meantime I can afford to pay them $100 each a month. I’m scared to call and open pandoras box with them if that won’t be an acceptable payment amout. Do you think they would both accept that? Are you saying they would work out arrangements with me now….or after they served me? How long do tbey each normally allow payments for ( is asking for $100 a month on a $2200 + debt asking for too much?)

        • Shannon says

          Oops… I forgot one question. If I should decide to wait until I have a larger pool of money will there be any warning signs or notice that they are about to sue me? I know the SOL is up around May or so..but I have also read that Capital One specifically likes to wait to the SOL is near. I am not sure what the best course of action is at this point with my limited funds. I definitely want to avoid a judgment and a lawsuit if possible but I don’t have a lot of money to settle it right now. What would you do?

          Thanks for doing this for everyone! Your posts and answers have been great to read!

          • Michael Bovee says

            Midland Funding is highly likely to work with you if you negotiate 100 dollars monthly payment, or even settle for less and with payments (though smaller balance accounts in general do not settle for the best savings compared to higher balances). As far as Capital One, I cannot really comment without knowing who the account is placed with for collection. Who was it that most recently contacted you collecting on the Capital One account – whether phone calls or letters?

            • Shannon says

              Capital One hasn’t been placed with anyone yet. It was still in house. No one has called me or mailed me anything. I just know I owe the debt and that they have a history of suing so I wanted to get some sort of control over it. I actually got brave and called them this morning. I must have told them not to call me anymore a few years ago. They referenced having a cease and desist notice on my account. Anyway I called and they said I could pay $50 a month and that as longs as I didn’t miss a payment that it would remain in their office. I am still waiting to get a faxed copy of the arrangement before I make the first payment. That seemed a little too easy. Is there anything I should leary of? Can they still sue me if I am making the $50 a month payment?

              • Michael Bovee says

                Shannon – Yes, they can still sue, but I find that highly unlikely in today’s heightened regulatory debt collection climate. Most definitely unlikely depending on what that agreement letter says. Post an update when you get that letter and lets go from there.

                oh, and yes, it can be that easy sometimes:)

  34. Shannon says

    I think and hope I am good now :-) with Capital 1 atleast. I just got the arrangement letter. It says:

    Thank you for making payment arrangements for your Capital One account. As we agreed, your first payment of $50 is due by the 30th of each month beginning on 10/31/2013. Please continue to make these payments each month until you’ve paid your balance in full. You can always pay more than the amounts we’ve agreed on.

    If you don’t make all the scheduled payments as we’ve agreed, we’ll take action to collect the balance you owe us. After we receive your final payment, we’ll send you a confirmation notice.

    When mailing your payment please write your 16-digit account number on it and include the enclosed payment slip. If you have any questions, or if you’d like us to discuss your options please give us a call at the number below. If your account is being serviced by a third party agency, your call will automatically be routed to them,


    Does this all look ok to you? It does to me.. but just checking

    • Michael Bovee says

      Shannon – I would move forward on payments with confidence with that agreement. I would be sure to get payments sent well in advance of the due date. Keep that document and record of your payments in a safe place. If any other collection action were to occur, but where you have been following the agreement, post an update here. There are steps I will recommend you take.

      I am a huge fan of the rip the band-aid off approach to resolving collection accounts. Once you resolve the Midland account I would aggressively pay off this one with Capital One using all available funds (tax refund etc). Your credit will best heal once these older collections show a zero balance owed. You do not really get a credit bump from payment plans on charged off debts. But will benefit over time once the amounts are zeroed out.

      Calling Midland Funding to arrange your solution should go equally smooth. If you had previously indicated some form of cease communication like with Capital One you may need to be prepared for them to bring that up as well.

      • Shannon says


        Thanks again for your advice and support. I called Midland and got the same deal as I got with Capital One. $50 per month and then I will call back and try to settle the balance once I get my income tax return. So happy to have dealt with them on my terms instead of them dealing with me via a summons.

  35. Rachael says

    Hi Michael,
    Quick question. I have been in talks to settle my cc debt with B of A/FIA.
    The women I spoke with today said they would take the lump sum I offered at 35% of my balance.
    The problem I am having, is that they are telling me that they will not send me a letter stating this agreement in the mail. They will not give me anything in writing until AFTER I make the payment.
    How can I trust this? How do I know they are not just going to apply that payment to my balance and tell me I still have to pay the rest. Or sell off the rest. I am very leery of this. I want to see it in writing.
    They are also telling me that since it is the end of the month, they cannot guarantee that they will take the same settlement offer next month. Can you please give me some expert advice. I have a hard time sending them a cashiers check for a big sum of money without some written paperwork to back-up our agreement. They said that they do the ‘disclosure’ over the phone and they we have to “trust each other”. Just sounds so sketchy. One women told me that they don’t trust the mail service. I would really appreciate your advice.
    Thank you, Rachael

    • Michael Bovee says

      Racheal – Set aside the “don’t trust the mail” talking points that recovery specialists and debt collectors at BofA or FIA card services may use. None of that is really what is going on. Bank of America (and other banks), developed a policy a couple years ago where they do not kick the letter loose until there is a payment set up in their system. More often than not I would recommend using a check by phone direct from your account and set the date of the payment draft for a week or more in the future in order to allow time for the letter to get to you.

      They will do a disclosure call. It is recorded from their end. I recommend you record it from your end as well, and tell them that you are. If you do not record it, be sure to take good notes of what was said, by whom, and the date and approximate time of day. Those recordings will then be better identified in their system should you need to file a complaint with the CFPB for unfair and deceptive practices – if any mistakes are made with your agreement that lead to any future collection efforts by them, or a debt collector.

      Here is some more detailed information about settlement letters and getting through your concerns:

      Those letters have been getting released by BofA and FIA – as indicated – with very few issues.

      Offers do change. FIA may not even have the account next month, so now is a good time to settle with them.

      • Rachael says

        Thank you so very much Michael.
        I’m just clarifing what you mean by doing a “check by phone”- is this the same as giving them my account number and bank routing number? Like an auto withdrawal? Can it be from my saving account or do you know if they want it from a checking account?
        And in my conversation with them-I can set the withdrawal date for a future date? And they won’t take the money until then?
        I just want to be as informed as possible. I truly appreciate your advice. And will follow your recommendations.

        • Michael Bovee says

          Your debt settlement payment(s) over the phone can come from either account, using routing info etc. I do suggest using a different account dedicated to paying deals you negotiate. Read more about that here.

          Yes, you can set the payment for a future date. Just let them know you need sometime to pool the money together, and will have it in the account by xx/xx/xx date.

  36. Mary Ann says


    I’m in the same situation as many of these people. My story is too long to tell. In a nut shell, on my credit report, I see some that say Charged off and I get letters from collection agencies and some that say Account Closed ans some that say the account was purchased by another lender. I know in reading your responses, I am still responsible for the debt, and am willing to settle, even though I know each one is going to send me a 1099. My question is, can an account that’s in collections or has be purchased, specifically, purchased, charge me more than the amount that was written off? After it’s paid, even if it was settled for a lower amount, how does the Credit Card company handle that. Do they get their money from the purchaser? Do they re-record it as income? Will I now get 2 1099’s I want to get this settled, once and for all. Our other option is bankruptcy. We’ve already got the black marks on our cc report, if it can’t hurt us any more than it already has, is that the better option? If we do that, we won’t be liable for taxes, correct? Hope you can help! Thanks!

    • Michael Bovee says

      Mary Ann – When an account gets charged off, the agreement at the time of that event may mean interest is allowed to continue to inflate the balance owed. But there are also instances where “junk fees” – collectors adding fees that cannot be justified – can occur. If your aim is to negotiate a settlement for a significant savings, it may not be productive, or a good use of time, to get into how the inflated balance was achieved. That said, I can think of many files I have worked where getting to the bottom of how collection balances ballooned, in a seemingly arbitrary way, is the first thing I dig into.

      When you negotiate and pay a settlement on a credit card bill with a collection agency that is working directly for your lender, the settlement and now zero balance owed, is updated to the credit report by the original credit card lender.

      When you settle with a debt buyer, and if they are reporting to the credit bureaus, they would update the account to show settled and zero balance owed. The original credit card lender should already have been showing the debt as charged off and zero balance owed to them – so no change to the banks reporting would be needed.

      This is not to say that credit reporting always goes like it is supposed to. You do have to review everything and if things need corrections it is up to you to get that done.

      If your credit card debts were sold, the bank will get nothing from you settling with debt collectors on those accounts.
      If you negotiate your settlements with collection agencies working for the banks, the creditor will get paid, and the agency gets to keep a portion of what they got you to pay.

      Banks are required to follow accounting principles, so if they charge off a debt and record the balance as a loss, but later are able to recover some or all of that money, they would have to account for that.

      You should not get 2 1099c’s for the same account.

      Comparing settlement to bankruptcy is something best done when you have all of the facts about each path. I can help you understand the benefits and drawbacks to negotiating the debts down if you post a comment reply with the following info:

      Name of original creditor; when account last paid; who is collecting now; approximate balance owed.

      In order to truly evaluate bankruptcy you should consult with a pro. You can call 877-278-8117 for a free consultation and determine:

      Whether you qualify for chapter 7, or would have to file chapter 13.
      If chapter 7 is an option, are there exemptions you do not meet that would make negotiating the debts a better alternative.
      If filing chapter 13, are there benefits you will realize that you cannot from settling on your own.

      You are correct – 1099c’s and forgiveness of debt are not an issue when discharging debts in chapter 7, or when a portion of debts are discharged after completing the 3 or 5 year chapter 13 repayment plan.

  37. sarah says

    Hi Michael,
    I have a personal Student loan of about $20,000 from about 4 years ago that is in default and has gone to collections. I have so many different student loans that this one, even though its a big one, got missed. I would like to try and settle it, how much do you think they would settle for?
    My husband and I would like to buy a house within the next year but need to get this off of our credit.
    Thank you!
    Sarah S

  38. ed says

    Hi –
    Like many others did when the real estate market was hot, I opened a Heloc line of credit. Using much of it to complete the home we built and a lot more when I had loss of income and my wife had cancer, we are now not only underwater on the HELOC, but almost so on our original mortgage. We are current on original mortgage.

    As we sought out uninsured cancer treatments, I had to prioritize paying other things, and stopped paying the underwater HELOC. It was charged off in March, collection attempts were made by the lender (RBS/Citizens Bank) for a while, then it was assigned to an out-of-state law firm for collections. I had little contact with them, and they have now assigned the debt to a law firm in my state.

    I’m not worried about them foreclosing on an underwater HELOC, but I am concerned about being sued.

    Question: I read somewhere that a junior lender cannot sue in leiu of foreclosure in most states. Is that true?

    1st mortgage $350,000 current
    Home Value $375,000
    Heloc $90,000
    Last payment 08/12

    I am hoping to settle this and have read of a lot of people who have settled for 10-20% of the Heloc debt. I might be able to raise this amount by borrowing it. I just received the dunning letter from the second law firm.

    Question: Should I approach them to settle, or should I wait until they contact me?

    • Michael Bovee says

      ed – You are on the front end of what I expect will be a consistent theme regarding HELOC affordability for the next few years. Banks are going to develop more SOP for loans like yours, and beyond the standard mortgage work out and foreclosure prevention plans. Here is a recent piece about the larger issues:

      You should consult with an experienced foreclosure defense attorney in your area about the frequency and risk exposure for a second suing to collect in lieu of foreclosure. You want feedback from someone in that trench. Post the name of a nearby larger city and I can email you contact info to attorneys with the experience you would look to speak with.

      Settling a Heloc is very doable. Some settle for the type of savings you read about, some don’t. Who is servicing the first? Are home values in your area showing value appreciation? If so, by what amount, and when did that trend begin?

      Does the attorney letter you received reference any other company than RBS or Citizens bank?

      • Ed says

        Thanks, Michael for your very detailed response.

        I read the article you referenced and do agree that this is a huge issue that has not yet been properly addressed. I’m not sure if I fall into the same category since my loan has been charged off for about 8 months already.

        In regard to the questions you asked:

        Rbs/Citzens is the only one who is listed on the letter from the Law Firm.

        My first mortgage is serviced by Chase.

        Prices have appreciated in my area by about 7 % in the last year, a trend that started in 2012. They seem to be leveling out, but are expected to grow 2% in my area according to Zillow. My home might actually have around $50,000 of equity by now.

        I live in Chicago and would appreciate if you would indeed forward the name(s) of an experienced foreclosure defense attorney.



        • Michael Bovee says

          Ed – I sent you an email with contact details to several attorneys in the Chicago area. Any one of them would be able to advise you on your issues. Some will undoubtedly have professional experience in dealing with RBS and Citizens bank HELOC’s, and probably the attorney trying to collect on the HELOC too (if you are dealing with a seasoned collection attorney).

          The separate servicing from the first mortgage to the HELOC can make settling a little easier in some cases.
          Price appreciation metrics can matter, but not all collectors take a sophisticated approach using that data.

          It would be great if you posted updates as you progress through this. Other readers can benefit and learn from you.

          • edmarks says

            Thanks again, Michael –

            I did receive the list of attorneys, contacted 3 of them and connected by phone with one of them. He believes that the collector/law firm can sue for breech of contract and they would probably “get around to it”. For now he said what I was doing was the best thing.

            What I’ve been doing is that I reached out to the collector law firm and made a settlement offer of around 10%. I talked to two agents there. The first one just took my offer and said that she would submit it and that if I didn’t hear from them in a couple of days to call them again. I didn’t hear from them so I called them and spoke to another agent who said that they would need financial information from me in order to consider any offer less that 95%. I wasn’t comfortable with that so I politely terminated the call.

            I’m hesitant to provide financials for 2 reasons:

            1) I have a decent income which believe that is all that the collectors will look at. BUT, because of my wife’s cancer I have huge debt. I don’t think submitting my financials will help my case but hurt it.
            2) I don’t trust the collectors to not use the information they get against me in some way. It’s like I would be allowing them discovery without any guarantee that they will approve my settlement offer anyway.

            Instead, I wrote a letter requesting that the law firm verify the debt (it was within 30 days). I realize that I had made an offer and that might be construed as an admission that I owe the debt, but I never did say that I agreed with the debt, and in fact had stated that I disagreed with the amount. I’m hoping that by doing this I will be able to find out if they have anything like the original contract, or if they are just working off some statement they got from the previous collection law firm.

            I’m writing all this because you had asked met to let you know about this process so others can learn from it and to see if you have any additional feedback or advice for me at this point.

            • Michael Bovee says

              ed – From what you have shared so far, you appear to be dealing with a debt still held by its originator, not a sold debt. The attorney that has the account, if working for the original creditor, will not be working from an excel sheet containing only the most basic of information. The attorney should have no trouble getting the needed info to validate this debt, and will have instigated that process after having received your request.

              I think you may benefit from some help with strategics and implementation. Call in and talk with a CRN specialist at 800-939-8357 for some good feedback on negotiating and settling from here.

  39. stephanie says

    Michael, what’s a good source to find out how much i owe in collections? Not sure how much i owe. I do know i owe about 6k for two usaa loans. What’s a good settlement for usaa?

    • Michael Bovee says

      stephanie – What other accounts do you have in collection besides USAA credit cards? How long ago was it that payments were made on those debts?

      Your credit report is the first place you can look to in order to establish a base line of what your collection balances are. You can also call your original creditors and ask about the balances, and who they may have the account out to collection with, or who they may have sold your debt to (if sold). Any calls that result in connecting you to an agency, or the creditor themselves wants to start talking about settling, or negotiating payments, just let them know that you are still struggling financially, and cannot commit to any type of path to resolve debts quite yet, but are just gathering information in order to formulate a plan.

      USAA settles for 40% or a bit more. Sometimes lower if the situation is right. What types of accounts are you trying to negotiate with USSA? Do you have other loan products or bank accounts with them?

  40. carol says

    Dear MIchael, I sent you a long letter last night. I know you got it because a lawyers name showed in my e mail today. I ‘ve been looking for my letter and some advise on your site and don’t see anything. The lawyer you recommended is like an hr away. I see you answer people, I was hoping for you to advise me also. Thank you, carol smith

    • Michael Bovee says

      Carol – I posted a brief reply to your comment and questions about Cach that you can read here. If you want to be notified by email when someone replies to your comments, or when a new comment appears on a page, you need to check the box to subscribe to comments, or subscribe to the RSS comment feed.

      The attorney contact information I sent you is what I found closest to you for someone with debt collection defense experience. You should call and consult with them, and if distance is an issue, ask for a referral to someone with that same level of experience nearer you. Few attorneys are experienced with debt defense. Those that are tend to be a pretty close knit group and know each other.

  41. Bill says

    I just set up a debt settlement with FDR and I am anxious if I have done the right thing. My situation: $135,000 in credit card debit ( 5 cards : BOA, AmEx, Chase, Barclays). It has build up over a 10+ year span and has reached a point where it is no longer manageable and I can not handle the monthly payments. Balance transfers and relying on a big quarterly bonus is not working anymore. I researched my options and decided on debt settlement using Freedom Debt Relief. Putting in $1698 per month for 53 months. I had never missed any payments or been late. I stopped payments in Dec 2013 to the credit card companies. I hate the idea of not paying my bills but I have to think of getting this behind me for my kids sake.

    • Michael Bovee says

      Bill – Do you have any specific questions I can answer about your situation? All I can offer is my general feedback based on what you shared so far, and that is – Make every effort you possibly can to set aside more money much quicker. 53 months to settle credit cards like yours is just too long of a debt settlement plan. That type of debt relief program would be more consistent with credit counseling.

      • Bill says

        How much more do you suggest? I may be able to add more to it in the next several months. And should I add it to the Escrow Freedom Debt relief set up. Did I make a mistake choosing Freedom Debt Relief – should I have gone to an attorney?

        • Michael Bovee says

          Bill – Add as much money to your set aside account (escrow/other) as possible, and as often as possible. If you are working with a settlement company like Freedom Debt Relief, than yes, deposit into that account. The settlement company needs to know you have the additional money as soon as it is available. That way they can target the next credit card debt to settle.

          Freedom settles debt every day. More than any attorney I am aware of. If you need an attorney in order to settle debt, it is generally when you have been sued, and not necessarily then if the goal is to settle the account.

  42. Dung Le says

    Can anyone explain to me? I am a married independent taxpayer. Although I am married, my husband never support me financially. So, in 2010, I borrowed money from 2 banks for schooling about $15,000. From 2010 to today, sometimes I got job. Sometimes I lost my job. But I have paid the debts down. When I lost my job, I wrote letters to them to tell them I am able to pay at a reduced amount given by my mom from the other country. So, i have paid them down to $5,600 (for both credit cards). Last year, I had 5-month contract jobs and I earned around $25,000. Two banks said that they will send 1099-C to me. Now I have been unemployed for 6 months. Can anyone please tell me whether I have to pay anything to IRS? If they send 1099-C, will I have to continue to pay them? What if I have enough money from my mom to pay off, should I tell them not to send 1099-C to me?

  43. Judy says

    I’m trying to help my fiance clean up his credit. His credit went from good to bad when his wife passed away in 2004, his health declined and his business went under. He lost his health insurance and in 2011 i found myself taking him to emergency at USC Medical the outcome a triple bypass.
    He is now on Social Security Disability and Medi-Cal. His benefits are only $1,000.00 per month and family is helping him with his house payment. I help with other bills as well.
    He has so many past due all have gone to collections even one has a judgement. I have power of attorney and called the judgement one and they would not talk to me even when i offered to pay half of it as full settlement the girl was rude and no. They tried to collect from a bank acct. he did not even have. I filed paperwork back to the court that no money can be collected from any government benefits whatsoever. They tried to collect again and so I re-filed again some kind of exemption amount which exceeds the debt anyway. There are duplicates on his credit report one from the credit card company and another from the ones they sold it to.
    He has tax liens 3 of them from LA County, Ca. Its a mess. Im afraid to call because I dont want to start statute all over again. There are some he does know at all. What do I do first?
    We have no money to pay these completely off but I can come up with something.
    Some say ”charged off” and sold to another company. Is this worth pursuing is it too far gone?
    Thank you

    • Michael Bovee says

      Judy – Who is collecting the judgment debt? How much is it, and when was the judgment entered?

      Duplicate entries on the credit report are standard. The original creditor may be appearing with all the late payments leading to a charge off. But if the creditor sold the debt they should be reporting zero balance owed, and the debt collector who may later report would report the balance owed to them.

      If your only goal is the credit reporting aspects, than it may be worth negotiating and settling the debts. I can offer better feedback when you respond with answers to:

      How long ago was it that each of the outstanding debts stopped receiving payments?
      What are his credit goals for the next few years?

  44. Kim says

    We want to offer a settlement on 2 credit cards that we have, due to unfortunate circumstances life has thrown us the past 3 years. We have never been in a situation like this before and would like a bit of advice on getting these cards settled.

    1) We owe Capital One 5056.00. The last payment we made was September 7, 2013 for 115.00. Prior to that we had not made a payment since May 2013. The account has been charged off and is with First Source Advantage. They are servicing the debt for Capital One and have not bought the debt. I talked to a representative today and he sounds like he
    would like to settle as much as we would. I told him I would call him back after discussing things with my husband. He offered us a settlement for 4046.00. That is approx 80%. I told him there was no way we could do that because we are gonna be using our tax refund. He told me for us to come up with an amount and he would run it by his supervisor. He asked if we were prepared to get this thing settled this month if we come to an agreement and I told him we were. I was hoping to settle for more on the lines of 25%. What do you think?

    2) This credit card is Bank of America. We owe 12,500.00 on this card. It has been charged off and now Northstar Location Services has the account. I don’t know if they are servicing it or if they have bought it. We have not made a payment on this account since June 2013. Any advice would be appreciated….

    Thanks, Kim

    • Michael Bovee says

      Kim – I reviewed a Capital One settlement for less than 50% last week. But I just do not see enough of them to encourage anything less than 50% as a realistic target. If you offer low to start, and are prepared for the 50%, you are in better shape. Just try to avoid a situation where you go back and forth 5 times in 5% increments if 25% is turned down, and you have to get to 50%.

      On the Bank of America settlement with Northstar Location Services, is BofA showing a balance still owed on their credit report trade line, or does it show zero? Is Northstar Location services on your credit report? If not, is anyone else reporting? I generally target BofA accounts for 40% settlements, but still see enough come in under, or at 30% to suggest lower targets are still realistic too.

      Answer those questions and lets go from there.

  45. Chris says

    I just settled a judgement but I am getting the runaround on who notifies the court that this has been satisfied. I went to the county clerk and they said the plaintiff (debt collector) must notify the court. The collector says I do. I cannot get a straight answer. Any thoughts?


    • Michael Bovee says

      Chris – Can you offer more details?

      Who was the judgment creditor? The attorney you settled with? How old is the judgment? Do you have any documentation outlining the agreement you made to settle?

      • Chris says

        Palisades Collection. Settled with Fulton, Friedman and Gullace. The judgement was made in 2007. As far as docs, they would not give me anything until I agreed on a payment. I sent them emails that they would not respond to. So I had to call. I did record all the calls though. They sent me a copy of the release of Judgement that their attorney drew up. That was January 10, 2014. But as of today it has not been recorded to the county clerk.

        • Michael Bovee says

          Chris – It is common for Fulton/Friedman/Gullace to file the satisfaction. I would expect that to have happened after a month, but have had some files take 60 to 90 days too (even one that took much longer). You can file a motion with the court too, but I would encourage you to talk with an experienced consumer law attorney in the area about that first. If you want a referral to one let me know the name of a large city near you.

  46. Holly says

    Hello Michael,

    I have about $45,000 in credit card/personal loan debt. My minimum monthly payments are about $1,250 and all accounts are current at this time and I have not been late except for a couple of times that I paid a day or two after the due date. Unfortunately, my circumstances are about to change drastically – my income will be decreasing about $800 in the next couple of months due to losing some extra work I’ve been doing (the man I’m doing the work for is retiring), and on top of that, my expenses will be increasing because a member of my household that has been contributing to those expenses will be leaving soon. It won’t be long before I can not longer make those minimum payments. I’m wondering what’s the best option for me. Should I go ahead and contact my creditors and let them know what’s going on and see if they will accept some sort of settlement? The problem with that is that I don’t have any cash to settle with and no way of coming up with it in the next few months. The only thing I could do is make monthly payments. My creditors are Discover, Capital One, Chase, and American Express. I do have a few smaller department store/gas cards that I could probably pay off in a few months. I don’t want to file bankruptcy, but if they won’t work with me, I don’t see what choice I have. And I’m a little nervous about using a Debt Settlement Company since I’ve seen so many bad reviews. What do you suggest? Do you think it’s possible that any of those creditors will work with me to get to a monthly payment that I can afford? I’ve been trying to find ways to increase my income, and I hope that will happen, but I have no idea if or when it will, and I don’t want to go into default and start having them call and harass me and adding to the stress. Any advice is greatly appreciated!

    • Michael Bovee says

      Holly – Discover is the only credit card you have that has shown any interest in reducing both the balance and the payments. And that has always been on a limited basis – more like a pilot program – and for those who qualify. You may not.

      Other than that, you are looking at credit counseling to reduce the monthly payments. Best case scenario there is 765 a month for up to 60 months. But that rate is reserved for severe hardships usually, and probably not a realistic thing to expect from all of your creditors, so assume an estimated monthly payment of 945.00. The best way to get a direct and accurate quote would be to talk with a credit counselor. Its free to call, so take that time. At worst you walk away far better informed, and will know why you ruled it out, and why you are then limited to bankruptcy or settlement. Talk to a counselor at 888-317-8770.

      If you are adverse to creditor and debt collector calls, settlement is not a great option for you. You could hire a firm, but that will add costs to the process that you can do on your own. Not everyone wants to do this on their own, so one on one coaching could help. If you want to know more about the program I developed for CRN members to do that, call and talk to one of the specialists I work with at 800-939-8357.

      Hiring a full fledged debt settlement company is not that big a deal, just do it with eyes wide open. If the company does not charge advance fees (as most don’t any longer as a result of federal law changes in 2010), they cannot get fees without earning them first.

      You also owe it to yourself to full understand bankruptcy, and that is not a good idea to do just from online review of the process. Consult with an experienced BK professional in your area. If you can qualify for chapter 7 without giving up too much, it will trump all other options.

      Please post comment updates to this thread as you progress. Post questions, get answers, estimates on settlements with those creditors etc.

  47. Richard says

    Hi Michael,
    I’ve successfully settle two of my accounts with the help of your team. I’m working on the last one and
    wanted to get another point of view. This one is with Citi Bank with the current balance at 24K. There are 2 weeks left before charge off. Interestingly, they have never once called me about this account, though I have been checking in with them every month.

    I initially offered a low amount (5K) 2 weeks ago in order to see what they would come back with, which was 50% / 12K. I submitted a 7k offer last week but they were still holding tight at 50%. I was told on the phone that $345 would stabilize the account for another 30 days and that I might get a better offer in that next billing cycle. I asked if the $345 could be used towards this settlement even though a deal was not in place. I was told it could be and I made the person repeat that for the recording!

    Due to my funds, I need to be more at 40%….. 50% is not totally out of the question, just much more difficult. So my questions are:
    1. Do I stand any chance of getting below 50% pre charge-off? If so, is it best just to make a 40% offer in the final week or is there another option?
    2. If a 24K amount charges-off are they more likely to give it to a lawyer rather than a collection firm? If they lawyer-up will I be kicking myself for not taking the 50% deal and end up with a larger problem.
    3. Is the $345 “stabilization” payment, in the hopes of a better deal next month, worth considering or is this merely a red herring they’re using?
    One last note…I would much prefer to avoid a charge-off / R9 ending up on my credit report.
    Thanks for all your help so far. My CRN specialist has been fantastic.

    • Michael Bovee says

      Richard – I am glad to hear you are working through the debt relief program with some coaching from a specialist. That ongoing professional support really makes a big difference.

      I would be inclined to offer up to 45% leading into the last week if it is something you can fund. If you cannot do it financially, it is what it is. You can circle back with a similar offer once you know where the account lands. Don’t get overly hung up on charge off trade line reporting. You have other accounts that went south in order to settle, so the cumulative affect hammered your credit. If you settle this last large balance with Citibank in the first collection bucket, and get it to show zero balance owed on the credit reports, your recovery time credit wise is not going to change much.

      Once a collection file is placed with an attorney who regularly sues in order to collect, and depending on how collectable you look, you could certainly look back at the 50% offer and wish you had jumped on it. Do not let that response coax you to the offer on the table if that is not something you can manage with confidence. There are three buckets that creditors drop charged off debts into. The lawsuit prone collection attorney is one of, and the smaller of the three. It is just a reality of collections.

      • Richard says

        Thanks Michael,
        So bucket one is a collection service ,with the account still owned by the bank. Bucket two is the attorney…..what is the third bucket??

        Currently my income is from Social Security and a pension and I don’t currently own any property. There are a couple of non-retirement accounts that have what I consider a modest amount of money in them. I assume an attorney would not be able to access info about those balances without a court order. I would think I’m not that collectible but does the prospect of a 24K bounty make it worth their while to try and get a court order.

        What were your thoughts about the “stabilization payment” scenario I mentioned above.


        • Michael Bovee says

          The other bucket is the one creditors sell their debt into. Debt buyers are investors that purchase the legal rights to collect on unpaid bills. It is a volume business, as far, far less than half of the accounts purchased, will ever see a dime return.

          The stabilization payment referenced by Citi bank collection is not a scam, per say, but it can (not always) buy you a months time from your account meeting one of the buckets. I generally have encouraged this only when needing the extra weeks to gather additional funds to settle an account.

  48. Jessica says

    Hi, my name is Jessica and I have actually paid my debts in 2011. I started receiving letters from a collection agency requesting payment from me and I keep calling them and telling them I have already paid the bill. my problem is that I never received a final receipt from the collection agency whom I paid in full. I have tried to call the agency but their # is disconnected and now I have no way of getting that specific letter. I do have the initial letter stating what I was to pay and when and I have my bank statements showing the payments. what can I do in this situation?

    • Michael Bovee says

      Jessica – If you are confident of the deals you made, and given the documentation you have being sufficient to back you up in a he said/she said match, you could send a brief request to cease communication to these recent debt collectors, and include a copy of the debt settlement offers, and the proof of payments made prior to expiration. Send out certified mail return receipt requested, and keep a copy of all you sent along with the green return card you get back in a safe place. If you are contacted again after you know they received your letter, post an update and lets go from there.

      At least… that is what I would be likeliest to do.

  49. Richard says

    Hi Michael,
    Just wanted to followup on the above post regarding the 24K Citi Bank account. It’s now within one week of charge-off and I called to make a higher offer at 40%. The person I talked to, who said she was a supervisor veteran, told me that a new offer could not be submitted in this same billing cycle that the other offer had been submitted in. She refused to try it saying the result would be the same – 50%, claiming that was an exceptional offer. The only way I can submit a new offer is by making a stabilization payment to to buy 30 more days to prevent charge off. Then I can make the offer in the new billing cycle. It had been suggested I may get a better offer in the following month.

    One issue with this account, aside from it’s size, is that I borrowed 4500 on it within the last 12 months. The account is very well seasoned but I’m wondering if that will make it difficult to get below 50%.

    Any thoughts????

    • Michael Bovee says

      Richard – Creditors do come up with strange policies. Another large bank will not honor any counter offer if there was a mailed offer with an expiration date… until after the expiration date. Citi is one of the more process driven banks when it comes to internal recovery practices. That said, I do think that the 50% is more (or all) related to how your account is flagged. Here refusal to try is what I find the most consistent with this observation.

      I am skeptical of the stabilization payment as it does nothing of the sort. Only bringing the account current, or agreeing to payments that reage, would do that in a banks view.

      I am sure you understand what it means to have citi drop the account into one of the three collection buckets. It boils down to cash flow and/or risk reward in a situation like this.

  50. Richard says

    Thanks Michael,
    The “stabilization” payment was their idea to buy more time to see if a better offer might come forth in the next billing cycle. They did say that that payment could go towards a later settlement agreement.

    Do you think this is a wasted effort on my part and that I will likely end up with the same offer next month…or is there any potential to this. Would I have better chances in 1st tier collections?

    Thanks – Richard

    • Michael Bovee says

      Richard – I think the chances of getting a 5 to 10% better settlement after citi drops the account into the collection pipeline are better than negotiating that same outcome with Citi. The problem here is that settling direct with Citi removes the risks associated with aggressive secondary collectors. What I think we are really talking about here is the price of that.

  51. Shannon says

    Hi Michael,

    How familiar are you with LHR? I have made arrangement on most of my old debt. The last one lingering is an old First National Bank – Legacy Visa that I had. The last payment was made on 5/25/2010 ( and I live in Texas) so I think the statue of limitations is approaching. My credit report shows a balance of $780 to LHR for this. I am not in a position to pay it all off… and I am wondering if I leave this one be or if they have a history of suing not. They have not contacted me lately. I think a year or 2 ago they sent a little..but I am not 100% of that. Would love to get your thoughts on what you would do.. and what you know about them.

    • Michael Bovee says

      Shannon – I could better put this in perspective for you, using my experience, if I knew how prepared with money you are to settle, and what your credit goals are in the next, say 24 months?

      • Shannon says


        The immediate goal to make sure I don’t get sued: -) I would love to clean up my credit over the next year or two but paying them even half now probably isn’t an option since I have recently started paying on a few other old debts. My plan was to pay off the ones I am working on now and then try to call LHR and negotiate with them. If there is a chance they will sue me before the statue runs out I could borrow the money from family….but I really really don’t want to do that unless I have to. I can probably pay them off in 6 months or so. How does the statue of limitations work on credit card debt in Texas? Is it 4 years from the last payment or 4 years after it was charged off? What are the chances LHR will sue over $800?

        • Michael Bovee says

          Shannon – Lewis Hastie Receivables, or who ever they may be collecting for (if not themselves), has probably started contacting you again due to your comment about getting other bills caught up, or negotiated and settled. I do not think LHR is likely to sue, but people are sued for these lower dollar amounts, so it is a legitimate concern.

          If you get relief from other debts that are more pressing, and approach LHR with your settlement offer in 6-ish months, you will probably be okay. But I am all about getting this stuff knocked down as quickly as possible, so would encourage you to consider all of your options to take care of the remaining debts like this as soon as possible.

  52. Rony says

    Hello Michael,

    I have 4 medical bills that are there on my credit report, which were a result of doctors visiting me while i was hospitalized in 2009 for illness. The hospital charges were waived off as i was a student, but the charges for personal visits by doctors were billed to me. I was unaware of these bills and now my credit is bad. I have some money saved and want to settle and close these accounts by making a one time payment. How do i negotiate with these collection agencies.
    The 4 accounts on my credit report are as follows:-
    a.) CAC FINANCIAL CORP (800) 319-2676 – $563
    b.) I C SYSTEM INC (888) 735-0516 – $500
    c.) NRS/RECEIVIA (800) 776-4600 – $892
    d.) GULF COAST COLLECTION (877) 827-4820 – $399.
    What are precautions and safeguards to take while negotiating with them.
    I want to negotiate a settlement and pay it off.What are precautions and safeguards to take while negotiating with them. My credit score is 540 and i really want to make that good, but don’t know how. I do not have any credit cards nor do I have any other debts.
    Please advice me. I need help.


    • Michael Bovee says

      Rony – Before I go into particulars with my feedback, what amount of money do you have to put toward all of the settlements? And when you say you have no credit cards, are you saying you have not established any type of credit in the past?

      • rony says

        Yes I havent had any type of credit in the past. I contacted one of the collection agencies. They agreed to a one time payment of $337 to close an account that orginally was $563. But they just want me to write a check or pay it asap and are not ready to give it in writing. The total amount of all the 4 accounts put together is $2354. I want to have all these accounts closed . Please suggest me what should i do.

        • rony says

          I have saved some $1200 for this purpose. But if it is settled at a lower amount then that will be great. I am a student and struggling with this.


        • Michael Bovee says

          You are going to be contacting them one by one to negotiate the settlement, and probably real similar to what you experienced with the debt collector you reference above. Be ready to pay as much as 70%. You will want to wait 30 to 60 days to have any debt collector reporting to the credit bureaus update the account as paid. If they are not updated by 60 days after you paid the settlement, post an update and lets go from there.

          You can use some of the tips I outline in the video on this page for negotiating with debt collectors:

          Read over this report about getting your settlements documented. In a pinch you can record the call and agreement made over the phone. Just let them know you are recording the call and why. You want to cover the same elements in the phone call that I cover in the linked report. Keep everything, including any recordings, in a safe place.

          Post questions in follow up comments as needed for feedback. Once you are done, it will be time to talk about how to establish credit. Having none will keep your score low too.

          • rony says

            so should i send them the check by writing across as paid in full. Or should i call them again to get at least some written assurance or what. I can follow your tips with other debt collectors. the lady i s poke to did not let me talk and hung up after saying that i have until 11th to pay it. So what should i do now.

            • Michael Bovee says

              rony – I would not count on a memo section of your check saying paid in full. If it were me, I would try for a written agreement, and record the call with the collector as an alternative (I would tell any collector I am recording the call and why even if in a “one party state” – but that’s me). If they hang up on me again I would circle back and deal with that account after I dealt with all of the rest. If any of the debt collectors at that place still have a bad attitude, I would consider finding a guy like me to tell my story to on and off line :) so a guy like me could write about the collection agency, and the specific collector, and the billing company/medical service provider – all in an effort to prepare other consumers who may have to deal with them, and for training purposes….

              • Rony says

                Hey Michael,
                I called a couple of them and all of them are ready to provide the letter stating that the account is paid in full, only after i make the complete payment. They say they will send out a statement only after they receive the payment. I am not sure how to get them to send me a document stating the terms of settlement before the payment is made. What do I d now?

                • Michael Bovee says

                  Call them all and record the conversations, making sure that all of the issues I cover in that article I linked to above in our comment string are past of the conversation. Let them know you are recording because they will not release a letter with the agreement details prior to payment. Keep the recordings and the letters they send later in a safe place.

                  Post about hiccups you experience if any occur.

                  • rony says

                    Hey Michael,

                    I know this might sound silly but none of the apps i have tried can record calls. I’m in Florida. So i haven’t had success in doing as advised by you. Can you suggest something please.

                    • Michael Bovee says

                      rony – You can use some older technology and land line using some items you can pick up from radio shack. Do you have access to a land line?

                    • rony says

                      Hey Michael,

                      I do have land line, but it is majic jack(internet phone). I am not sure how to make use of that to record conversations. I called the toll free settlement number of this website to get help with negotiating debts,but was told that they don’t handle a small amount as $2400. Can you please guide me on what to do next in regards to the settlement and documentation of negotiating process.


                    • Michael Bovee says

                      rony – I think you can set up a google voice number and record with that. I am not familiar with magic jack to know if the little 12 or so dollar devices you can pick up at Radio Shack, to record using a regular desk top phone, will work or not.

                      If you want to talk about getting someones help who will work on accounts this small fill in the consult request on the right side bar on the site. I get those and will forward to Steve (CRN specialist for years). You guys can connect at a time that works for both of your schedules.

                    • Rony says

                      Hey Michael,
                      I did fill in the consult request which you said will be forwarded to steve so that someone can work on my accounts and negotiate settlements. I still havent recieved any call or email from anyone. can you please help me resolve this as my credit is hurting bad.

                      Thank you,

                    • Michael Bovee says

                      Rony – I did find the form you filled out. I missed sending it to a specialist somehow. I sent it to Steve, who you should now hear from. I will call him to bring the email I just sent to his attention as well,

  53. Richard says

    Hi Michael,

    Regarding the Citi Bank issue that is posted several times above:
    They had made a settlement offer of 50% and would only snail mail an agreement letter. I was right up against the charge off date but I didn’t want to give them any money without first seeing that letter. Therefore, I made a “stabilization payment” to delay charge off for another 30 days, with the hopes of getting a better offer early in the next billing cycle and to get a full 90 days to make the final payment, plus to allow enough time for the letter to arrive in the mail.

    This all backfired on me. I called today to submit new offer (which I believe is mandatory for them to spit out a number) and they raised their offer to 65%. I asked to speak with a manager. He told me I could try again and that the deals can change day to day. This contradicts what I had been previously told which was that the offer probably would not change within the same billing cycle. I can’t afford 65% so I’m not sure what to do at this point.

    Any thoughts??

    • Michael Bovee says

      Use an end of cycle strategy where you know their policy is to let the account go, and be prepared to settle without any delay. Record the call if you hit the settlement number you are shooting for, but cannot wait for the written agreement to arrive. Tell them you are recording and why. Save the recording and proof of payment. If the letter never comes, and you have them saying they would provide one in the recording, post an update and lets go from there.

      You also will have an opportunity to negotiate a settlement with whoever Citi bank places the debt with for collection. You need to be able to let go of trying to get this all done with Citibank if they are not going to agree to an offer you can afford to pay. It is okay, and more common actually, to settle with debt collectors.

  54. Steve says

    I made a very naive mistake a few years back and lent my card to a family member. I live in NY, they maxed it out an AMEX at about $10,000.00, maintained it as long as they could then defaulted.
    I’ve been dodging a lawyer about it for a while. Recently, I had a few unexpected knocks on the door, (I didn’t answer) so I believe I’m being served a complaint or summons.
    I have a bank account, but don’t make regular money, I work freelance. But I don’t want them getting a default judgement and freezing my account nor do I want his thing hanging over me forever. I have other cards that are well maintained though.
    My plan A, so far is to try and see if there is indeed a complaint or summons pending and to answer. Just try and make them prove I owe anything at all. Then if they don’t drop it, or I lose, my plan B is to just file Chapter 7. Plan C is see if I can lay my sob story out for the court and try to get it lowered or dismissed. Not sure if this is a good idea.
    In the end, I simply can’t afford to pay for this thing, I barely get by as it is. I realize I might lose by having broke the contract already by lending my card. And so you know, the person who charged up the card is not abel either to reimburse me. How can I unwind myself from this?

    • Michael Bovee says

      Steve – Plan A will buy some time, but there is little to argue with AMEX about proving the debt. They do not generally sell debts, so it AMEX suing, and they have all the documentation to prove the debt.

      Plan B will put this to rest quickly, as well as any other debts that are unmanageable.

      Plan C is a nonstarter. You can pluck a few cords in court, but it will not change a thing. The court is not there to determine whether a debt is affordable in this situation.

      Talk to an attorney about the benefits and drawbacks of chapter 7 bankruptcy, and how that applies to you.

  55. TY says


    I have a 2nd child on the way and want to clear out all my old debt before baby is born. There are 2 accounts where I have huge balances that I can’t afford and was thinking of negotiating a settlement instead (which I know they’ll knock off a huge huge chunk off of..about at least $6000) but a friend of mine said I shouldn’t do a settlement because it doesn’t look good. I mean at this point, my credit is bad already..both accounts are to stay on my report until October 2016 and March 2017. There’s no way I can afford both accounts.

    I guess my question is: does a one time settlement make any difference on my report versus just paying monthly until it drops off after 2016 and 2017 (and stop paying after it drops off)? And what happens if I don’t pay both accounts? Can the bank i owe decline me from ever opening an account with them or will they not be able to see that I had this debt with them 7 years ago? I’m asking because in case I want to get a home loan in the future. Thanks!!

    • Michael Bovee says

      TY – Have you already stopped paying these accounts? If so, settling would be better for your credit than having unpaid debt on there. What credit would you expect to apply for (home loan, auto, other) between now and March 2017? How soon is the future you reference above?

      Paying collection accounts the full balance using long term monthly payments is not as good a plan as settling with them and getting it over quickly. Paying accounts that are still with the original lenders, even if you have been late a time or two in the past (30 and 60 day late appear on the credit reports), is the better way to achieve your credit goals, but takes longer in order to get your income and expenses aligned with affordability.

      Post how late you are with payments, and who the creditors are, and lets go from there.

      • TY says


        I’ve been making monthly payments to these collection agencies since about 2012, in very small amount automatically deducted from my account each month. Some were paid off, some settled…i have about 3 more small ones that I can pay off easily in full and the 2 large ones mentioned where i would have difficulty paying in full. The 2 big ones are Citi and BofA. All of these accounts went into negative back in 2009/2010 after something happened in my personal life. So they’re pretty old and not with original lenders anymore.

        I don’t intend to take a loan with my significant other until probably all that has dropped from my report..possibly in 2017 but if i could do so earlier, I would like to (home loan). I am aiming to have all these closed by the end of this year so that my credit score can take 2015 and 2016 to slowly recover (if it will at all, since they’re all technically still on my record). Most of my negative records will drop by the end of 2016 (and 2 in early 2017).

        • Michael Bovee says

          TY- Thanks for the additional details TY. Now that I have a clearer picture, I would suggest settling the Citibank and Bank America accounts. The target I would aim for in those settlements is going to change depending on the name of the collection company you have been making those small payments to. Post a rounded balance for the Citibank account and who is collecting, likewise for BofA. Also include how long each collection company has been debiting your bank account monthly.

          Your friend would be incorrect about negotiating a debt settlement on these collection accounts not looking good. It is often better for your overall credit goals to settle collection accounts that are late enough to be paying debt collectors, and not your original banks and lenders.

          • TY says


            Citibank is with Associated Recovery Services but it looks like they’re using ARS to collect the money, it’s not sold to ARS. I stopped making payments as of Aug 2010 and it says charged off as of Dec. 2010. I believe March 2012 was when I started doing $50 monthly payments. The original balance was $11,116 after all the interest tacked on. My current balance is little less than 10,000. I spoke to them already about a settlement offer and the last offer they’ll accept was $3000 which is good but i was hoping for a little less because I also have to take care of BofA. Citibank due to stay on record until March 2017.

            BofA was sold to Asset Acceptance. Stopped making payments to BofA as of January 2009 and it was closed/sold to Asset Acceptance in September 2012. I started making payments to Asset on December 2012 for the amount of $100.00 each month. Original balance was $8,908. On October 2013 (current balance then was around $7,900..they also removed some interest so it was a little less than that), they told me that if i can up my monthly to $125.00, they’ll cut my balance down to $4000 something so I did and am now making $125.00 a month. Haven’t called them to make a settlement yet but I feel they’ll be a little more lenient than Citibank. And by paying this one off first, it’ll give me more cash flow to pay off other smaller debts BUT BofA is due to drop off on October 2016, 6 months before the Citibank one..which makes me think, shouldn’t i take care of Citi first since it’s on my record longer?

            Thanks a million, Michael!

            • Michael Bovee says

              TY – I would not get hung up on the credit reporting aspects of this. It is best to focus on the math and the best use for your available dollar at the time you settle each account. Asset Acceptance is not charging interest, but Associated Recovery Services may still be charging any contractually allowed interest on the citibank account. If that is the case, knock out the settlement with Citibank first. The 3k offer to settle a 10k balance is quite good for a citibank account. I would not expect ARS to go any lower using today’s trends. Can you pool together the 3k right now and still be able to meet your other bills and obligations? If so, and if I were in your shoes, I would knock that down.

              Settling with Asset Acceptance will be a bit different. Do you have the cash flow to wrestle with this one if you can negotiate a good settlement?

              Can you give me a rough outline of the smaller debts you have, who paying, any late pays, etc?

              • TY says


                I don’t think Citi is accruing interest. They send me monthly letters to give me the updated balance and to tell me $50 will be deducted and i haven’t seen any interest tacked on. If you mean something than this, please explain as I’m probably not understanding correctly.

                If I pay 3k to Citi, which i’d have to borrow a little from my 1st kid’s savings, it would probably take me awhile to pay for BofA. I might not be able to save enough for BofA until end of the year or until next. With 2nd kid coming, i have to enroll my 1st kid to preschool early which will cost about $1100 a month or a little more and which will also mean, I wont even have a penny to save until he’s out of preschool (2 years).

                The other debts are to Nordstroms (i haven’t even contacted them yet..i know the balance is $2000+ and they’re willing to settle for a few hundred according to their letters), Chase (owe about $800 left..$50 paid monthly) and HSBC (also about $800 left.. $40 paid monthly). I was thinking if i paid BofA first, i could tackle these with the $125 that i normally pay BofA monthly with.

                • TY says

                  Oh sorry, for the 3 smaller ones..Chase also uses ARS to collect like Citi and HSBC sold to Portfolio Recovery. Nordstrom..i think is still with Nordstrom. Unsure actually.

                • Michael Bovee says

                  Negotiating a settlement with Asset Acceptance for the best savings can sometimes require payments be stopped. You risk the account being placed with an attorney who could sue in court to collect. Same thing applies to the HSBC account, though that balance makes it somewhat less likely that Portfolio Recovery sues.

                  If it were me, I would stop payments on all of them, and start settling them off one by one, and as quickly as possible. By order of priority:

                  Citibank and Associated Recovery Services
                  Asset Acceptance for BofA
                  PRA collecting on HSBC account
                  ARS collecting for Chase
                  Nordstrom Visa

                  I would set a realistic expectation that I could be sued on one of these with how long it may take to continue to save up, then settle the next debt… save up, then settle the next. But if you clear those first 3 quickly, you will limit those risks.

                  • TY says

                    I had actually called the smaller ones before in attempt to stop monthly payments so that I could focus on each one individually first. The HSBC one said that because it was originally with an attorney already, they said i shouldn’t stop payment on that account because it’ll go back into the chances of being sued (even though for that small amount, it’s unlikely).

                    Also if i stop monthly payments on all and do them one by one, i dont know when i’ll save enough to clear the bigger ones, therefore leaving the smaller ones unpaid for a while. BofA also said if i stop payment with them, i’ll start accruing interest again. Such a headache.

                    I was actually thinking of settling smaller balances first and then work on the bigger ones (while still paying monthly for the bigger ones so i don’t get sued…until I can come up with enough cash to settle..which i understand is like paying more than I should). Totally opposite from what you suggested though.

                    • Michael Bovee says

                      TY – You run higher costs, or higher risks either way. It is a matter of choice. You will be making an informed decision.

                      I would have started your file from the outset a bit differently, but would do as I suggest if I woke up in your shoes today. PRA is a loose cannon in this. I say nice things about them on the posts I have dedicated to them, and because they are consistently pleasant enough for consumers to work directly with to solve accounts. But they can do some damage too (using the courts overly much).

                      It will boil down to what you are most financially able, and comfortable with doing. If you can power through the settlements inside of 12 months, I like your chances of avoiding major issues.

                    • TY says

                      Hi Michael,

                      Thanks for the response. I think I will call Asset today and see what’s the lowest they can go. At least get one of the bigger ones out of the way, then see how much I have to work with Citi. And possibly even call the others to see what options I have and go from there. I’ll update you and will let you know if i have any further concerns. Thanks for your input!

                    • TY says

                      Hi again (sorry to bother you),

                      I just noticed on my credit report that 2 different bureaus have different drop off dates for Citibank. In fact, everything’s slightly off by a month but Citi bank is off by 6 months or so between Transunion and Experian. Is there a way to dispute the one with the later drop off date?

                    • Michael Bovee says

                      You can dispute the Citibank entry on your credit report. Send your dispute to the credit bureau that has it wrong, and to Citi bank. Keep a copy of your letter and send certified mail return receipt to both. You may need a record of this later on.

                      I would not dispute collection accounts on your credit report, for the reasons you would, before I have negotiated and settled the account. I would wait until after the settlement.

  56. Shana says

    Hi I am wondering if you have any knowledge settling with a collection agency called MC Acceptance located in Phoenix, AZ

    • Michael Bovee says

      Nothing in my files with an MC Acceptance in Arizona, or anywhere else for that matter. Can you offer any additional details about your issue?

  57. Atanu says

    What is my best course of action after my bank account has been frozen by a Marshall. My bank, Chase, called me today with that news. All but 1920 dollars is remaining as available purchase. The credit card in question was from Bank of America of in and around 6,000 dollars which has ballooned to 12,000 dollars. This is in NYC. I am a student and have no income, until I graduate later this year. Please advice.

    • Michael Bovee says

      Atanu – Were you aware you had been sued and a judgment entered against you? Who sued (name of plaintiff) if different than BofA?

      How long ago was it that you last paid your bank of America credit card? What was the date originally sued?

      • Atanu says

        Yes, I was aware that a judgement had been entered against me. This judgement was passed in Sept 2008. The name of the Plaintiff is Bank of America although they had taken the help of Worldwide Alliance or an agency like that. The last payment on that card was much, much before 2008. Unfortunately, I cannot remember. Wish I could give you more information, but I just don’t have them. The person I talked to at my bank ( Chase) gave me the number, case number and name of the Marshall I should call .

        • Michael Bovee says

          Okay, thanks for those details.

          If the judgment is something you knew about, and it is from 5 years ago, I am not sure what your options are going to be for challenging the bank levy. You could talk this over with an experienced consumer law attorney.

          What is your goal with this debt?

  58. Atanu says

    Just wanted to let you know, the case was taken up by Kirschenbaum and Phillips PC. I got their contract fRom the Marshal’s office.

  59. David says


    I have two judgments against me one from Ford Motor Credit for about 7800, and one from a title company who botched a closing (while I was in Chap 13 bankruptcy no less) and then sued me for 4800 in a venue 600 miles away. I REALLY have a bad taste in my mouth even still from these crooks but I digress.

    The title company judgement was made on 7/3/2007, and the Ford Motor credit judgement on 7/23/2008. I have made no effort to contact or make any payments whatsoever to either of them at this point.

    I am wanting to get a mortgage, and need to resolve these debts. Given that they are so old what I can expect when I call them to negotiate? Is it dumb for me to even try when they are so close to dropping off the radar anyways? What kind of settlement should I offer?

    I have found a house that I really want to buy, but am I being stupid in even trying at this point? I know I can be approved for the loan to buy the house with these paid.

    • Michael Bovee says

      David – The older the debt, typically the better savings you can target when negotiating your settlements. The more sophisticated debt collectors will use software and scoring models (not credit scores), that will rate how collectable you are. If more collectable you look on paper, the more convincing you may need to be about what you can afford to pay to resolve the debts.

      After 6 or 7 years, I would look at 50% of the balances owed today as a realistic amount to negotiate, get documented, then pay.

      Can you raise that amount of money to pay in a lump sum?
      How many open accounts are on your credit report today that show you are current with payments?

      • David says

        I have two open accounts that are current. One auto loan, and one credit card. I also have 3 collections left to pay totalling about 1100. Although the debts are from the same time period as the judgements, the collection dates vary. The most recent one is 2 years old

        Yes, raising the 50 % isn’t an issue. I was thinking more like offering 25% to start out. Is that too low?

        • Michael Bovee says

          Not too low at all. And if you are financially prepared to pay higher, while always targeting the better savings, I like your chances. Do not let on about any financial goals when negotiating. Just that you fell on really tough times, and that things are not easy now… not by an stretch. But you are trying to bounce back, never intended to not pay, have limited budget bandwidth, etc.

          • David says

            OK, thanks for your advice. I have left a message first thing this morning with the attorney but it is the end of the day now and they still haven’t called back. I don’t want to seem too eager, so I will wait until just before lunch tomorrow to try again. I can’t let it sit either, or I’ll loose the house I want which is the whole point of doing this now anyways. I’m guessing they are playing hard to get also heh. Anyways, kudos on a great site and it is great you help so many people, great job.



            • David says

              Just for anyone else who might happen by I thought I would share the end result of my “negotiations”. The attorney came back today and said FMC will not settle without having taken payments for a while first. Every call for the last week or so I was under a full court press for my employment, bank, and address information. The title company wouldn’t settle at all. Perhaps my experience is unique, but I believe I would have been much better off had I hired someone to do the negotiations for me rather than do them in person. I believe that at least in my case, having a third party shield me from the creditors would have been a major advantage. With this debt being so old I guess they figured why take a settlement, they have gone without the money this long if I need to settle (of course I never told them I needed to, but why else try after all this time?) then they want to make me pay. Not at all how I expected things to go. Thanks again for your advice, this has been an excellent learning experience, and a great place to learn from.


              • Michael Bovee says

                Thanks for posting the update David. Negotiating settlements as a form of debt relief can vary in results from one person to the next. Depending on the timeline of your goals, you may also want to reach back to try and settle this the following month, or even the month after that.

                While it is pretty obvious this site focuses on what you can do for you, without hiring a professional negotiator, I do suggest working with a pro too. There are people that should start with, and keep to, that approach to settling debts (hiring a company or individual). There are people who can do some of the negotiations and settle some accounts, and only hire a company to work on some difficult accounts, or late stage debt collections (your type of situation). And then there are DIY debt settlement files.

                • David says

                  I agree, and I certainly wouldn’t advise anyone who wanted to try on their own not to. However, my situation has changed dramatically from the times the debts were incurred (for the better). It was very unnerving to be grilled by the attorney for all my up to date personal info, and now I feel since I have contacted them it is possible they will pursue further action, when in the six years the debts have been out there I haven’t heard a peep from them. Secondarily, I think that had they been contacted by a third party, it would have seemed more “normal”, as opposed to what is this guy up to that he is contacting us after all this time. From everything I read, I thought this should be a slam dunk easy negotiation. Now, not only will I not be able to buy the house I wanted to buy, but I will be living in fear that garnishment or levies could be in my future. Your mileage my vary, and I encourage you to work out things on your own if you can. Just be aware if you have something to protect, you could be opening up pandoras box. My experiences are my own, and I do not offer them as advise, but merely as an example of how things progressed in my specific case. Best of luck to everyone here!

  60. Mia says

    Hi Michael,

    Thanks for all your wonderful credit repair advice. I have a charged off account with Bank of America for $5,400. It was my only credit card. It appears they passed on this account to LTD Financial. I’m unsure if BoA sold my account to them or just passed it on to collect for them.

    In any case, I was scared and irresponsible and ignored calls from both BoA and LTD since 2012, when my account first became delinquent. I’m finally ready to take responsibility and try to settle this account. I have about $2,000 saved up. Do you think this is enough to settle?

    Also, becoming paranoid about my credit score, I jumped the gun and recently got an unsecured credit card. It only has a credit limit of $300 and I’ve been making only very small purchases on it — nothing more than $20. I got it because I had no other credit cards to my name after the BoA card was charged off and I wanted to build credit. I know I should have waited to take care of my BoA debt first, but it’s too late now. I know you advise not making payments on any other accounts when you try to settle with a company. Do you think the fact that I’m making very small payments on my new, secured credit card affect my chances of settling with BoA? Right now, the balance is only $2. What if I pay it off so the balance is $0 and then not make any payments on it? Please advise. Thank you.

    • Michael Bovee says

      Mia – You can always call Bank of America and ask them if they sold or simply placed the account for collection with LTD Financial.

      Offering 2k to settle a 5400 balance on a BofA account is a realistic target. You may even be able to get a bit lower.

      Yours is not a scenario I would be concerned about, where you are paying other accounts, and not paying the accounts you are negotiating a settlement with. The balance is just too low, and if any collector brought that up, I would refer to it being a secured card with a low limit for identity theft protection purposes.

  61. LS says

    I owe $22,000 to Capital, Citi, and Bof A credit cards. If I was able to settle, what amount would I need?
    I have 5 years to go before the SOL expires. I am behind almost 6 months now. The cards are in my name only, not my spouse’s. thanks.

  62. Tisha says

    Hi there! I am looking to go back to school but owe an old college money from 2008. I had a loan that didn’t go through because a signature was needed. The school didn’t notify me until the semester was over and I was trying to enroll for the next term. I ended up dropping out because I couldn’t pay it and it went to collections. They will not release any of my transcripts until the collection agency is paid. I want to call the collection agency for details about how much I owe and if they will settle for less, but how can I do that without admitting it is mine and reactivating an expired debt? Any help will be greatly appreciated!!!

    • Michael Bovee says

      Tisha – What is the name of the debt collector? What state are you in? What type of student loan was it?

  63. Nikki says

    Hello! I’m 23, and I’m trying to fix my credit score (580) as much as possible after a couple screw-ups. I had a BofA credit card that I haven’t paid since 2012. I have a balance of $1,254 owed as of today. I received a letter from Gatestone & Co stating: “Your account has been placed by FIA Card Services with Gatestone & Co, a collection agency.” It goes on to tell me I have 30 days to dispute the validity or they will assume it is valid (which it is).

    I have a few questions I was hoping you could clear up!

    I have $500 that I have saved up to put towards a settlement possibly. I would love to pay a lump sum and just be done with it. Since this is a smaller debt, is the benefit of owing $0 and not being maxed out on the CC worth the negative effect a settlement will have on my credit score? and what type of offer do you think I can expect to get?

    Also, if a settlement is an option, would I be better off calling Gatestone & Co or contacting Bank of America? I’m not sure if BoA is even an option, since I already received a letter from a collections agency..

    Any advice or a point in the right direction would be sooo helpful! Thank you!

    • Michael Bovee says

      You would be calling the debt collector, Gatestone, to negotiate your settlement. You could call BofAto start, but they will refer you to Gatestone.

      I would target roughly 40% of the balance owed today as my settlement amount. If I had time to go back and forth with the negotiations, and wanted to try to save maybe up to 10% more, I would make a lower offer, and call back about this time next month if I cannot get it approved.

      Debt settlement is not bad for your credit reports. At least not in the situation you are describing to me.

      How many other accounts do you have in collections?

      • Nikki says

        Thanks for clearing that up! I have a Capitol One credit card that I owe roughly $600 on that I last paid in 2012. They haven’t sent any type of letters lately so I figured I’d start with BofA. I also have a T-mobile debt of $463 in collections from 2009 or so, but I haven’t received letters from them either so I’m assuming I should save them for last?

        With settlements, are payments an option or is the whole lump sum expected up front?
        Thanks again for the help!

        • Michael Bovee says

          You can often get payment arrangements along with the reduction of balance you negotiate. How many months will vary from one account and debt collector to the next.

          How much money do you have to offer in a lump sum to settle the BofA account with Gatestone?
          How much can you confidently afford monthly if you negotiated, say 6 payments?

          • Nikki says

            Ideally, I would love to pay a first lump sum of $500 toward Gatestone, and be done with it. I’m not sure if that would be enough on it’s own though. Monthly payments, I could probably only manage $50 to be safe. I’m on a pretty tight budget.

            Thanks for the speedy responses and all the help!

            • Michael Bovee says

              I think you have a really good shot at settling your BofA debt with Gatestone for that amount, or a touch less. You have to stick to your guns when negotiating and let the collector know that is all the money in the world to you, and all you have to work with. Debt collectors often have real time access to your credit reports, so they can see the Capital One and Tmobile in collections. Use that fact by referring to the other debts you can use this bit of money to resolve if they do not want to.

  64. Jodi says

    If a debt I had with say Citibank has been sold 3 or 4 times over…how can I get all the debt collecting companies that no longer own my debt off of my credit report?

    • Michael Bovee says

      jd – Please provide more details by answering the following in a comment reply:

      What are the names of all debt collectors reporting an entry for the Citibank account?
      Which one (or more) of them is reporting a balance due and owing as of today?
      Which deb collection agency did you last hear from, whether by phone or email?
      When did you last pay Citibank?

  65. Maria says


    If something is already in collections, does that mean that I can’t work out a settlement with the original creditor I owe to?


    • Michael Bovee says

      Once your account is sent to an outside collection agency, it generally means the original creditor tried to get you to pay for several/many months, and then gave up. They contract with outside agencies, or sell the debts off from there.

      You can start your negotiation effort with your original lender. But if they refer you to an agency, then that is who your negotiations and settlement efforts will need to focus on.

      There are instances where you would strategically choose to wait for your debt to get sent back to the original lender, placed with another agency, or sold off to a debt buyer.

      If you provide more details about the debt, how long ago it was paid, who is collecting now, how much you are targeting to settle this for… I can offer more feedback.

  66. Chuck says


    I have debt with TD banks from a Target credit card. I am being sued by Cohen & Slamowitz LLP in Long Island NY. The amount I’m being used for $3300 . A summoned was served to an individual at my apt on July 4th . I want to settle with them. I had a shoulder and ankle injury and I was behind on some my accounts . Target would not work with me. I am going to address the summons ASAP . What is the best way to nego a debt settlement instead of going to court . I can’t afford the whole amount. Please advise.

    Thanks ,


    • Michael Bovee says

      You need to be able to convey your in a financial hardship, and have a realistic expectation of what you can settle for. Now that you have been sued, and because it is a Target account, you could need 60% or more of the balance to settle in a lump sum single payment. How possible is it to pull together that amount? How long will it take?

  67. Eric says

    Hi Mike,

    In October of 2012, my wife and I made the decision to do a strategic foreclosure on the condo she purchased before we started dating. The mortgage is held with of BoA and as soon as it went into default, our credit card account with them was closed. The credit card account is up to date and we haven’t missed any payments. However, the debt is rather large (about 16,000). At this point in time, it seems as if we have paid the principle several times over and with the account officially being closed, it seems like it might be a good time to make a settlement offer especially since we will have enough money to make a lump sum payment in the next month.

    What should our settlement offer be and would it be better to contact them in writing or via phone?

    • Michael Bovee says

      Negotiate with BofA and get the details worked out by phone, then get the details outlined in writing.
      I typically target settlements for BofA credit cards at between 30 and 40 percent.
      How many payments have you missed so far?

      Edit – I see you have not missed any. You will find it is best to negotiate with original creditors like BofA when you are between 150 and 180 days late (try not to let it go 180 days late if you can help it). Continue reading the section of the debt settlement program guide that deals with settling your debts direct with your bank.

      Calling now to talk about settling for a lump sum settlement is not going to lead to anything, and can be counter productive sometimes.

  68. Luis says


    I have a credit card debt with BoA that was sold to a collection agency. I am wondering if there is a way to get the collection agency to remove this from my credit report because BoA has charged off my debt.


    Last payment 1/2009
    BoA Amount $11,000
    Collection Agency claims $17,000 is now owed
    State of California SOL = 4 years

    I have sent a DVL and contested this, which my credit report states. I am wondering if threatening to file a complaint with BBB and CFPB due to the SOL making the loan time barred. Any advice?

    I don’t want to settle the debt because I don’t trust the collection agency and it’s almost 7 years, which means it will fall off my credit. If they try to sue me, I can get it thrown out due to SOL.

    Thanks in advance,


    • Michael Bovee says

      Hi Luis. I responded to your comment on the other page about settling with collection agencies, and that page is more topical to your situation and goals. Lets continue the discussion over there.

  69. MM says

    Hi Michael,

    Thanks a lot so far for your great advice. I currently have a Bank of America credit card in collections for $5,400. It’s been passed on to a second collection agency now, and it’s been about two years since the account has been charged off by BoA but they haven’t yet sold the debt. (The collection agency that has most recently contacted me is collecting for BoA.) They have agreed to settle the debt, but for over $2,000. I finally want to deal with this debt now, but only have about $1,300 saved up for a lump sum. Do you think this is enough to pay them? What do you think is a reasonable settlement amount for this debt? Thank you.

    • Michael Bovee says

      1350 would be the lower end of settlement approvals I am seeing with Bank of America. Getting them to agree to something that low (25%) is not as common as it was a couple of years ago. 1600 to 1900 would be the more common low end target to hit.

      How long will it take to raise any extra money if you cannot get the collections agent to agree to 2k?

      Be sure you get any agreement to settle in writing. Follow this outline for settlement agreements:

      • MKM says


        Thank you so much for your response. I appreciate it so much! I have a few more questions, if you would be so kind as to help me further. I talked to the collection agent today and we agreed to settle for the amount she wanted (around $2,160) , but to split it up in three payments. However, I may have access to $2,000 total now. I want this whole debt ordeal to just be gone ASAP! Do you think they would accept a lump sum of $2,000 instead? I just want it all to be over!

        Also, they would like to be paid via direct deposit. I heard that it is a very bad idea for debt collectors to have your bank account number. However, I bank online and it’s very easy to open up a new, separate account (for free), and then transfer the money needed from the preexistent account to this new one. Do you think it would be a safe option to just use a brand new online banking account to pay the collection company? Thank you again for your time. It’s wonderful how you spend time answering everyone’s questions on your website.

        • Michael Bovee says

          I would do just like you suggested… open the different account and use that for electronic payments.

          If you do call back and offer the lump sum, that results in a slightly better savings, let them know you have a source for the money, not that its yours. It may change their mind about the settlement they already agreed to (not likely, but I have seen something like this occur enough times to raise the concern).

  70. Howard says

    Dear Michael –
    First a little background information before asking a few questions about debt settlement on a small business Capital One credit line. My wife has had an S-Corp small business since 1996 and in 2003 opened a line of credit with a credit limit of $45,000 and interest rate of 4.25% with Capital One. My wife is the sole owner of the business and is the sole guarantor for the credit line. The business drew regularly from the credit line as needed over the years, but the recession nearly brought business to a halt and it’s barely viable at this time. I co-managed the business for about 12 years, though we are in the process of getting divorced – no fault (New York) and my involvement in the business is minimal at this point. The balance is just about $45,000 and my wife has decided that default is the best option. We did not make the July payment (first missed payment since 2003) and will not be making the August payment. We’ve been through debt settlements with several personal credit cards and an Amex small business credit line and settled for less than 30% for the personal accounts and about 55% for the Amex business account.

    I am 67, work part time and receive monthly social security payments. I do have stocks worth about $90,000. My wife has a small amount of money in an annuity (about $10,000) and is trying to continue and breathe new life into the business. We would like to handle the debt settlement process on our own, so here are the questions:

    1) Is it best to let Capitol One know right away that we are unable to continue paying? Or, is there some advantage to stalling and letting them come after us?
    2) Is it reasonable to assume a settlement amount of 50 – 60% of the outstanding balance (plus penalties and interest?)
    3) We are planning a fundraising campaign in about a month to support business growth and to pay off at least some portion of the debt settlement. If, for some reason we are unable to come up with the full settlement amount would Cap One have access my wife’s annuity? To my stocks? (in terms of divorce law, NY is an equitable distribution state.)

    Many Thanks!

    • Michael Bovee says

      I would target settlement with Capital One right at the expectation you set in your comment. I rarely see settlements go below 50% with them.

      You cannot have a productive settlement dialogue until you cross a threshold with creditors. With some banks that will be 60 days, and others 90. I put Capital One in the 90 day category. You can call and let them know you are unable to pay, and that it is not your intention to fall behind, but circumstances are what they are, and you tapped everything out just to stay current for as long as you have. But you are looking for that notation to be placed in your file this early, not negotiating with them. With a business line of credit, you could look to negotiate with CapOne after 90 days, and hold out for the best savings from there.

      In other words – be proactive in reaching out, and do not wait for them to come after you, but time your efforts for when you are likeliest to get the best result. Check in with them once a month to let them know you are still trying to figure out a plan of action (even though your plan is already set on negotiating a favorable settlement).

      They would have to sue your wife; have that result in a judgment; and pull her in for an asset discovery hearing, in order to even learn about the stock and annuity. Even knowing about them, I am not sure they can force the liquidation of her annuity. And she would have opportunities to settle all along the way.

  71. John says

    I have a default judgement from Discover in NJ from 2010. I was not a resident of NJ at the time but had a PO BOX there. I was a resident of PA. I was served for a court date via return receipt letter. I could not make the court date and therefore a default judgement was issued. I tried to declare chapter 7 bankruptcy but could not come up with the $2,000 in advance to file.
    I couldn’t get a decent paying job there since my layoff, so I moved to Texas and found one. I tried to settle my $7,900 debt with the law firm representing Discover for $5,000. They would only go to $7,300 as they say I now owe them $12,000. Should I hire a lawyer and see if I can get the judgement vacated? I do not think the judgement has any affect in TX. What do you think?

    • Michael Bovee says

      You were sued in the wrong jurisdiction, so yes, I think you should connect with a consumer law attorney familiar with debt defense and vacating judgments. This is an old judgment, so that could be a hang up.

      If you need some help locating an attorney with the experience you need, post the name of the county the judgment is in, I will find one (or perhaps several) and email their contact details to you.

      • John says

        Thank you for answering so quickly. I haven’t really had the money to pay back the debt or engage an attorney until now. That would be Camden County NJ. I tried calling a few attorneys I found online left messages and never heard back. Thanks again.

  72. Mary says

    I am helping my sister put together a plan for debt settlement (or perhaps chapter 13 bankruptcy). She currently owes about 15K total in credit card debt (CitiCard -~5K, CapitalOne-$7K and Kohls-~$3K) and has some equity in a house owned jointly with our brother. Between a part time job, child support for her two children and food stamps she has roughly $2k in monthly income. Because of the equity, I believe she would have to file bankruptcy which would protect $15k in equity. If need be, my brother could also file which would protect another $15K in home equity in Ill. I think they are both “judgment proof” His only income is Social Security disability. There may be about $15K additional equity in the house (total home value estimated at $140K – first mortgage at 85K, second mortgage at 10K). They went through a HAMP modification last year and had the principle amount owed reduced by 10K on the first mortgage and a second mortgage covers the remainder of $10K (only payable upon house sale).

    We are wondering about the pros/cons of trying to settle the debt or to go through bankruptcy.

      • Michael Bovee says

        Thanks Mary. I did not see this comment until after responding to the last one.

        How much money will be available to use to settle credit card debts in 6 months time (credit card payments are not being made for those 6 months)?

    • Michael Bovee says

      Is she paying the credit cards currently? If not, when did she stop?

      How much money is available to your sister after all of her other expenses are paid (what is left over to set aside in order to save up and settle)?

      Are there other cash resources she can tap in order to settle with her creditors as early as possible?

      Assume she can settle with Citicard, Capital One, and Kohls, for under 7k. Set that beside the cost of a chapter 13, and what will likely be a 5 year repayment plan, and I tend to like debt settlement over chapter 13. But if she were to file chapter 7 bankruptcy, where the cost would be more like 1500.00 total, and all the credit card debts are discharge in a matter of a few months, I would like chapter 7, but only if that can be done while keeping the home (that seems to be the goal from what you wrote).

  73. stacy says

    Hi. I owe 36 in credit card debt and am ready to pay each a lump sum and be done with it. My last payment to each of them was in July. I have not paid August or September. When I called one of them I was told that it had not reached the point of negotiations. Are there a certain number of payments I need to miss before I begin to negotiate? Or can I offer you a lump sum amount that I can provide to go towards paying off each debt and allowing for payment to you for your services and be done?

    • Michael Bovee says

      Stacy – You should get an email notification of this reply. You can also subscribe to the comments of this, or any other page of the site directly, by checking the subscribe box before you submit a comment.

      Continue reading through the first stage debt settlement sections of the site. You will want to have a full understanding of what to do, and when to do it, with each of your creditors. You can skip ahead to this article about timing:

      You cannot hire CRN to negotiate for you at this time. I shut down customer coaching and direct negotiating services 6/2013. But you can still reach out for help at 800-939-8357.

  74. Cynthia says

    Hello Michael,
    After reading other questions presented to you I thought it would be a good idea for me to ask questions, as well.
    I live in Michigan and I had a terrible spiraling financial fall after I lost my job in 2008. I was able to pay my bills for 2 years after the job lost, but it in 2010 it all collapsed on me.
    I have a judgement from rental company that says, satisfied as of 12/2013.
    A judgement from a credit card that states “pending” for
    A car loan that was repossessed in 11/2011, $4062 balanced charged off . I got a loan for this vehicle 10/2007.
    How long will the judgement(s) stay on my credit report?
    What should I do in regards to the car balance? Should I work out a payment at this point or leave it alone?
    I have medical bills from a fall in 2011 that total $1275.
    How should I address paying the medical bills off?
    I don’t want to file bankruptcy at this time, if I can avoid that process.

    Thanks for your help.

    • Michael Bovee says

      The paid judgment should stay on for 7 years from the date the judgment was entered in the court.

      I would want to settle the car loan balance. It is best to negotiate a single lump sum payment. How much money can you pull together to settle this debt?

      Have you contact the hospital and asked if they have a program for writing down, or off, services and bills for patients who meet a set standard, or qualify for indigent status?

      Were any of the medical bills covered by insurance?

      • Cynthia says

        The most that I can come up with for a lump sum payment at this time would be about $1000-$1200. In regards to the hospital bills, I have not called the hospital regarding settlement, because for a long time I didn’t have any money. I was in between jobs during the time that I was injured, and I had no medical coverage. I am just at the point were I can begin to make arrangements for my past due bills. Once, I make arrangements on these bills and pay them up, will this increase my credit score? Do I need or should I get a secured credit card to rebuild my credit?

        Thanks again for your help.

        • Michael Bovee says

          I think you have a shot at negotiating the repo collection balance for 1500-ish. You could start that conversation now, or perhaps wait until you have a couple more hundred to add to your stash. How long wil it take to save up another 3 hundred?

          You can often settle medical bills in your situation. My goal would be to settle for around half. And you are at a place where you could pay the medical debts outright and/or settle.

          Getting a secured card is more likely at this point (with the unpaid collections), and would give you a head start on rebuilding. What are your credit and finance goals? Are you planning ahead to purchase a home, car, other?

          • Cynthia says

            Hi Michael,

            I could probably save another $300 by the beginning of the year. I am keeping things realistic because the holidays are coming around, and I know I need to have money for the occasion(s) to come. In addition, I am seeking a part-time job to help with getting things paid up.
            In the future, I will want to buy a car and home, but I mainly want my credit restored so that I can freely do as I wish. I’ve always had been a responsible person with my finances, and never lived above my means, so to have financial freedom back again would make me happy.


            • Michael Bovee says

              Because the collections are as aged as they are, and with no real collector efforts (unless you have received recent collection calls and notices), I would hold off on negotiating anything until you have the money in hand, or will have inside the same month.

              End of year is a good strategy similar to end of month negotiation timing I discuss elsewhere on the site, and on the dealing with debt collector videos.

              Find out if your bank offers a secured credit card program. I like Bank of Americas because they will convert that secured to unsecured with proper use, and relatively quickly.

              • Cynthia says

                Hi Michael,

                I will look to the end of the year to do start the negotiations. I’m glad you mentioned Bank of America, because that is the bank that I plan to use for the secured credit card. Once last question(s), should I start with one secured card or two? I want to get my scores as close to 700 -720 within the next year, right now it is at 568. Or whatever other suggestion that you have to help me get there.


                • Michael Bovee says

                  I would use the one secured account, and then after the medical collections and deficiency balance are negotiated, and showing paid for 90 to 180 days, apply for ONE unsecured card with a lower credit limit. If you are declined, wait another 6 months.

                  Slow and steady will win this race.

  75. dan says

    Can you help me with a quick credit report question.

    I recently found i have 2 wells fargo student loans defaulted and charged off. I had too many seperate holders I lost track of two. All other student loans slowly paying off.

    Original chargeoff $3700
    Terms: $3556 per month, paid monthly for 141 months

    What does that mean?

  76. Frank says

    I owe about $50,00 in an unsecured loan with NFCU and are about 5 months past due. I have no other loans with NFCU. I was thinking of doing a debt settlement with them. What do you think would be their response. Do you know if they are easy to work with?

    • Michael Bovee says

      Negotiating a settlement with NFCU is not complicated, and I have never considered them difficult. What you are able to settle for can differ from one person to the next.

      Is that a 50 dollar debt, or 5k?

  77. jt says

    I entered into an agreement with Freedom Debt Relief (FDR) to help me when I separated/divorced in 2012 for 3 credit cards and one line of credit. FDR settled one card with Capital 1 for 50% after 6 mo0,000.00 I owed on the card with Bank of America. I only have a 12,000 balance with the final credit canths with a savings of about 10%. I came into cash after changing jobs and pulled one card from the service and paid it off. I have my final card settled at 50% but with FDR fees it only saved me about 20% of the 2rd debt BoA. I have about 6,000 in my account with FDR as they are paying 800.00/month for next 6 months to complete my settlement on the Bank of America line of credit. My question is can I pull this credit card out of their program and now negotiate a settlement with BoA on my own? It’s been almost 2 years that I’ve been in this program and am very frustrated with FDR. Their website lists typical monthly settlements with BoA for their customers saving over 70% of total owed INCLUDING their fees. After paying 600.00 per month and even putting in an extra 3,500.00 in an effort to expedite this process I feel like i have been duped!!!! And as a result my once sterling credit is ruined and I did not really save very much money in the process.will I nullify my current settlement with BOA if I try and make my own settlement with BOA and cut freedom debt relief from the process?

    • Michael Bovee says

      If you have a deal with Bank of America the Freedom Debt Relief already worked out, they will have, or are, already being paid their fee for negotiating the debt for you. Quit now and you may be out the full fees, as they are considered earned when the settlement is accepted, and the first payment made.

      You can rework the settlement. But are you sure the deal was negotiated direct with BofA? From what you shared, it may have been reached with a debt collector, or a debt buyer. Find out who (if not BofA) and post an update. Who you may have to negotiate with can change my feedback to the point I would caution you from ending what is already in place.

      • jt says

        The line of credit with BOA is already settled. I don’t want to pull it out. FDR negotiated a settlement for 50% of 20.000.00 for 10,000.00 to BOA. They charged me a fee of almost 5,000.00. My last card in the program is for 12,000.00 with BOA. My question is can I remove this card from the program and negotiate my own settlement without FDR or BOA negating the settlement already in place for my line of credit loan.

          • Michael Bovee says

            Find out who BofA has your account assigned to for collection, or if they sold the debt, who they sold it to. Post what you learn and lets go from there.

        • Michael Bovee says

          I was not sure if the account you want to negotiate already has been by FDR, and is getting paid monthly. If that BofA account does not have a deal negotiated yet, you can yank it from FDR and negotiate the credit card settlement yourself. For those inclined, I recommend folks negotiate settlements on their own whenever possible. Get everything done you can, and let a pro step in when you hit a wall, or if there are situations where the deal that can be done, is better reached by a negotiator.

          • JT says

            I pulled the BoA Credit card from freedom debt relief today. Thank you for the advice as they did not give me any hassle at all as I was expecting. The credit card (charged off) has not been paid on for 2 years and the balance is roughly 12,000.00. Is an offer of 5,000.00 to BoA fair? Do you think they would accept this? I’ve seen others talk about settling for as low as 30% but 40% is what I can honestly afford to do right now. Should I start at 4,000 and leave me some wiggle room. Where/who within BoA would I begin to discuss/write/email this settlement to. I looked and couldn’t find an overdue accounts section. Thank you again for the information you and your site provide.

            • Michael Bovee says

              Call the normal number for BofA credit card accounts (look on the back of the credit card if you still have it, or old billing statement). It is unlikely you will be negotiating directly with BofA after this long. They will have the account placed with outside debt collectors, or sold your account to a debt buyer. Your calling to ask which, and the name of the company.

              Once you know that, post an update and lets go from there.

              I would start your negotiations at a round dollar figure around 25% of the balance owed, and work your way up from there. 40% is a very realistic goal, but I still see many settlements around the 30% mark too. But much can depend on who has the account.

              • JT says

                I seem to have made things worse. I pulled the debt owed to BoA from FDR like we discussed earlier in this post and wrote BoA asking to settle the debt. I received an email from an attorney in New Orleans that had a copy of my letter sent to Bo A asking if this was me and to provide him with a telephone number to discuss this issue. That was mid January. Didn’t hear anything back until today when summons delivered from sheriff dept stating i have 10 days to reply to lawsuit by BoA seeking all 14,000.00 of past due amount. What are my options other than the obvious of getting an attorney? Do you have any experience when it gets to this point?

                • Michael Bovee says

                  It is likely more cost effective to respond to the summons using an experienced debt defense attorney in LA. You can still settle the account after that, or call to negotiate now. But I would definitely talk your options over with an attorney first.

                  Would you like me to email you contact details to those I know of with the most experience? All of them offer a no cost initial consult, which will help you get your bearings regardless of whether you retain one.

                  • JT says

                    Yes please do. I’m unsure of how to proceed and could use someone with experience in this type of matters to assist.

                    • JT says

                      I am located in Bossier City LA. Zip is 71111
                      Shreveport, LA is very close also.

                      Thank You

                    • Michael Bovee says

                      Done. Like I said in the email, distance from the attorney you are working with is not always going to be an issue in these cases, especially if the goal is negotiating the lowest settlement.

    • Michael Bovee says

      Setting up payments could be as simple as contacting the creditor you owed, or their assignee debt collection agency. Some debts are sold off to investors, so you may end up paying a company not connected to your creditors.

      Can you offer more detail? Who was the creditor, and when did you last pay them? From whom, and when was it, that you last heard from anyone about your debt?

  78. Ashley says

    I have recently been sent to collections on some schooling I have done in the past and I was told not to come back.
    They have sent me to collections for $3067.
    I am wanting to try to settle on a lesser amount. But the collection agency tells me that they have to get with the school in order to do anything. I’ve been dealing with this for only 2 days and I just want to know what would be my best bet in getting this resolved without paying the whole amount of possible.

    • Michael Bovee says

      Settling student loans for less than the loan balance is possible when they are private.

      How long ago were the loans issued?
      Were any payments made, if so, when was the last payment?
      What type of school is this?
      Are the loans private (not government backed in anyway)?

      • Ashley says

        This was cosmetology school.
        All payments made were from pell grant and fasfa financial aid.
        I started school January 2013 was asked to leave and not come back October 2013 they sent me to collections September 2014.
        The documents the collection agency provided don’t match. For example: one page has an amount for tuition fees books and kit. And the next has a different amount completely.

        • Michael Bovee says

          Federally backed loans do not settle in the way we thing of negotiating a lower pay off amount. You may be able to get collection fees waived on them though.

          Why were you asked to leave the school? Perhaps that is something to leverage.

          • Ashley says

            My student loans are currently being paid.
            That is not what they have sent to collections.
            the 3067$ is money they say I owe them (the school) not the government.
            She asked me not to come back because I offended someone with something I said.

            • Michael Bovee says

              And I wonder if they can do that… send you away without an alternative, and whether how it was handled, was without a cause clearly outlined in any agreement.

              Did you talk to the school about their policy over such things, either then or recently?

              The debt the schools is trying to collect on for themselves appears to be private, so can be settled. What amount are you able to pull together to put this behind you?

              • Ashley says

                It was against policy to be offensive in any way so I understand that part.
                I’ve asked the collection agency to settle on an amount I offered 1000-1500 and I haven’t gotten an answer yet because the collection agency told me they would have to get back with the school in order to do anything of the nature.

                • Michael Bovee says

                  Okay. Post an update with what they say.

                  It is normal for a collector to have to get approval for something that is not automatic for them to be able to accept. That approval may have to come from a manager or supervisor, but it can also be required by their client, the school.

  79. Amanda says

    I see several times that you mention Bank of America has a dedicated line for debt negotiation. Would you please provide me with that number.

    • Michael Bovee says

      Just call the number on the back of your credit card, or on your billing statements. When you puch in your account number, your account will be recognized and will get directed to the correct department at BofA that still has your account. If your account is more than 6 months past due, it is likelier you will be dealing with an outside collection agency.

  80. Heather says

    Following a civil suit in which I brought counterclaims in part dealing with wrongful charges, I entered into a formal settlement agreement and dismissal of case with a major credit card co. Original claimed amount was approx. $12K and following negotiations with their attorney the stipulated amount owed came to around $5K, payable in monthly installments, all of which have been timely for about a year, and one year to go. I waived claims for wrongful reporting up to date of settlement only. They relinquished all their claims too in exchange for the settlement so long as I pay the agreed amount. Now, I would have expected that if anything the card co. would stop the negative reporting but not only have they failed to report that going forward from settlement, I have been on time for nearly 12 months and paying as agreed (as to which I have numerous automated email confirmations of receipt of payment, so even if they want to try to skirt around and pretend the lawyer wasn’t their lawyer, their domain name is all over the automated email), they are also continuing to report charge off every single month. I have called them and pointed out the settlement and afterward faxed them the legal docs. I also disputed with at least one credit bureau early on, about 3 months after entry of dismissal and execution of the settlement (with proof of payment), all to no avail. I am nearly apoplectic.

      • Heather says

        Massachusetts, originally CA, but the suit was commenced Feb 2013 in MA and settled/dismissed March 2014 in MA. The delinquency started end of 2012 after I’d been in MA for nearly a year.

        • Michael Bovee says

          If I understand this correctly… you were sued; you counter sued; you both came to an agreement; part of that agreement was that they would not report the late pays or that you account was charged off? If that was part of the agreement, you should be upset. If it was not, what you describe is normal when settling debts at all stages of debt collection.

          Did you have an attorney helping with your counterclaim? If not, I would run the scenario by an experienced debt collection defense attorney in MA. I can help you connect with some for a free consult if you like?

          • Heather says

            I did not use an attorney but did pro se. That said, having done many settlements professionally (not debt or PI but other kinds of claims), I am familiar with release language and was careful to say I only release up to date of settlement. The fact is, the only binding agreement is the settlement, which does not say I owe $12K. It says something like $5K, and that should I be in default of the payment schedule (I also ensured to provide a notice/cure period to allow for inadvertant mailing delays or delays of address change before being deemed in breach) or if I should later declare bankruptcy, the only remedy to them is they can claim a balance of $7,500 or so, less the payments made. So it seems to me, they are in clear violation (now wilfull after having the opportunity to fix it and refusing to) of FCRA because it is agreed that $12K is not relevant and I am in fact making payments as agreed per the only valid agreement now existing.

            • Michael Bovee says

              If you are ready to take them to task, it sounds like you are capable of preparing for this. There are some experienced FCRA attorneys in MA you can connect with for a no cost initial consult. There are helpful case management resources for FCRA issues available from NCLC too, who are in Boston.

  81. Heather says

    Thanks for the tip. Resources are very limited so hopefully I can manage something. I did go ahead and write the junior lawyer that was on the litigation, as a kind of heads up and last chance for his client to get on the straight and narrow. Maybe that will suffice if it gets the job done. Otherwise, I’ll try your recommendation.

  82. John says


    This is a fantastic informative site. I watched your interview with Jared and sent him a request for a consolation but I would like your advice. I recently sold my home due to a job loss and tax increase I couldn’t afford it. During this time I racked up 30k in credit card debt. I am working now and making over 1k in minimum payments.
    I have 11k with Citi Bank with a Sears MC, Home Depot, Best Buy, and good year.
    I have 14k with Synchrony Bank for Lowes, SAMs , and a couple others.
    I am current with all of them but 3 months I was several months behind until I sold my house. My credit is down to 500 from 730.
    If I stopped the minimum and saved I would have 12k or more in a year to settle. Do you think debt settlement would be a good option?

    Thank You

    • Michael Bovee says

      I generally see settlement as a good option for folks that can negotiate and fund all of their settlements inside of 24 months. I would estimate your time to completion at 18 months or less. If you have to one off your settlements, you could be dealing with some higher percentages, or even critical stage collections, on the last couple of accounts. But all of that is navigable.

      Jared is great with this stuff. I expect him to encourage you to pull resources together earlier than what I implied is doable above. He is right to do so. You can often have better settlement outcomes when you negotiate the deals not only quicker, but in rapid succession.

  83. Cynthia says

    I have about 20k in credit card debt. Most of it is from 2007/2008. My mom took out most of the cards, and then put them in a debt management program, but I was unable to pay the monthly fee when I left work due to maternity leave. I have not paid these cards in all this time, and I want to know what would be best. should I settle? (I only have a few thousand dollars in my account, I just finished graduate school and I was living off my loan money) or, should I file for bankruptcy?

    • Michael Bovee says

      What state are you in?
      Can you confirm when it was the last payments were made on the DMP?

      Whether to negotiate the debt, wait out the derogatory collections on your credit reports, or file bankruptcy and get a fresh start, is a big decision. I will be better able to help you make a comparison with the answers to those two questions.

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