Hi Robert,

Bank collectors and recovery employees have real time access to your credit report, your credit card account behavior with them, information you provided when opening the account and gave to them along the way (like questions that may have been asked if you requested a credit limit increase).

In collection efforts, some banks will indeed seek additional information from you.

If you are trying to get your payments lowered after you fall behind you may be taken through a litany of questions about income and expenses in order to determine how low your payment can be set in a hardship plan (generally not dropped to lower than a calculated 2% of your balance each month ). If you have too little money left after typical living costs they may not offer you a plan at all even if it meant they were getting paid something rather than nothing. If you have too much money after expenses they may not offer to lower your interest rate and thereby your monthly payment.

When settling with your original creditor before charge off (less than 6 months late), some creditors may take you through the above income/expense exercise because that is what they have been trained to do, even though you are not seeking lower monthly payments, but a lower balance payoff.

When taken through a litany of scripted budget questions with a creditor, how you answer the questions should be based on the facts. You are light each month, otherwise you would be paying the required minimums. What created the situation and/or continues to contribute to it, is your hardship. With settlement, you may have to repeat the hardships several times before getting to a point of advanced delinqency where an income and expense and/or settlement discussions will occur. If you are trying to settle multiple accounts you will have to repeat your hardship and be prepared with answers to budget questions more often than you think. Make notes in advance and stick to the script. If unable to settle some credit card debts directly with the creditor before they charge off the account, you will be sharing your hardship with collection agencies. Be careful what you share with collection agencies. Limit your comments with outside debt collectors to the hardship details and avoid going into income and expense details.

There are only rare instances where you will be asked for and should agree to send in documentation of your income and expenses. Documentation may be requested when negotiating business debts (P&L’s), when trying to modify a mortgage, offer and compromise on tax debts, attempting to lower payments and/or settle an SBA loan etc.

You should avoid sending in documentation when seeking payment or balance concessions on unsecured debts like credit cards. It is unnecessary in  today’s collection climate.

If you have a personal checking account with a bank you are trying to settle a debt with, I would suggest moving accounts. A bank can look at that account you have with them. They will see what you have coming and going.If you are light each month you may think them seeing that type of detail helps. It doesn’t. You should keep money you are saving up to fund settlements at a bank you will not be seeking payment or balance concessions with.

If you are going about seeking lower payments and settlements for less than what is owed on your own – you are on the right path. There are some tips and targets that would benefit you to know. CRN can assist you with maximizing your savings in your DIY efforts. Its what we have been doing effectively for many years.  CRN members benefit by having access to our coaches and specialists who can guide you through all DIY phases, help you target better savings and outline strategies that can limit your risks. If you hit a wall with an account or debt collector you have access to affordable full service professional debt negotiation at 15% of savings. If you would like to enroll as a member check out the services page: CRN Membership

The debt settlement process is not too difficult, but it does help a great deal when you have access to people who can assist you in navigating the twists and turns through your journey. Some of the things you need to be aware of and work through while in the process are:

Who are your original creditor and what is the current trend with each? If an agency has the debt on assignment from your credit card bank, how long have they had it and was it placed with an agency prior? If the debt has been purchased, by whom? Just like dealing with original creditors, not all buyers settle debts at the same rates and not all buyers or agencies offer the same payment terms where the reduced amount can be paid over many months as opposed to a lump sum or shorter term payment duration (you can also save more with some creditors by paying in a lump sum as opposed to 3 month plans offered pre-charge-off). Have any of the accounts been placed with a collection law firm? If so, this fact would impact the priority given to each account. The state you reside in could change your debt settlement plan strategy. For instance, if you live in a state that has more advantageous consumer protection laws like North Carolina, Texas, Pennsylvania, Florida and some others, you have an element of time being more on your side than someone in New Jersey and other states lacking robust consumer protection laws. Then there is the number one ingredient that goes into baking a debt settlement cake; the amount of money you can pull together over a specific period of time in order to follow through with the settlement plan design.

You can get started as a CRN subscriber by clicking here: CRN Membership Enrollment. Membership provides a detailed understanding to all of what is outlined above and will also allow you to work one on one with a pro who does this stuff all day who will help you through it. If you hit a tough account(s) and need some one to do the heavy lifting (the settlement work) CRN is one of the only professional networks who provides full service settlement at 15% of what you save.