Expert Review of Top 7 Credit Card Banks For How They Settle with Customers

There are many sources for rating credit cards using points, rewards, and fees as the main criteria. What follows is a debt relief version of “rank a bank” where I apply my experiences; feedback from people settling credit card bills on their own; trends for each bank that apply today; and each banks past offers for debt relief, as a ranking tool.

Most people reading this will care more about what relief is available from these lenders today. But I have included some review of past behavior in order to better organize the list.

If you need debt relief and help from your credit card lender, predictability and flexibility are 2 major considerations for how the below list is ordered.

Chase credit cards take the number one slot.

This may surprise many readers due to how much Chase gets hammered in the press and media for a host of issues. The state of California has sued Chase for past collection practices. There is still a pending announcement regarding penalties against Chase at a federal level as a result of the same practices the California Attorney General is suing for. Chase even stopped directly suing their card members as a method for credit card collections, and has all but stopped selling their unpaid credit cards into the debt buying market. But all of that happens around policies and procedures for accounts that charge off. This review focuses on debt relief before credit cards reach 6 months late.

Predictability: Chase has been settling pre-charge-off credit cards with their card members for between 25% and 40% for years. While there are instances where settlements are higher, they are for predictable reasons.

Flexibility: Offers settlement with 94 days to pay (split the payments up) before charge off.

History: Even while suing more card members a few years ago, Chase card members were consistently able to get 35% to 40% settlements pre charge off, and even with post charge off accounts sent to Chase legal (sometimes even after a lawsuit had been filed).

Active page to discuss settling with Chase.

2. Bank of America could arguably be at the top.

Anyone who knows the debt relief market well enough to put together their own debt relief ranking list, could argue Bank of America should be at the top. Bank of America, like Chase, is no stranger to negative press, and for some of the very same issues. But here again, sticking with predictability and flexibility, Bank of America wins second place when it comes to settling your credit card debt yourself – directly with your bank – and before charge off.

Predictability: Bank of America currently settles credit card debts for between 25% and 40% before sending your accounts out to debt collectors and debt buyers after charge off.

Flexibility: Offers the 94 day settlement payment terms prior to charge off.

History: Had I been publishing this in 2008 and 2009, Bank of America would be at the top of this list by a huge margin. At the height of the recent recession BofA settled credit card debts consistently for as low as 15% of the balance owed. Prior to the recession, BofA remained fair and consistent with settlement offers you could negotiate with them on your own.

Active page to discuss settling with Bank of America.

Wells Fargo rounds out the top 3 for consistency not savings.

Wells may not issue as many credit cards as some of the banks that follow, but they could teach a couple of them about stable recovery policies.

Predictability: I have long estimated settlement percentages for Wells Fargo credit cards at 40% of the balance owed. I still do. But enough 35% settlements are accomplished by people settling with Wells Fargo on their own, that I find that to be a realistic target prior to 6 months delinquent.

Flexibility: Wells Fargo may not always offer the 94 day terms. There have been instances where the better savings percentage has come from lump sum single payments.

History: Wells has been one of, if not the most stable credit card banks over the last 10 years when it comes to working with their customers to resolve debts before they get dropped into the different collection buckets. The American Bankers Association ran a story recently about how Wells Fargo started tapering off selling charged off accounts to debt buyers last winter, and has now ceased all sales to debt buyers. This change won’t likely last long, and I do not think it will impact pre charge off settlements with Wells Fargo.

4. Discover Card debt settlement policies are unique.

Some readers could legitimately make a case for Discover being at or near the bottom of this list. But if you are looking for debt relief versatility and flexibility amongst major credit card issuers, Discover Cards delivers. Just in some unusual ways.

Predictability: Discover trends today are settling credit cards (on accounts that qualify) for between 40% and 50%. There are some limited instances where settlements have been lower. Discover tends to not offer the 94 days to pay on settlements, preferring to get a single payment when settling before they charge off the account and place it for collections. But Discover is one of few creditors to offer a 60/60 plan to some of their card holders. This is where they offer to reduce the debt to 60% of the balance and spread the payments on that amount over 60 months. Discover does not sell much to debt buyers. And they are one of the more aggressive creditors to place accounts with attorneys for collection after charge off. If the focus of this ranking and review were anything other than pre-charge-off settlements, I would not have them at number 4.

Flexibility: Discover provides a different type of flexibility like mentioned above. Where Discover may not offer the 3 month payment terms; the 60/60 plan; as well as some of the strategic ways I have helped people navigate a Discover settlement when juggling other accounts; combined with a good reduction on their balances; places them above the remaining banks for this category.

History: Discover has been fairly predictable with settlements for the past decade. They do tend to get stubborn with settling, and the amounts they will settle for, when your accounts are very new. They have long had the reputation for placing more accounts with attorney debt collectors after charge off, than other creditors.

Active page to discuss settling with Discover Card.

5. Citibank is a little bipolar with debt settlement.

When it comes to settling with their card holders, it is hard to pin Citibank down for predictability, which is such a huge element for developing a successful DIY debt settlement plan. This fact combined with the other things I will lay out puts them near the bottom of my rank-a-bank debt relief review.

Predictability: Depending on the account, targeting 50% for settling your Citicard is the most realistic expectation to set. Citibank also services other credit cards like Sears, Lowes, and Home Depot. These branded cards can at times be settled for 40%, but often after they are placed for outside collections. When I put a debt settlement plan together that contains 3 accounts; one with BofA; one with Chase; and one a Citicard; I often target settling the Citibank card with a collection agency after charge off (if you had only enough cash resources to settle 2 accounts before charge off).

Flexibility: Offers to settle with the 94 day payment terms like other banks.

History: Over the last 10 years, I have watched Citibank go from being the most likely to sue; to offering to settle in a mailed letter for 35% at just past 90 days late; to offering great temporary hardship plans; to offering none; to settling at 60% as a floor; and even not offering any settlement at all. They do tend to sue for collection a great deal less than in years past, and due to the current collection environment, I don’t expect them to get more aggressive again soon. I do wish they would quit selling their debts to Unifund (a debt buyer), but I will save that commentary for the upcoming rank-a-debt-buyer post.

Active page to discuss settling with Citibank.

6. Capital One is not great for amount saved from debt negotiation.

The offers to settle credit cards with Capital One have been on again off again. That is only part of why they are this low in my review.

Predictability: Capital one settlement percentages before they charge off your account are currently 50%, sometimes a bit higher, rarely a touch lower.

Flexibility: You do have opportunities to settle over a few payments like with other accounts, but there are instances where a single lump sum is all that is on the table.

History: Capital One is the most prone to sue for collections than any other credit card issuer on or off of this list. Recent reports by investigative journalists show that Capital One sues more in Hennepin County MN, and Cook County IL, than anyone else, and by a large margin. One of the biggest issues is with how they have reported settled accounts with a balance still owing on your credit report. I do expect that practice to be curbed due to the supervisory authority of the CFPB, so if you experience this, post about it and let’s bring more attention to that practice.

Special note: Capital One fills a void for people starting off with building credit, and they offer good products to those who need to rebuild credit. Last I knew, they offered the best discretionary income calculation to qualify their accounts into a reduced monthly payment debt management plan with a nonprofit credit counseling agency. If they could rework their recovery policies, and their compunction to sue, they would be closer to the top of this list.

Active page to discuss settling with Capital One.

7. American Express misses in my review for settling debt.

AMEX lands at the bottom of this review for a couple of key reasons. Not the least of which is that you will rarely settle with American Express directly. The accounts that I have worked on as the negotiator (settling direct with AMEX), were done through a very small hardship department. That department had usually only been available when there were severe and sincere hardships – of a type that someone is not going to bounce back from. To their credit, the department has been wonderful to work with and extremely fair with the outcomes.

Predictability: Settling American Express accounts is a bit all over the map. The vast majority get settled with outside collection agencies and attorney debt collectors. The target amounts can range between 35% and 60% depending on who the account gets placed with, and how long the account has gone unpaid. There are instances where settlement is simply not on the table.

Flexibility: There are cases where settlements can be paid over 6 or even 12 months (after charge off). It will depend on who is collecting for AMEX. The lower percentage and best savings offers for settling tend to be when agreements are paid in a single lump sum.

History: American Express is a bit of an anomaly compared to all other credit card issuers in the US. To my knowledge, they have never really built out an internal collections and recovery department with long term goals. They have not sold charged off credit cards into the market. They maintain a black list of their account holders who default, making it more of a mistake if you ever get another Amex credit card product again. Their practices with business cards are odd too.

Active page to discuss? There really isn’t a dedicated page for settling with American Express. Settlements with AMEX are typically done with a collection company. Here is a post about settling with debt collectors for AMEX, and one for negotiating with Zwicker and Associates (national attorney debt collection firm that does a ton of file work for AMEX).

How do other credit card lenders rank for debt relief?

The above lenders combine to control more than 60% of the credit card market in the US. There are pages on this site with ongoing feedback and discussion about settling with many of the credit card lenders you do not see listed here.

Use the search box to find more information about them. If there is no page on this site about your creditor, or a debt collector you are dealing with, you can start one by using the Ask Michael feature.

The above is provided for general information. You can use the predictability for what each creditor may settle for as a base line for your planning. There are reasons why you may be able to settle for a better rate, or not be able to settle at all. I cover these variables throughout the debt settlement section of this site.

I will update this review with new information as trends change, which is inevitable. You can join the discussion for settling with each one of the creditors linked above, and are welcome to post in the comments section below for feedback.

If you are having difficulty hitting these targets when you are negotiating debt yourself, there may be a good reason for a banks reluctance to offer you better savings in a settlement. You can call and talk to me about it at 800-939-8357, press option 2. You may be going about it wrong, or have an account history that makes settling more challenging.

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Comments

  1. says

    Michael,

    I respectfully must disagree with your conclusions about Chase and Bank of America. They make it virtually impossible to settle debts at all. Bank of America is particularly egregious. I have clients with debts with them and when I go to settle, they refuse to speak to me (an attorney) unless my client sends a power of attorney. When I fax one over, they say its no good and that I have to have an original signature. I send that and its no good as it does not have a Social Security number and date of birth. I send that and I am told that I should not have mailed it (how else to show an original signature???). Then after all that I have to complete a statement of compliance with the Telemarketing Sales Rule. And they are no longer giving fabulous settlement deals – they are closer to 40%-50%.

    Chase is almost as bad. They refuse to speak to anyone other than the client and even though I am an attorney they lately have been refusing to speak to me because I live in a state that differs from some of my clients. I am licensed in PA, GA and NC but live in NC (gotta live somewhere!) and my clients are predominantly in PA and GA.

    I have thrown up my hands. If Chase and Bank of America are going to throw these obstacles in the way and if the clients have numerous debts, I will settle those first and hope that my clients get past the statute of limitations before I will have my clients pay these entities, both of which are criminal enterprises in my view (read the whole host of articles by Matt Taibbi of Rollingstone for a detail of their crimes).

    Discover will settle for between 30% and 40% and so will Wells Fargo and American Express. While not great, I can at least talk to them. And while you bash Citi (and rightly so because they claim its their policy not to deal with lawyers) I have at least found their legal counsel to be much more amenable and reasonable.

    There is no negotiating with Capital One – they know only one one thing – no debts will be settled for less than 5o% ever.

    • Michael Bovee says

      Thanks for posting your experiences Rachel. The reviews assume you are negotiating a settlement yourself directly with your creditor.

      I do know that Bank of America began complicating the process for attorneys and debt settlement companies a while ago. But customers working directly with BofA do not experience complications, and regularly settle for less the 40%.

      Chase changed their third party policies in the fall of 2009. Before those changes, and since, Chase has consistently worked with their credit card members to resolve debts before they drop the accounts into what is now a somewhat stalled out collection pipeline.

      I have seen some settlements with Discover less than 40% prior to charge off. Just not consistently enough to publish them as a realistic target. Same for Wells Fargo. With Wells, the larger the balance, the more likely the incremental savings. I have always had a tendency to pad my estimates by 5%, and that will often show through on this site.

      I suppose describing Citibank’s collection policies prior to charge off as being bipolar could be viewed as bashing, but it was not my intent. I used that term as a description because it just seems to fit the on again/off again, softer stance/harder stance changes over the years.

      A friend and industry pro pinged me about Capital One after reading the review. He suggested they be at the bottom of the list, and that 50% deals are just not that common right now. I have seen enough consumers this year hit the 50% target for settling directly with Capital One, but may edit the target after gathering some more information. Recently I had a member get just under 50% on one account direct with CapOne a few days prior to charge off, and get 55% with a contingency collector for his other Capital One account shortly after that. I have also seen refusal to settle no matter the condition of the file.

      I hear you on the Taibbi pieces. If I were to include factors other than the above banks flexibility and predictability of offering debt relief to their credit card customers before charging them off, the review would come out very different.

  2. Charles says

    From my recent experience, Chase, BofA and Disc were fairly easy to negotiate good settlements with.

    Disc was done just before Charge Off at 36% of original balance before all the late fees. BofA, the same, at 27%. Chase was a little goofy. They wouldn’t come down to 40%, then it Charged Off and went to collections. Two different collection companies quickly took 27% and 32% (before any late fees). Now I have to the work for filing for insolvency on the taxes.

    Cap One has Charged Off, so I’m still waiting to see what they will do.

    • Michael Bovee says

      Thanks for posting your results Charles. The Chase outcome was goofy. They send collections out to contingency collectors, so they paid out to collect less than would have been the case otherwise. Odd stuff can happen with virtually every creditor and collector out there.

      You may have one of the accounts Capital One does not bend very far.

  3. steve says

    hi, love your site. If I handle debt reduction myself with the credit card companies, will I have to make lump sum settlement payments to them ,or will they accept a monthly direct payment installment?? This could be a problem if they only accept lump sum payments. If you can”t make lump sum payments, wouldn’t it be better to use a debt reduction company. What is your opinion of the company, Curadebt ? Are they reputable? !8% fee

    • Michael Bovee says

      steve – You can negotiate settlements with creditors where you get a reduction AND time to pay. Settlements prior to charge off will not typcially be allowed to exceed payment plans more than 94 days. Settlements done after charge off (typically more than 180 days since last payment) are often available with very flexible monthly terms. But all of this is situational (from one account, one debt collector or debt owner, to the next.

      Negotiating your own settlements is not rocket science, but there is a science to it. If you post the balances and the creditors for each I can better help you estimate what you will need to save up, and over what period of time. You can then add in Curadebt’s fees to that and estimate how long all this will take.

  4. Ambert says

    Hello,
    This is long but I tried to put as much info as possible so you have the FULL picture…
    I am 44 years old and never thought I would be in this position at this age. I grew up in a military family and money was always tight. I hoped I would not be in the same situation when I was an adult, but I am.
    I am currently in credit card debt about 100,000 in total. 3 bank of America cards total 22,000. American Express card total 10,000. 2 Discover cards total 14,000. 3 Citibank cards total 48,000. Wells Fargo card total 7,000.

    I am current on all cards and have never paid late on anything in my life. I am trying to decide if debt settlement is risky because I have 3 rental homes that I own. I also own the home I live in. I live near Houston, Texas and all the rental homes are all in the Houston area. All of the homes are in my name even though a partnership recognizes 2 of the homes on a partnership tax return. The partnership isn’t listed as owner because it was difficult to get financing. All homes have equity of about an average of 20,000 per home. All homes have mortgages on them ranging from 60,000 to 100,000. One of the two homes in the partnership has a loan related to it from a family friend for updates to a home. This loan was made to the partnership. My wife isn’t listed as owner on any of the homes. Some of the cards are in her name only, some my name only, and some joint. Overall we are both about 50% of the debt.

    I am running out of money and cant afford the minimum payments in about 5 months. I have family that is willing to gift me around 35,000 and I can come up with about 15,000 more for a total of 50,000 to lump sum settle with all creditors. I feel it would be better to settle with a lump sum rather than to spend the lump sum money to make minimum payments and run out in early 2016 anyways. Some of the cards have balance transfers on them from ranging from around 2,500 to 21,000.

    Bal Transfers:
    Nov 2nd 2014: 2,300 on a bofa card with credit limit of 2,300.
    Mar 11th 2014: 12k on a bofa card with limit of 12k, then around 500 on Sept 28th 2014 as balance was paid down a little bit.
    Oct 28th 2014: bofa card, 2 balance transfers of about 3,000 each. this bofa card card has around 6k limit.
    Sept 30th 2013: discover card with 7,000 limit was used for 7,000 xfer to pay other creditors. Nov 2nd 2014 $800 xfer.
    Oct 2nd 2014: discover card with 7,200 limit was used for bal xfer of 7,200. then dec 14th 2014 a xfer for $190.
    Oct 23rd 2014: citi bal xfer for 21k on card that has a 21k limit. then Dec 8th 2014 a transfer for around 195.
    Nov 3rd 2013: 3 citi transfers that maxed out a citi card with a 15k limit.
    Oct 11 2014: citi card bal xfer for 9,000 with a credit limit of 10,800.

    I used the 2 different Citi cards to pay health and home insurance on Nov 21st 2014 and Jan 4th 2015. the amounts were around 675 and 905 each
    The Amex card has no bal xfers and it is what we use as our day to day credit card and always have paid the balance in full until a 2 months ago. I’ve used the Amex to pay some holiday travel expenses for flights for 825 and a home repair for about 425 and also 375 for child’s education. This was all done in Nov 8th, Nov 29th, and Dec 28th 2014 respectively.

    My total available credit is about 104,ooo so I only have about 4k available between all cards with about 2k of that being available on my Amex card. All of the other cards have 15-400 of available credit. All cards are at 4% or less Apr. Two cards promo rates expires in March 2015 and another expires in April 2015. The rest expire in late 2015 through spring 2016.

    I’ve used the money to pay living expenses and insurance and property taxes etc. All cards are due in the middle of each month. I plan on paying the minimum payments until June 2015 and then I will not make the July 2015 payments which will make me become one day late beginning in July 2015 when I don’t pay what is due on each card. I hope that I’ll be able to settle around Dec 2015 or Jan 2016 before they are charged off and while allowing these balance transfers to be older than 12 months for the most part.

    My wife and I both worked until 2007 but she has stayed at home with our 2 girls who are 3 & 7 yrs old, and we have slowly spiraled into way too much debt than we can afford.

    I’ve had some large purchases on my debit card with a bank that I also have credit card with. Will the credit department scrutinize my debit card purchases to decide whether or not to settle with me? The charges will all be about 10 to 13 months old when I am about 150 to 180 days late on my payments.
    Is it unlikely that I will get any good settlement offers because I have homes with equity?
    Will I most likely be sued and not even offered a settlement because of the equity in rentals, i have no major heart warming excuse, and I have balance transfers.
    If they get a lien on my homes, can they force me to sell it?
    Is it unlikely for them to sue for liens if I settle when im 150 to 180 days late? I don’t let plan to let these go past due much further than just right after charge off at the latest.
    I plan on waiting to fall behind so the balance transfers will be a year in the past when i am around 120 to 150 days late.
    Can I use a few cards for essential expenses if needed from now until about 2 months prior to me stopping making my minimum payments in July 2015? I plan on not using any of the other ones beginning in Feb 2015.
    Can they garnish wages or bank accounts in Texas?
    Do you think since I can come up with around 50,000 lump sum that I can most likely avoid being sued and also get offers in the 35% to 45% range? I would hate to start the process and not get 35% to 45% offers because of my overall situation with owning properties and bal xfer history.
    Will it be a problem that I don’t have some big reason(job loss or health problems) for being behind? I am behind because we went from a 2 income no kids in 2007 to one income with 2 kids for the last 8 years. Over that time we have spent too much and tried to juggle balance transfers but it caught up to us.
    I just wanted you to see my full picture so you can give me your professional opinion.
    Thanks so much for all your advice!
    Ambert

    • Michael Bovee says

      Which accounts and balance totals are in your wife’s name only?

      Those balance transfers are going to be of real concern. I will have more feedback to offer once I know which accounts are only in your wife’s name.

      I am doubtful that a collector at the bank you would negotiate with will be scrutinizing debit transactions from checking accounts with them. That said, your bank accounts being at the same bank you will later be negotiating with to settle credit card debts for less, is something I advise against. You do not have to close your bank account at that bank, but I would encourage you to use a different bank for your settlement savings account, and even for deposits and bill pay checking.

      The rental homes showing current mortgage payments on your credit reports are going to be questioned by a debt collector, or recovery department rep, using certain types of collection scoring software. The impact can vary from one account to the next. You are, in my opinion, not going to be able to target any of the lower end settlement deals some of your creditors will negotiate down to. More on this too, when I know the separation of accounts.

      It is more likely you are sued by some creditors given the assets, but there is a way to limit that exposure. It takes some creativity that I will likely cover in follow up comments.

      Getting a lien on any one of the homes is the result of being sued and a judgment entered. You may be able to avoid that all together. But if they get one, I do not see many forced sales at all. Your bigger risks are with the AMEX accounts. I will have some creative suggestions for those, and perhaps some others.

      I would encourage you to read up on using some credit cards while trying to settle others. Given the amounts at stake, I would use debit cards attached to a checking account at a bank I am not settling with while getting the bulk of my settlements done.

      Your risk of wage garnishment in Texas is nil. Your risk of a bank account levy after a court judgment is real enough. You will have plenty of warning of this risk, given the fact they have to sue and get a judgment first. And there are often ways to navigate even that, were it to come into play.

      I think it is possible to navigate most of the debt for the 50 percent you will pull together. But you may not settle a couple of the smaller balances.

      You do indeed have a story, and it is more common than you think. You went from a 2 person income household to one. And you failed to adjust your lifestyles and financial expectations accordingly. There is dialogue to have and maintain around that theme. You can still fit a hardship demographic. The issues I see are the account usage and balance behavior patterns.

      Once you post answers to my questions, I can offer some of the ways I see this shaking out. You have a window to try to fit into using the available funds you will have to settle with larger balance creditors, while maybe paying off other low balance credit cards now and putting them in the sock drawer.

      The alternative will be chapter 13 bankruptcy, which is something that can be done now, or in 2016 too, if your not out of the woods on the Citibank and Bank of America credit cards. It would not be a bad idea to consult with an experienced bankruptcy attorney about what chapter 13 looks like with your situation. That kind of detail would be good to know and compare with what you are up against trying to settle these debts.

      • Ambert says

        We are both authorized users on ALL accounts.

        We jointly are responsible for the $12k bofa card opened in 1997.

        My wife is solely responsible for the $7.2k discover opened in 2012(this is the discover card with the more recent bal xfers compared to the other discover card that has a 7k limit which is in my name), the $21k citi opened in 2002, and the $11k amex opened in 2010.

        I am solely responsible for all the other cards.
        Thx!
        Ambert

        • Michael Bovee says

          You can call in and remove the authorization for one another from each account. It will limit unnecessary credit report damage for each of you. I would if it were me.

          I like her having the 11k AMEX credit card just in her name. You will have a better shot at settling that one at all, and can target the range I gave in the original post above. Had that not been the case, and the likelihood that you are dealing with third party debt collectors before charge off with AMEX, I would have wanted to be a bit more creative on that.

          That Citi account can also be targeted for the lower bound range given her not working.

          I can see a path where you let all of the accounts in your wife’s name go, and pay yours down to close to zero and save yourself the trouble. You can settle hers as you save up for them, and when the best deals are available.

          Your settling all accounts within the cash flow framework you have, inside of charge off where advisable (and possible given the recent account activity), is possible.

          I also think you should talk all this over with a BK attorney before you make any decisions. If settlement is the route you decide on, post an update about that.

          Also realize the tax implications from settling debts that will apply to you. Given the assets you own, or are part owner in, it is safe right now for me to assume you will owe tax on at least some of the forgiven debt from settling.

          • Ambert says

            My wife just started working in September 2014, but only part time with no benefits. She hopefully will have full time employment in the fall of 2015 and with benefits.
            If I use all my potential lump sum money to pay off my debts, I will not have any money to pay off hers as they become extremely delinquent. This would cause me to take a long time to pay hers off. Since Texas is a community property state, will she not be probably sued and then liens on my property?
            Do you not feel good about me trying to settle both our debts at same time.
            Thx.
            Ambert

            • Michael Bovee says

              If not for your account usage behavior on nearly all accounts of size, I would good about it (great if less property in your name). You will have to rely on creditor policies taking a back seat near the charge off dates on some of these.

              I do not like the Discover cards with recent balance transfers, but maybe at 60 percent lump sum.
              Citibank may end up getting done on first placement with a third party.
              BofA is loosest amount your accounts, so not all that concerned here, and the rates will possibly be improves with the first debt collector they place your accounts with.
              Wells Fargo is the lowest balance, and almost an after thought.
              Amex accounts are going to land in the lap of a contingency debt collector, or a law firm debt collector, be ready for 60 percent settlements here, but aim a bit lower to be sure.

              I do like your chances of settling for half, yes, but do like to point out different strategies too.

              Her being sued can be avoided and/or delayed depending on the circumstances. Property liens do not have to result from collection lawsuits being filed, but the concern is legitimate.

              • Ambert says

                Hello,
                What do you mean by “I will have to rely on creditor policies taking a back seat near the charge off dates on some of these?’ Also which cards are “these?”

                Is it a concern about my wife working part time now and then hopefully full time within the next 6-9 months? Will this affect our settlements?

                From a prior post to me you said, “I can see a path where you let all of the accounts in your wife’s name go, and pay yours down to close to zero and save yourself the trouble. You can settle hers as you save up for them, and when the best deals are available.” I guess I don’t understand that because I would have to use the 50k I have to pay off all the cards I’m solely responsible for and would be left with nothing to settle her cards with.

                Would it help to pay off the discover or Citi card with recent balance transfers in full now and then use that particular card for regular living expenses over the next 5 months until I had planned on stopping payments? My thinking is that it would make my recent activity regular purchases and not balance transfers. I had planned on stopping the use of all cards in in February, but if I do this particular strategy I would be using the discover or citi over the next five months and only paying the minimum payment. I cant afford to pay off and not use… Is it very important to stop using all my cards in Feb which would be 4-5 months before we stopped making payments in July. Or can I use for longer which would put me closer to July.

                On the cards with 2,500 limit, why can I not include them in the settlement? These cards are from the same creditor we have several other cards with. Cant we settle each creditor all at once? Or does each different card with the same creditor have to be settled individually? Will my wife’s cards have to be settled separately from my cards? If so, the only card we would settle together is our jointly owned card? Will I be allowed to be the person settling for my wife’s accounts or does she have to do all the negotiating?

                I really do not want to go the bankruptcy route. Can you explain to me the risk of trying to settle first and if that isn’t successful, then I could file for bankruptcy. I was thinking at worst case I would be able to settle most of our accounts for 50% and any that didn’t get settled eventually would be included in bankruptcy if needed.

                Can you give me what %s each account will probably be able to settle for given my particular situation? If possible can you give me the range of what you think would be the best to the worst and then let me know what you think will most likely happen?

                Obviously cards in my name only and the card we are joint owners on can put liens on my property. Can the cards that are solely in my wife’s name put lien’s on property that is in my name only? Texas is community property state, not sure if that matters.

                Thanks so much,
                Ambert

                Thanks so much!

                • Michael Bovee says

                  Ambert – I typed out a long and detailed reply, and then fat fingered the keyboard somehow and it all disappeared. I do not want to retype it all. I am available to consult with you on the phone about all of the details and strategies I see possible. If you are up to it, just fill in the contact box in the right side bar column. Those all copy to me. You can also just send an email back to the same address you get these comment notifications from. Those emails only deliver to me.

  5. Christopher says

    I received a letter yesterday from a Perry Law Office in Fort Wayne, IN representing American Express on a 32K credit card debt . It is not a law suit letter just a letter stating that their client wishes to work with me on resolving the issue and I have 30 days to respond that the debt is valid. A month ago I received a letter from a Debt Collector saying they were running the account and I had 30 days to respond that the debt was valid. I had been getting correspondence from American Express and another collection agency a little before that offering a settlement of $18K and $11K. My questions are is the Law Firm representing American Express or one of the collection agencies? If there last offers to settle were $11k then is that still an option is there an even cheaper one? Lastly is it better to request arbitration before the law firm files suit?
    Thank You

    • Michael Bovee says

      Are you in Indiana?

      American Express does not sell defaulted credit card accounts. The attorney would be collecting on behalf of AMEX.

      That 11k option is roughly a third of the balance owed, and is close to the lower end of what I see AMEX cards settle for. If there were a lower deal, it would not be by much. Now that an attorney is collecting, if licensed in your state, and depending on how collectable you look (amongst other considerations), I do not think you will see 11k again. Maybe close depending on the circumstances. How much can you pull together to settle with?

      What is your goal with requesting arbitration?

  6. Rachel says

    Chase routinely writes off bad debt. So much so that when I have a client with several debts one of which is Chase, the Chase debt goes straight to the bottom of the pile and gets resolved never as a 1099c will in all likelihood be issued.

    American Express is so difficult to work with lately but I have not any clients with a real hardship. Now Discover will go lower and do 30% deals if there is some peculiar hardship.

    Midland routinely gives me 45% but with proof of Social Security or SSDI or something like that they will go down to 40%.

  7. Leece says

    Hi, I currently have 31 K in debt with American express. They are willing to negotiate to 21K saying I am responsible for 70% of the debt. They indeed sued me , as I answered the door in my towel for our local sheriff’s department. Is this a good settlement?

  8. Michael Bovee says

    70 percent settlements with American Express when you have been sued are not uncommon. You may be able to negotiate a better savings, and answering the complaint as if you are in it to win it (defending the suit), could further help your cause.

    When were you served?
    Who is the law firm handling the case for AMEX?

  9. Rachel Hunter says

    No, this is not a good settlement in comparison to what I get for my clients. I have settled American Express accounts for 40% for litigation accounts.

  10. Leece says

    Hi Michael,
    The law firm is through AX , Global Collections and Strategy Legal Group , I was served on Monday 2/9/. I can not come up with any more money in six months. I called my retirement fund who has so many withdrawal criteria, including my place of employment withdrawal criteria, that the best I could do was take a 4,000 loan at 4.2 % 76 4 a month repayment , to give AX a down payment to negotiate the charge off o f 22 K and make the payment something I can afford , until I have paid my debt. I do not want a legal battle . I can only hope they accept a 500 a month payment and the 4,000 down payment of good faith.
    Thoughts?

  11. Michael Bovee says

    I do not think you will have much trouble getting them to agree to 500 dollars a month. In fact, I would leave off the 401k loan, and just aim at the 500. The problem here is that the collection attorney could require you to stipulate or consent to a judgment. It is what it is with this stuff some times, so that may not be a problem for you.

    I do not look at defending against collection lawsuits as a battle. I see lawsuit defense as strategy to get a lower settlement, or more time to come up with money to negotiate a lump sum pay off. This can buy more than 6 months time. In busy courts it can buy much more than that.

    I do highly recommend you work with an experienced consumer law attorney in that effort. Many with the experience you need offer a no cost initial consult, so the price is right to gather up more information. If you like, I can email you contact details to attorneys I know of that are best suited to help you. Post the name of a large nearby city.

    Also, what if any information have you gathered about your options with chapter 7 bankruptcy?

  12. Jon says

    Hi Michael,

    As I was negotiating what is clearly the crazy world of debt settlement last year, your site and your advice came in VERY handy. I promised myself that when all was said and done I would post a comprehensive update to give you information on how everything worked out. So here it is, for your help and for others!

    To quickly recap, because my mother was elderly with her only assets being Social Security and a modest pension, which made her basically judgment-proof, I felt I had some advantage in settling her significant credit card debt. On the other hand, I was doing this on my own and did not want it to last forever; she and I wanted to pay something on each card from her pension savings, so I was willing to negotiate to reach quicker settlements. (As I noted above, bankruptcy was not an option: since she lived in my house, according to a reliable attorney the newer bankruptcy laws would have looked to my assets to pay off her creditors, and that was not going to work.)

    First things first: getting the Power of Attorney was essential so that I could notify each company not to call or contact my mother in any way except for in writing. Some companies required their own POA forms after I sent in a legitimate authorized form, so that took a little longer.
    The phone calls stopped very abruptly as soon as I put in writing that they needed to stop based on state/federal fair debt collection laws.

    I believe it was very advantageous to have me as the person the banks had to deal with. My mother in no way wanted to deal with these banks, and since it wasn’t my personal debt, they couldn’t really be mad at me in any way when I talked with them. In a sense, it made it easier for the bank and me to seem like allies in trying to reach a reasonable settlement. After the POA’s, they never needed to speak with my mother again, including at settlement times.

    I started calling around once each POA was finalized. There were about 10 banks or so (some with multiple cards), so I picked a day or two each month to work through the calls. If someone wanted to speak with me, I continued; if that bank wasn’t willing to negotiate, I just made a note and called back the next month. Eventually I started asking when, at that bank, someone would be willing to negotiate; often, the phone representatives were fairly forthcoming with information about when, based on the bank’s collection schedule, things might change.

    Here’s where each bank settled:

    • Comenity – settled at $2000 (50% of debt)
    • QVC – settled at $1039 (35% of debt)
    • Bank of America – settled at $1494 (25% of debt)
    • CitiBank – settled at $750 (44% of debt)
    • Capital One – settled at $7000 (41% of debt)
    • Citizens Bank – settled at $5000 (40% of debt)
    • Chase – see above – settled at $0 on $23,575.

    A few lessons and explanations:

    • In general, the more debt, the easier it was to negotiate. Chase was very strange. I kept offering 40%; they refused. We got right up until when they were sending it to a third-party debt collector, and I insisted on speaking with a supervisor. He asked if I could get a letter documenting that my mother could no longer work, and yes, I was able to do that. He said then that they would make the whole file “medically indigent” and write off the total debt. I actually kept saying that we were willing to pay 40%, but they couldn’t take that – only $0!

    • Conversely, I never was able to reach any agreement with Kohl’s Department Stores on a debt of $1640. They would not go below 50%, and would not take my 40% offer, and I eventually just said that they’d have to decide whether to file suit for the money; since my mother is judgment-proof anyway, I figured I was calling their bluff, but they faded into the sunset (for now, anyway, but I am basically unworried if they do sue).

    • I found it very necessary to have “ready money” available for the settlements, but I had to be careful where it was. The later banks wanted all types of documentation that my mother had no savings; pension monies are judgment-proof, but not savings. So I made sure that I personally had enough money in my savings that when a bank offered to settle I could transfer the money quickly, then get reimbursed from my mother’s pension savings.

    Again, I want to thank you, Michael, for all your great advice and wisdom last year. My mother’s situation was difficult, but I don’t think entirely unique. Given the particulars, it made sense for us to handle it this way, and I think we did well, and from a moral perspective, most of these companies got back their principals many times over; what they were forgiving was very ridiculous interest rates that my mother simply could not (and probably was never able to) afford.

    Let me know if you’d like any other info. I’ve forgotten to include –
    J

  13. Michael Bovee says

    Thanks much for posting the update and results Jon. I moved your comment over to a post more about negotiating directly with creditors as opposed to debt collectors. Anyone interested in reading original comments from Jon can see them on this active reader question page about negotiating with collection agencies.

    I have seen banks completely forgive balances when there is documentation that evidences they will never see a penny, and nor would any debt collector. Chase’s position on this is good to see. There are several credit card banks discussed on this page that could learn from that. New guidance from federal regulators is helpful along these lines.

    You did really good work!

  14. anonymous says

    hello! You wrote: “I have seen banks completely forgive balances when there is documentation that evidences they will never see a penny, and nor would any debt collector.”

    What kind of documentation is that? How does one get it?

    Thanks!

  15. Michael Bovee says

    Currently I see Chase bank completely forgive unpaid credit card balances when there is a fixed income, judgment proof, severe medical, or other documented situation that suggests they will never be paid. This is obviously case be case, and the documentation will be different for each person.

    I have seen a really tiny internal hardship department at American Express do the same.

    Midland Funding is a huge national debt buyer that regularly does the same.

    There are dozens of examples of this kind of thing. What is your situation?

  16. Rachel says

    its called a 1099c cancellation of debt. Many creditors issue them – Bank of America does. Someimes Discover and American Express will as well when a debt is settled and the creditors write off the forgiven balance.

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