Welcome to CRN’s Debt Settlement and Negotiations Guide. This guide makes up the largest portion of the debt relief and credit guides published on this site. That’s 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 settling with 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 guide focuses 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.
Get the Most Out of This Debt Settlement Guide
We highly recommend you read through the debt settlement program in order. 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 might want to avoid debt settlement all together. This recommendation includes any of you reading who 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 our debt settlement guide, you will know more than the majority of sales people who are the front line for selling debt negotiation to the public.
Before You Jump Into Debt Negotiation
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 considerations 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.
We decided to create and publish this guide 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, and on our DebtBytes YouTube channel.
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.
What is Debt Settlement?
Debt settlement is what happens when you negotiate a payoff for less than the total balance you owe on a debt. The lower payoff amount will be something the creditor or debt collector agrees to document and accept from you as payment in full. The lower negotiated amount should be something you can afford to pay in one lump sum, or over time if it is a term settlement agreement.
Negotiating and paying a lower amount to settle debts you are already late with is very common. There are elements to settling some types of debts that you can set your clock to because the process can be highly predictable. And there is both safety and comfort in this predictability.
Settling credit card bills, and other debts you cannot afford to keep up with paying, is a pretty straight forward concept. And so is determining whether settling with creditors and collectors is right for you. Let’s start by narrowing down the basic principle of the 3 most common debt solutions to one sentence each.
- Consumer credit counseling and payment consolidation is based on the principle of “What can be paid – should be paid”.
- Debt settlement is based on the principle of “Paying something – is better than nothing”.
- Bankruptcy is based on the principle of “What cannot be paid – won’t be paid”.
If you are looking at debt settlement as a way to deal with problem bills, it is likely because you are in the middle. You cannot fully afford the debts you have now, but can afford something, and would prefer to manage the situation outside of bankruptcy.
How Debt Negotiation Works
Each of your credit card lenders will have a policy for how they handle collecting on accounts that go delinquent. Some of these policies include:
- Getting you back on track by offering reduced payment hardship plans that may be temporarily extended to you for 3 to 12 months, or applied over the life of the balance in a 5 year payback schedule. Read more about credit card hardship payment plans.
- Debt collection efforts internal of the banks own recovery department.
- Charge off your debt as noncollectable and place your account with a collection agency who will bug you over the phone and through the mail to get you to pay.
- Placing your account with a debt collection attorney.
- The legal rights to collect from you could be sold to a debt buyer.
Debt settlement is a method to resolve unpaid credit card bills for less in every one of the scenarios above. That’s as complicated as the debt settlement process will ever be.
It’s the “how will debt settlement work for me” and “is debt settlement even for me” questions that make for the details.
Is Settling Debt Right For You?
Ahhh… the details. Yes, getting the best deals, and the most from settling debt, is in the details. And the details when negotiating and settling can change from one creditor to the next; from one collection stage to the next; and most certainly from one personal set of financial concerns to the next.
The majority of what happens in the process of settling credit card debts is controlled by the policies, procedures and protocols that are set up by your creditor or outside third party debt collectors. Knowing the policies and procedures for each of your accounts you will settle, in advance of the settling, is a huge benefit. You simply plan ahead financially for the settlement opportunities that will be presented, and make the right moves along the way.
You can use this site to help you settle your debts on your own. We offer upfront education about the debt settlement process, supplemented by on the ground and “right now” details provided free in the comments section of this website. And you can get one on one dedicated professional feedback by requesting an expert debt settlement consult over the phone.
We know that many people are freaked out by the concept of negotiating and settling credit card debts on their own. You also have access to professional debt negotiators, and often at the most reasonable cost found in the industry. If you would like to talk to me, Michael Bovee, about that, you can reach me at 800-939-8357, choose option 2.
In the next section I will bluntly outline who debt settlement is right for and why debt settlement is a race. You may already be in the race and not know it.
Continue on in the debt settlement guide to How and Why Banks Settle Credit Card Debt with You.
As you will see throughout the site, I respond to reader questions and comments throughout the day, so feel free to post below for feedback.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement (you are here)
How and Why Banks Settle Credit Card Debt with You
Types of Accounts to Include in Your Debt Settlement Plan
Why Settling Credit Card Debt is Like a Race
How to Settle Credit Card Debt Quickly
How to Talk to a Debt Collector
How to Negotiate Credit Card Debt Successfully Yourself
7 Largest Credit Card Banks and How They Settle Debt
Get Debt Settlement Letters and Agreements from Collectors
Paying Debt Collectors After You Negotiated a Settlement
I HAVE BEEN ONLINE FOR ABOUT THREE HOURS NOW …I AM ON SSDI AND ONLY RECEIVE ONLY 1025 A MONTH IVE GOT SO MANY ADVICE I DON’T KNOW WHERE TO TURN. I WANT TO BE CONSIDERED FOR JUDGEMENT PROOF. IM STRUGGLING TRYING TO PAY ALL MY CREDITORS AND I KNEW NOTHING ABOUT JUDGEMENT PROOF UNTIL TODAY .NUST TEMP. OR UNTIL I CAN DO BETTER FINANCIALLY I NEED HELP AND DON’T HAVE LOTS OF FUNDS . SO I WANT TO SEND THE CREDITORS A LETTER FROM SSDI PROVING TO THEM THAT I’M DON’T HAVE IT ALL I HAVE IS SSDI TO LIVE ON .CAN YOU HELP ME PLEASE?
Check out my article about being collection proof on a fixed income.
I have wrote this issue on a previous post but the date states 2016. I am hopeful that this may be seen. I apologize for duplication if you received this previously. Sessom & Rogers sent a me summons of being sued. S&R purchase my debt through Bank of America whom write off my account 2/29/24 $7,715.00. My last payment on the account was sometime in 2022 however; S&R sent me a paper stating on or about 7/11/23 (which is not correct as it did not show an amount paid). I called S&R 18 times in the course of 30 days and sent a letter. I could not reach them and reached out to a bankruptcy lawyer. I could not afford the lawyer. I received a judgement letter from S&R 9/5/24. The letter stated 7/25/24 it was filed that a judgement was enter. However, I never received a hearing. I called the county courthouse and was told there was not hearing for my case. The clerk signed the paperwork that was sent to me from S&R. There is a signature of the clerk but no legible name. Lee from S&R signed the paper and put the date of the notice for 9/5/24 but the paperwork states it was file 7/25/24. I called the county clerk and explained all of this. The clerk stated she sees the judgement however, there is no court date for a hearing. She told me to be on the lookout for a notice of rights. As of today I have not received anything from S&R and they never called me back. The phone line stills states high call volume to leave a message. I am not sure what I can do please advise.
Thank you in advance
I would run your situation by an experienced debt collection defense attorney in your state. They can comment on whether something should or should not have happened in your situation, and where to logically takes things from here.
How would I go about doing that? I couldn’t afford a bankruptcy lawyer. I have no clue how to get in contact with an debt collection defense lawyer or how much they would cost. I am worried as I am the only provider for my family.
You can find some using the drop down menus here: https://www.consumeradvocates.org/attorney-directory/
Hello, I have a consumer loan with Goldman Sachs of $21K that has been charged off. I got myself in a massive amount of debt, and I have negotiated payment with my other creditors through a credit counseling company. That has been going well. But now Zwicker & Associates has contacted me about this debt, which I cannot pay, based on my current debt payments and expenses. They have made a settlement offer of $15K, but it’s over 24 months. I can afford to make a maximum monthly payment of $200 over time, due to my salary and expenses. When I talked to the representative at Zwicker, he told me the online offer was the best offer, and basically, the only other thing I can do, if I cannot afford the monthly payments of over $650, is to wait for the attorney and get sued, because the attorneys are “looking at my file now.” I don’t know what to do, because I literally don’t have the means to pay this debt with the terms they have given me. Can you provide some guidance please?
I can help you think through the different ways to tackle this. You can schedule a call with me here: https://calendly.com/debtbytes/15min
Hi Michael, First and foremost, thank you for your time and for sharing your knowledge with us. Any feedback or guidance on my situation would be greatly appreciated. Here’s my credit card debt details, prior to getting into my spiel:
Chase Freedom – $4.4k balance @ 28.24% APR – $90ish in interest a month
– Credit limit is $5k
Chase Sapphire – $24.8k balance @ 28.24% APR – $531.85 in interest (more numbers below)
– Credit limit is $25.8k
March –$782 minimum; $531.85 interest
February – $733 minimum; $511.54 interest
January – $627 minimum; $429.13 interest
December – $452 minimum; $298.63 interest
November – $356 minimum; $245.86 interest
October – $270 minimum; $182.62 interest
In the past two years I started my own business, moved, incurred some medical bills, and a hefty veterinarian bill, all of which have contributed to my current financial situation. For the past 4 months, I have basically been living off of my Chase Sapphire credit card. I always pay more than the minimum, but am never able to fully pay off the interest, and sometimes not able to pay off what I spent that month. I just cannot get ahead of the interest.
I have been trying to build up my business as fast as possible, but my income stream isn’t consistent, so it’s hard to have the right amount at the right time when a bill must be paid, hence the need for a credit card at all.
Yesterday, I deleted the Sapphire card information from everything possible and moved all of my bill payments to my Chase Freedom card, which will max out soon as well. But that is a later concern….
The main point here is that next month, I will not have enough money to pay the minimum amount due, nevertheless the interest amount on the Chase Sapphire card.
I really really wanted to avoid closing this account because it makes up nearly half of my overall credit, so if/when I close it my credit score will get demolished (as of this morning, my FICO score was sitting at 698, but it’s normally in the 700’s).
To avoid closing this account I have pursued every possible option I can think of. I have applied for various balance transfer cards and for various debt consolidation loans, all of which I have gotten denied for – despite being “pre-approved” for some, and having a good credit score, and excellent payment history. I am assuming I have been denied because of my credit utilization rate and/or my current income amount. I’ve even considered taking out money from my 401k, but apparently they won’t let me take out part of it — so I’d have to take out the entirety of my 401k savings and get taxed on it, which I obviously want to avoid.
I called Chase to explain my situation. They said they can’t offer me any sort of payment plan directly because I always pay on time and always pay at least the minimum. HAHA. They told me I could speak with someone at a non-profit org they work with called the Credit Counseling Agency, where we would negotiate a monthly payment amount and interest rate. I would pay that agency who would then pay Chase.
I am wary of whatever the bank recommends I do, which is why I am here. Right now it seems like I don’t have any way to avoid closing the Sapphire account – unless I ask my family for a loan, which is tricky…So it seems like all of my options are as follows:
– Avoid closing the account, keep my credit score in good standing by asking a family member for a loan.
– Avoid closing the account, keep my score intact by taking out all of my 401k, but get taxed on it and lose money.
– Close the account, destroy credit score, and call the Credit Counseling Agency that Chase recommended. I am concerned they will still try to give me a high interest rate and I’ll continue drowning in it, but don’t know till I speak to them.
– Do not pay anything on the Sapphire card, wait for one or two cycles and then call them to try and negotiate a payment plan directly with the bank. This would of course close the account and crush my credit score.
^ I saw you reply to another poster about waiting around 150 days after not paying the bank to call and see if they’ll negotiate and set up a payment plan. Do you think that would be a good option for me?
Are there any other approaches that I am missing here? I haven’t looked into a local credit union, and tbh don’t understand the difference between that and a business online, but apparently folks say that’s a possible option. Though I’ve gotten denied on all other consolidation loan requests, so why would that be different…
As I said, any general thoughts or guidance on my situation would be incredibly helpful. I’m not sure what option is the “best” and feel stuck. This is so overwhelming and anxiety provoking. I had to go through this last year with Citibank. I ended up closing 2 accounts with them and entered into a hardship program. I think I got 0% APR because I cried on the phone and the lady felt bad for me lol. Bless that woman.
Citibank 1 – $6.5k balance @ 0% APR – $135/month
Citibank 2 – $6.4k balance @ 0% APR – $132/month^^ both accounts are closed
Anyways, thank you in advance. I truly appreciate it.
Thanks for the thorough details you provided. I would look at your situation as requiring debt intervention, as you cannot afford the debts you have, and borrowing more in some situations like this is akin to rearranging the deck chairs on the titanic.
Check out my article review of the 3 main debt relief options.
Working with a nonprofit credit counseling agency to get your interest rates reduced is standard stuff, as you can tell from that article. It actually does NOT hurt your credit like settling debt, or bankruptcy would. Having said that, there is a time and place for setting aside credit score concerns and dealing with the debt problem head on, even if there is some short term credit pain.
You can call my hotline and get a monthly payment and lower interest rate quote from a counselor at 800-93-8357. Press 1 when you hear me go into the menu options.
If that monthly payment quote is not enough relief, you may need to think about one of the other 2 options in that article.
If you want to talk through your situation in more detail, and then get more detailed actionable feedback from me, schedule a call with me here: https://calendly.com/debtbytes/15min
Thank you so much for your helpful feedback, Michael!
Hi Michael. I talked to you years ago & you were very helpful! Sadly even after entering a debt management program I’ve made very little progress overall, mostly because I’ve racked up debt on the Apple Card… including using it to cover a charge-off for a debt that went to collections.
– I have $8,000 in Apple Card debt at over 27% APR; the monthly minimum is around $260, and I’ve missed no payments so far (I enrolled in a “customer assistance program” to skip 1 payment without interest). I know Goldman Sachs is the (current) financial partner, but I’m having trouble finding any information about hardship programs. I also learned that they’re splitting from GS in the next year, but I’m not sure if this will make negotiations easier or harder.
– I also have nearly $21k in debt remaining in my debt management program, having paid $11k over the last 19 months. Payments are made to 2 banks: Chase (2 cards, $10.3k left, $290/month) and Citi (3 cards, $10.3k left, $260/month). The remaining totals are:
–––– Chase: $5.7k at 2%
–––– Chase: $4.6k at 10%
–––– Citi: $5.2k at 10%
–––– Citi: $2.3k at 10%
–––– Citi: $2.8k at 10%
The DMP has biweekly payments of $300 ($600/month); I missed my last payment to the program, but that wouldn’t be reflected with the banks yet. I think I could negotiate lower rates than 10% if I went directly to the banks (and save ~$50/month in DMP fees), but I didn’t know that when I signed up, & I don’t know anything about exiting a DMP.
TL;DR: I’m not sure what to do. I’m working occasional part-time gigs but have not had full employment in months. I’m barely making rent, I missed my last ($300) biweekly payment to the debt management program, & I will not be able to make my next $200 Apple card payment. I have no savings and very little income. Any ideas welcome.
With what you shared, I would tend to suggest looking into chapter 7 bankruptcy or debt settlement.
Do you know if you qualify for chapter 7 in your state?
You can schedule another call with me to talk about what settling may look like.
I have a charge off from Bank of America Alaska Miles Card. It’s approaching 6 years old, but I really want to get it paid. It used to be with a couple different collectors, but now there is not one listed on my credit report. Does BOA ever repurchase the debt? If not, how do I find who currently hold that debt? If so, how likely is it that BOA will be willing to settle?
I also have a charge off from Barclay’s that I want to get paid off – it’s the same age as the debt above. Same questions for this one. I don’t believe they ever sold it to a collection agent, though.
Thank you so much for you help.
Bank of America stopped selling debt in 2015-ish. They still own it. You can call them directly to settle.
You should be able to call Barclays and negotiate your settlement if they have not sold it.
Are they willing to settle for less. At this point I just want it paid. Interesting, I received a letter from NCB saying they have the debt from BOA. This was in 2022, then I received a letter from a different agency in 2023, but I am unable to find it.
Yes, you should be able to settle both accounts for less. If you would prefer to have help with this you can schedule a call with me here: https://calendly.com/debtbytes/15min
Thank you so much.
A little while ago I settled my own credit card debt thanks to your wonderful guidance and online resources..
I’m not sure if this is an area you advise on, but my mortgage company has offered me a loan modification. Normally they require an extensive application and financial disclosures, but in this case they are doing an ‘express’ modification which requires no documentation. I had payments suspended (forbearance) during Covid. I resumed payments, but was not able to catch up on the back payments in a lump sum. They moved me from a covid Forbearance to a standard forbearance as that program expired. They will not offer a deferment (moving the missed payments until the end of the loan) unless it is 3 months or less past due. It is 6 months past. I am more stable financially as far as cash flow (even if net worth is quite negative). Is there any reason to be skeptical of the loan modification?? They are offering it so readily, and I am not sure what their motivation is here. I don’t like the idea of a 40 year term instead of 30… but they say that I can pay extra and pay it off as early as I want. There is no change in interest rate or principal. They will move the back-owed money into principal… so there is some potential hit to credit score there (but who cares about a credit score… I don’t want to borrow money anymore). I wish they would defer the missed payments, but they won’t, and are pushing the modification. Is there some sort of big benefit to the lender and some big disadvantage to the borrower that I am missing here? Basically, are you aware of any new games/tactics that these lenders are playing, and any reason that I should avoid the loan modification?
Thank you very much for advice, if you are able to comment on this matter.
Thank you again for all you do. Your work is life changing for many of us.
There can be incentives for modifications that have no relevance to a consumer. I would focus on the math. If want to keep the home, and the numbers work for you, and provided you are not paying any/negligible loan costs, I would consider it.
As your situation improves you can certainly pay the loan down faster.
I would talk to a housing counselor that works on these every day. You can call my hotline at 800-939-8357 and press ext 2. Ask for a housing counselor and you will get connected to one.
Hello is Care Credit quick to garnish wages or will they hand it off to a debt collector? Balance 3220.00 not paid in 2 months
I would not say Care Credit is quick to sue. That is Synchrony bank. They will typically charge off your account at 180 days late and either send your account to a debt collector, or sell your account off to a debt buyer.
It is when Synchrony sells your account that you have to worry about being sued. All debt buyers sue, but the account can be settled early on with any of them and avoid that. Some give decent settlements with extra long monthly terms.
Do you have other debts than this?
Michael…..have settled with chase, Barclays and discover…..cap one said no go up until charge off…no settlement offer…..but as you stated sometimes the best with cap one is after charge off….well, you were spot on….just settled with cap one about 30 days post charge off…piece of cake….30% of my 12K debt….and in 3 payments….wow….now we tackle Amex….
Congratulations! Who is the AMEX account with for collection?
….only 90 days past……adversarial communication is yet to come…..will contact you whenever, I don’t expect it to be easy……
Most of us do not settle directly with AMEX during any early stage delinquency. The deals are typically not optimized.
Check out more about settling an American Express account.
Came to a settlement agreement verbally with Barclays back in February. Called weekly asking for settlement letter to be mailed and emailed but never received it. Payday came and went without it. I didn’t pay. Started a new job and put it on back burner. Now I reached the same agreement and still no letter after 2 weeks. Trying to figure out how to proceed. Should I call again and record the details and then pay so I can move on in case they give me problems? Also they say they only accept payment via check or money order to a PO Box no ACH or debit card payments.
Are you speaking directly with Barclays, or a collection agency they placed the account with?
How late are you with payments?
If you call again to get a new letter with a different payment date, see if they will fax instead.
You can get a free trial fax number at http://www.efax.com if you do not have access to one.
Anyone that must mail the agreement letter I try to get the settlement done by mid month given how long it is taking regular mail to be delivered.
Directly with Barclays. 4 years since last payment. Shows as a charge off on report. They had sent it to ameritrak, but when I called them they said it was back with Barclays and that’s who I negotiated it with. Thank you.
Hello Michael,
Thanks for all the help you offer so many people.
All of my credit cards and bills are current, but Covid-19 really took a bite out of our monthly income, and so out came the credit card purchases back in 2020, and voila, the CC companies are getting richer by the minute on an economic downturn!
Recently I took a relief payment plan from Wells Fargo for the Cash Wise CC for 5 years, now with a lowered 1.9% interest rate (the original was like 26%!). Currently owe around $8000 on that. Part of the deal was to close the account and that’s fine since I don’t want a CC at that rate anyway.
Also just took a 3 yr relief program with AMEX Gold card at 4.9% which I’m planning to pay off quicker ($8000). Charging privileges suspended but hey that makes perfect sense if you’re trying to pay off debt!
My issues are with these 3 credit cards:
Chase – $12k balance @ 17.49% APR = $180 interest
Barclay – $8K balance @ 16.49% APR = $107 interest
PNC -$9K balance @ 17.49 APR = $130 interest (all 3 APR’s are from one CC)
$1.5k balance @23.49 APR = $29 interest (cash advance, probably from autopay overdrafts)
$1.4 k balance @8.99 APR = $11
In total, we’re looking at over $450/month interest charges! Hard to make big dents when a good chunk goes to their pocket!
Called PNC, and they do not adjust rates on the Core card, so says the rep!
I haven’t checked with Chase nor Barclay after reading in numerous places that they won’t adjust rates either.
While I do pay above all the minimum amounts due, I can only stretch so far!
Any suggestions as to a method of clearing these balances quicker, bringing those rascals lower somehow or
another way, other than living with these exorbitant interest numbers biting into monthly payments?
Thank you for any help you can offer me!
Chase and Barclays regularly enroll account holders in lower payment plans like your other cards did. Check out the details I share about credit card hardship plans.
There are instances where you want to be late a few days on payments before you call and talk to them about lowering your rates for the life of the balance.
The fastest way out of this would be chapter 7 bankruptcy or settling the debt. Check out this article where I review debt relief options for speed, cost, and access to credit.
Thanks for your reply. I had asked PNC for a reduced interest rate, not for a “plan”. I still presume they will not grant anything as I see you omitted their name in the list of cards you mentioned that do enroll.
After going through the material you highlighted, a few questions remain (bankruptcy is not something I would consider.) If I were to ask Chase or Barclay for a temporarily reduced APR as an option, what’s the likelihood that it would be granted? And if it were, what are the chances they would return the accounts to the current rates (which are somewhat towards the lower side)?
If I ask them to lower the rates for the life of the balance, is that different than asking for a temporary reduction?
Must either of these requests be done only after one late payment? Can “late” qualify as just a day or two past the due date would work?
Would this type of request put me into their higher-tier APR’s automatically in the future (or even currently?)
I’d prefer keeping these particular accounts open because they may be needed for emergency things down the road.
In essence, which would you say is the safer (smarter) way to go? The potential benefit of getting a lower and livable APR’to pay off quicker on the one hand, or the potential denial, along with a possible tampering of my current APR and/or credit limits, or even their potential decision to close the account on the other?
Most banks that approve a temporary hardship revert to the prior existing interest rate when the plan expired.
The likelihood of getting approved for a temporary, or lifetime of the balance hardship repayment, is high when you are already late a few days. Less so if you are on time with all payments up to that moment. And I see people have just as much success with being 3 days late as I see with them being 3 months late. That said, if you are already showing 30 days late on your credit debt settlement begins to be a superior mathematical option to payment plans.
The difference between temp and long term hardships are largely:
1. Lower interest rates are more common with long term payments for the balance.
2. Your accounts are closed on the long term plans, where you can often keep the account going on the temp plans.
Each one of us will view this type of situation differently. It can vary widely depending on current and forward looking cash flow, credit related goals over the next 12 to 24 months, credit score hit tolerance, etc.
I do not see your interest rates being messed with immediately from this conversation.
Long term hardship plans mean losing the card. If I could avoid having to do that on my longest held credit card (that has the lowest interest and best rewards based on my lifestyle), I would try to prevent that one. But it could still make sense to do that for many of us.
Credit can be rebuilt with new accounts later, so I would personally make this about what mathematically benefits me and my goals the most.
How do I get a payoff on a collection?
Who is the collector or creditor you are dealing with?
Hello Michael,
I have a credit card that I have been paying the minimum balance on for years. However, last year I had a health crisis and lost part of my income (I was working a full-time job and a part-time job to make ends meet. When I got sick, I lost the part-time income, making it impossible to pay the full minimum payment on this credit card). So, even though I was making partial payments (after trying to get approval from the credit card company, who refused to commit to anything, but said I could try it), they turned me over to collections (without any notice).
Today I received my first debt collection notice. The amount they want is almost half of my yearly income, and I am barely able to pay all my other bills right now. What should I do with this debt collection notice? I’ve never received one before, and I don’t know what to do.
Thank you so much for your help.
Who is the original creditor?
What is the amount owed?
Are there other unsecured debts besides this one, and if so, what do they all add up to?
The original creditor is Citibank, amount owed $24,125.00. Total credit card debt is $94,979.43, plus $9400.00 medical bills.
Thanks. Have you looked in to whether you qualify for chapter 7 bankruptcy? It could provide a fresh start, and knock out over 100k worth of debt for 2k or less. Check out this debt relief comparison article.
Here is another comparison when using debt relief and your credit bouncing back.
If you would prefer to avoid bankruptcy, and want to limit the risks of being sued for this debt, settling for less would be an option. You are looking at needing around 40 percent of the balance, and with some monthly payment flexibility depending on the company collecting the debt.
Are your other balances current with payments, or behind the same amount of time as well?
Hello Michael
I was wondering if online loan lenders are more prone to suing? Avant, Lending Club, Upstart and Freedom Plus to name a few. I’d like to stay current on most of my credit cards but can’t afford the monthly payments anymore. I would hope to settle with the lenders within a year after situation hopefully improves.
Thank you
There are risks of litigation, but more from debt buyers than those named lenders.
I can talk through strategy with you to avoid those risks if you schedule a call with me.
Hello Michael,
I have a judgment against me, and my paycheck is currently being garnished weekly, at around $25-$30 per week (I don’t make much money, especially after child support). About a year ago, the creditor refused a lump sum settlement of around 75% of the balance. My remaining balance owed is around $500, so I’m around 4-5 months away from paying it off.
My question is do you think it’s safe for me to open a bank account without the risk of it being levied my them? I figure I should be safe considering the remaining balance is low and they’re getting steady money from me every week. I’ve been building my credit back up (over 700 now!) and would like to open a bank account to make it easier to pay bills and finance a car in the near future.
Thanks!
I do not see collection law firms try to levy a bank account when they have a wage garnishment performing its function.
Hey Michael, I’m in desperate need of guidance! First and foremost I want to thank you for the the resources you have available to read for all like me at no charge. THANK YOU!
I had a judgment against me just yesterday and don’t know how to settle this debt, The amount I’m due to pay is of 16k and some change,
I am paying a debt settlement company that has been successful in settling more than half of my debts but they pretty much told me they can’t do much with this one since it already has a judgement and I am in a state where wages can be garnished. VA. I’m a mother of 3 that made a mistake years ago and ran up this credit card, how can I possibly settle this with the these people, please help me with your knowledge. Thank you!
I have an article up about settling judgment debts.
Settling judgment debts works, but often at higher percentages. Can you pull together 80 percent of what is owed?
Hit biggest debt is from Barclay. My child has been in the hospital for months and I have not been working to take care of him. I am current on all of my bills but I can’t be after this month. I tried offering a lump sum payment to them and they just transfer me to a debt service for advice. What should I do?
You can schedule a phone call to talk strategy with me by clicking the Get Help tab at the top of the page or by calling 800-939-8357 ext. 2.
Hi,
My question is: Is there an optimal amount of time to wait after the last payment made to call and try to settle a credit card account?
I generally have found the earliest, and most opportune time to call to negotiate settlement, is after 150 days late.
Hello Michael, First of all than you for taking the time to respond to these comments. I am trying help my mom. She received a letter about a judgement she had against her that is now 16 years old. The original amount owed to Discover was only $8k but now since its so old they are saying she owes $30k!
My mom only has like $9k max to her name and we are unsure what to do. They sent a letter saying she can pay a lump sum of $24k or arrange a payment plan. She doesn’t have $24k as mentioned above.
Could we try to offer a $9k settlement as this is all the money she has?
What is the lowest you can usually settle for once it’s in the judgement stage.
This was a default judgement as my mom didn’t know what to do back in 2005 and this was also right after my father passed away so it was a difficult time.
Thanks again for any advice. The lawyer handling the case now is shafritz & associates.
Check out this resource about settling judgments.
What state does she live in?
Does she own a home?
Hello. I have a Wells Fargo business credit card that hasn’t been paid on in 2 years. My brother was using it and paying it until he didn’t. It is not on my credit report I think because it is a business credit card. The balance is 9K. They recently called to offer a settlement. They have not sent a letter or called until now. What % do you think they would settle for?
The settlements we see on Wells Fargo business accounts range between 30 and 60 percent of the balance owed.
If Wells Fargo has your account with a collection law firm the settlement amount could be higher.
There are instances where Wells holds out for detailed financial information related to the business and the personal guarantor before approving a settlement.
I tend to suggest getting help on Wells Fargo accounts.
You can schedule a call to talk strategy with me by clicking the get help tab at the top.
Michael, I’m currently 90days behind in Amex and I called zwicker and associates. Their best offer is 55% they say is Amex lowest floor. 22k and they will accept 11,900.
But they said I need to give them bank account info first before they can send me a letter in mail regarding settlement amount.
Should I just take the 55% now and call it a day?
Settling for 50% with a collection law firm is typically a decent outcome.
I would still want the letter before paying.
You can set the payment up for end of month, which will give time for the letter to arrive before the payment pull date.
What chances do you think if I call Amex themselves and offer 45%? Instead of 55% from Zwicker. Or will Amex not talk to me since they sent to zwicker?
Amex will direct you to Zwicker to resolve your account.
Hey Michael, we spoke a couple of weeks ago on the phone. I’m trying to settle with chase currently and I’m about 160days late now. I made the phone call today to offer 3k on a 14k balance and there asking for income after taxes and monthly expenses to look into my settlement offer. I would prefer to not disclose either of this to them as I’m prepared to settle with them cause my financial standing is now fine. Is this a necessary step, they also threatened to send me to an attorney. Thank you
It sounds like your Chase account is on the attorney track, or they likely would not have mentioned this.
I am finding settlements on accounts in this situation are between 35 and 60 percent.
If providing details they ask for will cause them to question offering any settlement, were it me, I would not provide that.
You may be stuck with less than optimal settlements in these scenarios, or wait for charge off, and see what can de done shortly afterward.
There are ways to do this still, but with assistance, and I understand you prefer to be DIY on this.
Hi!, I just received a letter from Midland Funding LLC asking for payment.
Since I didn’t know who they are I got a TransUnion credit report and noticed
they are there:
Midland Funding LLC
Placed for collection 07/03/2018
Balance: $2,338
Pay Status: In collection
I moved to Mexico in 2015, I have a Personal Mailbox (Nevada) as main address and still
do some remote work as self contractor that I receive into a virtual wallet and
then manually deposit into my US bank account, not much though, but it’s enough here.
How should I proceed?, will they sue me? can they levy my account?
What should I do if they sue me and I’m out of the country?
Thanks!
If Midland thinks you still live in Nevada, they may still try to sue you.
If they think you live in Mexico, I do not think they will try to sue.
If your account is not with an attorney for collection you can settle this favorably.
DO you have a goal to resolve this?
I don’t have a goal right now, this came out of nowhere, and as you can imagine, my live is very different now. Is there a way to let them now I’m out of the country?, I don’t have plans to come back in the near future. Thanks!
If it were me, and I were worried about being sued in the states when I am no longer here, I would call and tell them my new contact points, and my mailing address in Mexico, and that I do not intend to return.
I called Midland today and told them I’m out of the country. Thanks for the advice Michael!
Hi Mr Bovee,
I have a Credit One charge off showing a zero balance on my credit report, and I need it off so I can get a mortgage loan. I’m willing to pay it in full, but don’t know how to go about it. It was sold to Midland, who then took me to court for the $910, but I got the judgement in my favor and didn’t have to pay. Within 30 days the Midland collection was deleted from my credit report.
My question is will Credit One even take payment for the deletion of the charge off, or do I have to deal with Midland?
Talk to your loan officer for the mortgage.
Credit One is a zero balance charge off, who you cannot pay, as they sold the legal rights to the debt to Midland Funding.
Midland not showing on your credit means it should not flag anything for resolving prior to a loan going through.
If you have to resolve the debt with Midland, for some odd reason, in order to get your home loan through, you can call them to work this out.
Hello,
Found your youtube video and seeking your advice.
I filed bankruptcy in 2011. First and second mortgage discharged along with credit card debt. We wanted to keep our house and attorney advised to keep paying the first mortgage but not the second. So that’s what we’ve been doing for 9 years now.
However, the second mortgage lien originally with CitiBank, was transferred to a debt buyer, United Guaranty. So because of bankruptcy, they cant collect on the debt, but still hold the lien and wont release it. They could foreclose on the home, but unlikely since they would also have to pay off the balance of the first mortgage in order to start foreclosure proceedings. They send me a letter once or twice a year to settle. I send a written reply with a 10% of balance offer and never hear back.
If I ever want to sell or refinance, this lien will need to be settled. Luckily, I don’t need to do either, but I do know that down the road in 10 years or so, I may want to sell and move to a smaller home after I retire.
When the lien was transferred to United Guaranty, the balance was about $20,000. They have never offered less than $15,000 to settle the lien and they have actually sent letters stating a balance of over $45,000 with interest and fees.
I have my last statement from Citibank that shows the balance and always use that as my starting point with them.
During this pandemic, do you think the lien holder now would be more accepting of a settlement amount of 30% to 50% of the balance? I’m tempted to contact them and make one very good offer of $10,000 to settle and release the lien and see what their response is. However, since it’s been 9 years and they don’t seem very aggressive to collect, sue or foreclose on the house, perhaps I should just wait it out more?
I think things will get much worse related to mortgages in the near future. If it were me, I would wait until to home loan default numbers go way up after the different forbearance plans end. That could give you time to save up more cash too. Hopefully you hit your goal, but having more in case you need it is just good planning.
I have the below past due since 2017. In what order should I settle?
Chase
Discover
Macy’s
Barclay- mercury something now
Care credit
Bank of America
Volkswagen
Express
What are the balances owed?
Have any accounts gone to collection law firms to date, and if so, which ones?
Have any been sold to debt buyers, and if so, which ones?
I have no idea at this point. All stopped contacting me about a year ago. VW holds the highest balances
You can often see the balances owed on your credit reports, and debt buyers will show up there to. Let me know those details and we can go from there.
Hi Michael, I currently have 10,377.11 with Porfolio Recovery Associates. I received a letter saying the account was transferred to the litigation department but no attorney has reviewed the particular circumstances of my account. I am currently furloughed due to COVID, but the thought of being sued scares me, should I contact them to try to settle now?
I would suggest scheduling a consult with me using the tab above the comments. Settling with Portfolio Recovery, and getting time to pay, appears to be necessary in your situation, and that can be trickier than when dealing with creditors.
FYI, Mellissa. In the last few months I settled several debts with PRA.
I settled them for 70%, 77% and 60% respectively.
I do not claim to be an expert. I wish I was. I think they milked me up one side and down the other,
but that is an FYI. That was after already paying perhaps 20% of the respective total balance over a period
of 2 to 2.5 years. When I saved enough, I decided to settle.
The total owed on those accounts was $9,300 and I ended up settling for: $6,185. I am fairly happy,
but I was not well informed. I hope with the help you get here, you will be able to do much better.
I wish you all the best. Hope you do better than I did.
Hello. I have about $12,359 debt from William & fudge, Inc. It is a student loan. I was wondering if it’d be worth it to settle now for pennies on the dollar, if I missed that opportunity prior to the economy healing, or if I should wait until the extra $600 unemployment benefit runs out at the end of July. Ultimately, is now a good time or should I wait?
I think recovery expectations will soften even more in the fall, so if it were me, and I was not in a hurry, I would wait.
Hi Micheal, Thank you for all the information. I was hoping to find out something about settlement expectations with Mariner Finance. I owe about $ 6500 on a personal loan – I have been two payments past due for about six months. I found information on my other creditors and have actually been in contact with most of them . I was just wondering if Mariner Finance was going to be a problem. Thanks
Mariner Finance is one of the more aggressive lenders right now. I have seen them sue to collect in a matter of a few months. The settlements are not all that great either.
With COVID things could soften up, but I would try to gather as much funds, as quickly as possible, to be ready for this one.
If they sue you can defend the collection to buy time to pull money to settle together.
I have cc debts from 2012 that I gave not paid on since 2016 , are these debts still collectable or is there a statue of limitations I can rely on.
I’m in Utah
There is a limit of 6 years since you stopped paying in order to legitimately sue in Utah to collect on the debt.
Passing that time limit does not render the debts uncollectible, they just should not sue.
Debt that passes your states SOL, and then passes the 7 year credit reporting life, is often referred to as zombie debt.
Hey Michael just updating you and your followers on my progress specifically with discover. 21k balance. Which I settled today for 50% in one lump sum. I waited until around the 150 day mark to reach out and begin discussing my situation with discover. My initial phone call the agent offered me numerous payment plan options including matching my payments dollar for dollar example would be if I made for $400 payment she would match it and then my account would become current after 4 months. They were very persistent on getting some type of payment even if just was a monthly minimum of a couple hundred before I got off to the call. The original agent told me there were no settlement options on my account I did press a little bit on this and I call back 2 days later and spoke with someone else who told me that a settlement was now available at 60%. I explained I couldn’t afford that and gave them a brief description of what I had available for funds I told them around the 40% mark via a loan from a family member and while she did not give me that option on the phone she told me there could be options down the road before charge off. The interesting part is the day after that phone call and I don’t know if the info I gave her triggered this but all of a sudden 3 settlement offers became available in the discover mobile app where they offered me 3 payments for 60% 2 payments for 55% or 1 payment for 50% due by may 31st. The other alternative was a $330 payment over 60 months which would waive my late fees and extra interest at a 0.99% APR. The 50% was doable and based on my research was a pretty competitive offer so I tried just out of curiosity to call 2 more times to see if they would budge maybe go to 40. But it looks like either internally 50% is now their lowest or my account specifically with the balance and what not 50% was the lowest. The reason I say this is every agent and I spoke to was clear that they have no power over altering the settlement amounts that it systematically done.
Overall it’s a relief to settle my largest balance and it was a surprisingly easy and pleasant experience dealing with discover takes a little persistence and I have to go pretty much up to the finish line I’m 4 days away from charge off but you can get decent results and you are absolute correct they are very unique in how they deal with you.
Congratulations, and thanks for posting about your experience Max. It helps later readers.
Michael:
I recently received a settlement offer from a subsidiary of LVNV (Credit Control, Inc.) for 40% of the amount owed to the original creditor. The original debt was charged off 5 years ago, and under the heading “Important Disclosures” the settlement offer states, “Because of the age of your debt, LVNV Funding, LLC cannot sue you for it.” Three questions:
1. Should I negotiate for a greater discount? (I have the money to pay the 40% right now, but I don’t want to leave money on the table if I don’t have to.) What does your experience with LVNV suggest in this case?
2. What, exactly, does “LLC cannot sue you for it” mean in practical terms? Is it an admission that my debt is now a “zombie debt” and essentially non-collectible by ANY debt collector? If so, why did LVNV make me a settlement offer?
3. Assuming I pay the 40%, what wording should I require LVNV to put in the settlement agreement that will improve my credit score the most? Paid As Agreed? Paid in Full? What wording gives the most “bang” for the buck?
Many thanks. Your web site and videos are incredibly helpful.
Every state has its own statute of limitations that limits how long a collection action can legitimately be brought to the court. It sounds like yours has passed, but that does not mean the debt is immediately no longer collectable. They can still write to you, and call, and also credit report for 7 years.
The reason to settle at this point would likely be credit reporting. A paid collection on your credit will allow you to move on and accomplish credit and finance goals. If you do not have any meaningful ones in the time this will be aging off your credit, you could let things lay.
I too would try to get this lower. You may not be able to, but it is worth a shot. Another 10% off a debt with LVNV collectors that cannot be sued upon would not be out of the question, but be prepared from them turn down any other offer too.
As far as paid as agreed, paid in full stuff, that is just not all that meaningful to get caught up in. More on that here: https://youtu.be/Q7nwb8PvzPk
Dear Michael,
I had written before.
I have debt with Capital One ($3,621.13)
I had been making monthly payment of $100 but they still sent me a email saying that I was being sued in December 2019. Even though, I had being making payments since September 2019.
I won’t be able to make any payments this month due to health reasons and not working.
I have watched your videos in many of them you advice not to attempt negotiating too early after you are no longer able to make payment. You also mention that one is too meek, will lose their temper or get threaten not negotiate with the collectors.
I also don’t have the finance to hire a lawyer to file a defense for me. I also don’t have enough finances to pay 50% or 80%.
From a lot of articles you mention that timing is essential. I am having trouble which steps to take and when.
I really feel stressed with no way out. My health only continues to suffer.
Do I just call the lawyers and offer the $600, I have?
I would really appreciate it if you could advise me on a clear course of action.
Thank you very much,
Awa
You will likely not succeed with that offer.
You may end up sued, and even a judgment against you before you save up enough to settle.
You have the option of a payment plan, but you want one written up formally, not where you send in what you can afford, without an agreement in place.
Do you have other debts than this? If so, what do they all add up to?
I have a $755 electric bill to Gexa that I can not pay, I’ts technically not past due yet until the 18th of February. This company is awful They do extreme price gouging. I’ve switched companies but I’d like to try and settle with Gexa, I could possibly do like $300. I’ve worked very hard to repair my credit over the last 2 years and this would undo all the work that I’ve done.
I would try to work out a payment plan with them.
Settling utility bills is often done with collection agencies, but waiting for that to happen will often also mean waiting for it to hit your credit reports and drag you down.
I have the following situation with Chase: Last payment Aug. 01, 2016, Current Payment Status: Charge-off, Amount past due: $3010
Based on my scenario, is best course of action calling them and try to settle for something like 1000?
Thanks for any advice you can provide.
I have a letter from a collection agency looking for 1200.00 from u.s. bank. I don’t have any paperwork on the credit card use for the last 4 yrs. When I reached out to u.s. bank they said I would have to speak to their collections agent. How do I get the detailed records of this debt?
What is the purpose for getting the detailed records?
Do you have a goal to resolve the debt? If so, who is the collection agency contacting you?
If your goal is to settle, yes, I would call Chase and work through this with them by trying to settle for less.
Get it in writing before you pay.
Know that Chase can sometimes not bend as far when settling with you, as a collection agency working for them would have a couple years ago.
My husband and I have spoken to a BK attorney- chapter 13 is what we would need to do because of our income – we have settled with a couple of accounts but have about 10 or so more to start working with- My husband was served with a judgement filing and we know there is another one coming – we are lost- BK would give is 290 left after paying our normal bills and the BK – that is not going to work – We can pay some each month to start to settle more debt but we just have no idea what to do
You are welcome to click the get debt help tab on any page and go through the steps to schedule a call with me, or one of the counselors. We can review your situation for you and see if we can build a plan for you to stay out of chapter 13.
I can say this..you’ve come to the right place..I would HIGHLY RECOMMEND speaking with Michael…just taking to him takes 90% of the fear away..not to mention just an extreme straight shooter. Gives you the confidence that you can totally handle this ( settlement ) on your own or he will guide you through it pretty much every step of the way…
Hi Michael – I have roughly $118k in total unsecured debt between credit cards and personal loans, all in my name only. Although I’m current with all accounts as of today, because of a recent personal situation I will start to fall behind significantly in the next month and beyond. I’m looking into debt settlement as a way to tackle the situation. Once I stop paying on the accounts, I’ll have about $2,200/month that I can devote to saving/paying settlements, which feels like the 24-month timeline would be aggressive but doable. I’m comfortable with DIY settlement on many of the accounts, but would love any feedback (especially for which ones it might be better to engage outside help) before starting the journey. Here’s a breakdown of the $104k in balances I’m thinking of doing debt settlement on:
Chase Credit Card: $23,000
Lending Club Loan: $19,500
Upstart Loan: $19,000
Wells Fargo Visa Card: $16,500
Best Egg Loan: $8,500
Avant Loan: $5,500
American Express Gold Card: $5,000
PayPal Credit: $2,500
Mariner Finance Loan: $2,500
Regional Finance Loan: $2,000
Accounts I am considering NOT including:
1. Discover Card: $7,000 balance, opened in July 2019 as a balance transfer card at 0% interest until Sep 2020
2. 5/3 Bank Credit Card: $3,500 balance, opened in August 2019 as a balance transfer card at 0% interest until Aug 2020
3. Fortiva Credit Card: $1,000 (plan to pay off in next 60 days)
4. Citi Credit Card: $1,700 (plan to pay off in next 60 days)
5. Capital One Card: $700 (plan to pay off in next 60 days)
Any thoughts/feedback/suggestions would be greatly appreciated!
I would encourage you to schedule a time to talk over your strategy with me. You can do that by clicking the get debt help tab on this page. You have some aggressive creditors, and Chase just started suing again last month, for the first time in 8 years.
You can do this, but to maximize savings, and lower risks, you will want to be as aggressive as you can be with saving up to settle a few of these in the early innings.
You can also reach me at 800-939-8357 ext 2.
I live in Pennsylvania and I have a $530 credit card debt that got sent to collections. My problem is that I have been in contact with the agency to set up a payment plan, but I am trying to verify if the company is real before I pay the debt. And also, if I don’t pay by a certain time how long do I have before they take it to court? By the way, Collection agency is Global Management. Any advice is greatly appreciated.
Who is the original creditor? You can call them and verify who they have your account out with for collection.
When did you stop paying the account?
The original creditor is Credit one Bank and I stop paying about 12 years ago. I called credit one to verify the debt but it was sent to Cach LLC, but I haven’t called Cach LLC to verify yet. Is there any way I can have the debt sent back to the credit one bank and deal with that way instead of with collections?
Just seeing this Greg.
I would not pay a 12 year old debt, but would dispute it off my credit as being to old to be on there. Here is a guide for disputing items off your credit: https://consumerrecoverynetwork.com/dispute-tradeline-diy-credit-repair/
Of all my credit card companies I’ve dealt with, Credit One is the closest to a borderline sham company. Hopefully this was all resolved peacefully.
My husband and I have a mountain of credit card debt primarily with Chase and BofA. I mean like $80000 we have been juggling around with balance transfers and promotional rates. We are current on everything but the promotional rates are starting to expire and it is clear that even with a pretty good income, the situation is not sustainable (minimum payments currently $1400-1500). Realistically we are not going to be able to settle for much more than 30% of all this debt. My question, how likely is it these debts will be sold and how long before that happens? Is it better to wait in order to try to negotiate lower amounts? How likely are we to be sued if we can’t settle for more than 30%. Thanks!
At the time of my reply, neither Chase, nor Bank of America, sell unpaid accounts to debt buyers. They haven’t for many years.
You have a decent shot at getting these done for 30%, but 40% is more common (as an aggregate between the 2).
I do have someone here that can help you do better, but there is a fee for the service. Add that in, and you are probably right where you need to be.
I am trying to settle with Citibank and Discover. I may have mentioned settlement too early with discover as I was only about 90 days late/ Do you think I have a chance to settle with them. My wife went with a debt settling company which charges huge fees to do the settlement from you. I choose to do on my own
I would wait until I am between 150 and 180 days late to talk to Discover about settling for less.
Does your wife have a Discover card as well?
I had a rough patch back in 2005. I received a judgement in SC from Bank of America on 7/15/2009. Due to my lack of understanding of how all this works I thought once judgement was off credit report I was good. I owned no property when judgement was made. I purchase my house in 2013 and now am attempting to refinance when title search found a judgement on me. The judgement is not attached to my property. I think in SC after 10 years the judgement is no longer enforceable and can not be renewed. How should I handle this? I do not believe bank will refinance unless judgement is settled.
Have you talked to the loan officer and shown them the judgment entry date and the law for how long a judgment in SC is good for? You may want to exhaust that angle before trying to settle this.
Thanks for explaining that the debt will either be negotiated to a lump sum or a term agreement, depending on what we can afford to pay. I wasn’t very responsible with my credit cards, so now I’m in a bad situation where I’m unable to pay all of my bills. I’m glad I read your article because you helped me see why using a credit card settlement service could really help my situation!
Please e-mail me and help me make the right decision on my finances.
I recommend building a user profile full of your debts by clicking the get debt help tab at the top right of any page on the site. Once you add your debts you are dealing with, click on talk with an expert in your profile to schedule the day and time you would like for me to call you to go over options.
Michael, if we do debt settlement our own, how to avoid paying tax on the cancelled debt? Last night my friend told me I would most likely get a 1099 from IRS regarding the forgiven debt.
You can avoid paying taxes on forgiven debt whether you settle debt DIY or get help. Read that link to learn how that may apply to you.
The tax implications are different for each of us.
Mike, I have two cards that I have been behind on and have missed a couple payments and made a few payments here and there. I realize this is not helping me at all. Just paying those small amounts are like throwing pebbles at a freight train. I have not fully read all your steps to settlement but it seems like I should just not pay and wait. one balances is 25K with chase and the second is with citicard and is 13K. Should i change banks because I do my banking with chase. I would like to do a settlement over a chapter 13 I am not able to do ch 7 because my house has to much equity in it according to Illinois rules. I do not want to lose my house. I have no other bills that are behind or late. I recently took a significant cut in pay and my wife has been working part time due to child care cost being so extensive we felt it made more sense for her to stay at home. any suggestion would help
I would be working on a plan to save up 35% of the Citibank balance in the first 12 months of delinquency. If you can do it quicker (between 6 and 12 months late), that would be great. I would then focus on settling with Chase after that, and at around 30 percent (sometimes lower).
Can you do that?
I recently called professional collection consultant in CA for a judgement against me for 10k that was filed against me in 2012 for a old credit card that the original balance was 6900.00 I offered them 3k and the collector was not helpful at all told me that they can take 5500 and would rather sit on it then settle for less . My question to you is is this a good offer from them and if it was you would you accept it ?
Judgment debt is hard to negotiate to half off, and you are close to that. If it were me, I would take a deal that was around 50% on a litigation file.
I was served and didn’t go to court my bank account was garnished for about half of what I originally owe the creditor. My bank is holsing the money they took out of my account. I wanted to know if I could still settle? Could I just let them have what they already took and call it even? And how do I do that if I already have a judgment ruled against me?
You cannot let them take what they are already going to get (unless you successfully contest that with the court), and call it good. They will want the rest. You can negotiate a settlement with them for less than what is remaining as owed after they apply what they got from your bank account. But you typically have to wait until that levy order is completed before they will talk about settling the rest.
I recently tried to refinance my house to find my husband and I each have a judgement I called lvnv funding,llc they were unable to find info on my judgement,however they found my husbands it originally started at $3094.00 now they want $9000 his judgement is with assets llc. Mine is $3231.00 even though they can’t find information on me they want 8000.00 from me a total of 18,000. I want to settle with them, I don’t trust negotiating with them I will settle to pay original loan amount but not the 18000.00. They said that they will call me back with additional info regarding me,however I have not recieved a call. should I get a lawyer to assist.
It can make sense to get a lawyer to look into any legal arguments you may want to make. Let me know what state you are in and I will email contacts to any I know of with the experience you need.
If your goal is to simply settle, how long until you have half of what is owed today?
Hello. I am currently retired and living on a fixed montly income and even though I have a lot of credit card debt I am current on all of my bills/credit accounts except for a Sam’s Club credit account (which is issued by Synchrony bank). The current balance on my Sam’s club credit account is approximately $5000 (with a past due amount of approximately $1000.). I stopped paying in August of ’16 after they closed my account in July ’16 due to late payment history. My late payments started around March or April of ’16. I was struggling to pay this Sam’s Club credit account because of the high balance owed and very high interest rate (roughly 30% APR) on the card. They keep sending me notices that I am past due on my account from a company called EGS FINANCIAL CARE, INC. but I have also been receiving notifications from from Sam’s Club Credit also. It doesn’t seem like they have sent my account to an external collection agency possibly because I have other accounts with Synchrony bank that I am current on. I recently received a letter in the mail threatening me with “taking additional steps” allowed under the law. My question is, should I contact them and negotiate a settlement or should I ask to be placed under a financial hardship payment plan? I’m now reaching the 6 month mark without having made any payments. How likely are they to work with me? I would like to make good on this debt I just can’t afford to make high monthly payments at this time. If they do offer me a settlement I might be able to come with the money to pay if off. What would be the best course of action at this point? Thank you.
Once an account goes this long without payment I typically look to settle it. If you can raise 30 to 40 percent in order to fund a deal I would do that if it were me.
You can call and negotiate the payoff with Synchrony, but if they have it placed with a debt collection agency they will refer you to that company. Get your settlement in writing before you pay.
Thanks so much for taking the time to answer all of our questions. I have five medical bills all from the same hospital and within a short period of time, totaling around $3500. I had insurance at the time but a high deductible plan, so insurance paid nothing except for one out of the five bills. I have been unemployed and unfortunately couldn’t pay the bills at the time, they have now been placed with Medical Revenue Service aka Medical Data Systems.
I really would like to take care of these now, my main question is can medical bills like this be settled for less than owed? I have enough for at least a settlement of half, but don’t want to poke at them if I need to come up with the full amount. Any advice would be great, thanks!
Check out my video about settling medical debt, and also this reader question about resolving medical bills (read into the comments for additional feedback).
What is the lowest capital one will settle for i have 2 cards at 4400 each only behind a week on my pmt as of now. will they possibly settle at 30 % if it goes the 4 months past due?
I do not see too many 30% deals with Capital One. And you typically want to settle with them at 6 to 7 months late or more as of right now.
does chase freedom credit card sue/garnish? im trying to save to settle but they say they dont take less than 90% .
When did you last make a payment on your Chase card?
Chase is not suing their credit card members for non payment at this time. They have not since 2011. That could change of course, so keep saving up to reach your goal. What is the balance on the account?
thank you so much for the fast reply, you really help alot of people, thank you….
and the balance is 2200.00 and i would only be 1 payment late
You typically want to be close to 6 months late, when you are settling with your bank, in order to get the best savings. You can get Chase to 40% or less by waiting that long to negotiate or by waiting for the account to go to a collection agency, say in month 7 or 8 of nonpayment.
Be sure to read through this entire 10 part article series. You will be prepared for what is to come between being one month late, and negotiating the settlement several months from now.
Looking for advice. I have 6 judgments all from 2008.2009,2010. Out of the blue I received a writ of property garnishment on bank account, but this account has been closed for 10 years. This was on Nov. 24,2016 I have been a bundle of nerves, wondering who is coming after me next. I do own my home and all 6 judgments have liens on it. Can they sell my house out from under me I have no were to go. I am on social security disability and have some saved because it was retroactive payments can they take that money. I though about calling this attorney to see if he would settle for half but chickened out still thinking about it. I owe 3,528.00 or if i can pay 30.00 a month which will take 10 years. I just thought with liens the debt would be paid when i sell my home or when i die. My total debt is 22,000.
ThankYou,
Sandy
That is more than likely what will happen if you do not pay. The judgments will get resolved when you sell or after you pass as part of your estate.
If you do want to settle, it makes little sense to me to do just one. All the others could easily learn you are motivated.
Check out this page about SSI protection from creditors. You may want to call and talk to Eric, who is the attorney in the video interview I did on that page.
I was unsure if they would even offer a settlement if I have a loan that I am up to date on.
Keeping unsecured accounts current with payments while others go months late in order to settle can indeed create objections to settling. But those objections can be overcome with your list of creditors and the collection agencies they use.
Thank you for all the great information on your website and YouTube channel.
I was considering using a settlement company, however I felt that paying them a couple of thousand to do something that I could do myself was crazy.
Anyway, here is my question: If I get a loan through my credit union, can I use that for when I go to settle my credit card loans? Or will the companies not negotiate with me due to me having that loan? (I already checked and I can get approved for the amount I figure that I would need to settle.)
Who are your credit cards with?
Citi, Chase and Old Navy
You will be able to settle with those banks while still having another loan.
Thanks for your videos and tips. I actually called the Lawyers today to negotiate the payments. When I agreed to a plan they had me go into their website to make a payment. Both my debit cards wouldn’t process. (I had plenty of funds available) I called them and they said I might have to set up payments through a checking account. So I log back in and sure enough, the website for my account asks for account and routing numbers. I don’t want to give them full reign into my bank account. Any suggestions?
Who is the original creditor, and what is the name of the collection law firm?
Original was Best Buy, bought out by Midland Funding. I called Weltman, Weinberg and Reis today and spoke with a collector. It’s only $1415.55 including the $55 court cost. Collector said I could pay 18 months at $78. Which is full amount. To settle the full amount today was only $1,200. Not much relief. I agreed to the payments but haven’t seen anything to sign or made a payment yet.
If it were me I would have no problem setting up payments with Midland Funding.
Years ago there were many reasons not to trust paying a debt collector by giving them your main bank account information. Those concerns no longer exist when you are paying a legitimate debt.
If a payment problem does come up down the line, post an update and I can help you, but I doubt it will.
Thanks for the reply I appreciate it. Once it passes Midland Funding and goes to the lawyers, such as mine. Are you obligated to ONLY deal with the latest entity that has bought your account? Since the law firm of Weltman, Weinberg and Reis sent me legal papers to garnish, sue, etc….I would assume that MUST now deal with them and not Midland Funding? I’m in Michigan.
Midland Funding does not resell debt. They could change attorneys, but the account will not change owners after Midland buys it.
Perfect, Thank you for clearing that up. The lawyers I’m dealing with the lawyers for Midland Funding. I was unsure of that. Now it makes sense. I’ll report back. I’m sure many people simply freak out when they receive papers from lawyers. Now they did state that my State income refund (if applicable) could be garnished. Most people won’t think about that happening.
HI Micheal,
My husband and I both have credit card debt. With virtually no savings, an internship salary and several cross country moves we maxed out everything on top of borrowing from parents and student loans. He has a decent job now but we found out he needs thousands in dental work.
We had to make a decision to let some credit cards go to catch up and pay for everything. Discover offered us a deal at 60 days past due for lower interest and lower payments which we accepted for now.
The other three are from USBank VISA accounts. We were already on a hardship program on all three and managed to keep up on payments until the last four months. I have had one for probably 10 years and the other two for 5-7 years. They will “charge off” at the end of the month (Dec). The amounts are 4600, 4000 and 3900 and we had a payment plan of 98 95 and 78 with an interest rate of 5%. One or two of them may have been opened as a “business” account.
I have other cards and debt accounts I am paying on and current. We live pretty frugally, some would consider miserly, and try to make money on the side when we can. We are a also expecting a sizable settlement from a car accident but may be another six months to a year plus before we see it so we are trying not to count on it (in the mean time we have had to pay out medical expenses and it has also affected out credit).
We told USBank we could pay $20 per account for six months to a year until we catch up on some other debts and free up more money but no deal. This debt is in my name only, not my husbands and he is the primary earner. Anything I make is on the side as self employed. Our car is 16 years old so the only other asset I have is a house out of state (CO I live in IA and we rent.) We couldn’t afford to live there when we married (my husband has been in school) so I have rented it out for the last 7 years. I owe 104,000 on it and the initial property value search is did was valued at 130,000 give or take.
USBank won’t tell me what will happen once it goes into charge off. Can I negotiate for a settlement later? Will they do payment plans for the settlement that I could swing or do I need a lump sum? If I need a lump sum can I put it off for a while…like a year…so we can get some stuff paid off and money saved up? Can I even wait as long as it takes to get the accident money? Since it is three accounts do they treat them all separately i.e. separate law suits, separate settlements, etc or will they put them all together?
Most importantly could I lose my house over it? Is there a threshold…in other words if I need to pay one card and let the other two go will that work out better in terms of action they will take against me? I just want to understand my options and how to deal with the collector and my rights and their rights. I will read through your information but seems there is not much information out there on rental properties that may have equity and debt collection.
Thank You!
What US bank is not telling you is that after charge off they will send your accounts out to third party collection agencies. Review that article for more about what happens when your account charges off and you negotiate settlements with the collection agency.
US bank also sells debt to debt buyers like Portfolio Recovery Associates. Those debt buyers do not necessarily sue immediately, so you have time to save up to settle with them, or time for your accident settlement to come in and help resolve the debts.
You can settle directly with US bank too. The account may charge off, but stay with internal recovery for a couple of months (not always the case though), and this could provide additional time for your situation to change, and funds to become available to settle.
The three accounts could certainly all end up differently after charge off (one sold, one with a collection agency, one with a different collector). I find that more likely than all three sticking together.
You cannot get US bank to settle with payments longer than 94 days prior to charge off. But after charge off, there are settlement deals you can put together that could include 6 or 12 months to pay.
I think I will do a video this week about the impact to property (rental or otherwise) when you are not paying credit card bills. You may want to subscribe to my debt and credit channel. The gist is that they will have to sue you before the home could be impacted, and even then, they will typically only place a lien on the home that you will have to resolve before you go to sell or refinance it.
You are reading the beginning of the debt settlement article series, so be sure to read through to the end. These additional links are something you will want to review as well, because your situation will potentially involve dealing with each collection or debt negotiation reality. And it is better to know what is coming, and your options to solve the situation, before it comes up.
Hello CRN,
I am really happy to have found your site, especially this early in the morning for me. I am hoping to engage in debt settlement with Synchrony Bank unsecured retail cards, Barclay unsecured credit card, and Macy’s unsecured retail card. I am currently between 60-90 days late.
Where can I find the address to mail my settlement offers for these creditors and have them arrive in the correct departments and be in front of the right people?
Sending in letters to negotiate is ill advised. You are also way too early to start negotiating the settlement amount with those creditors. This page is the first of a 10 or more part article series (all linked at the bottom of this post). Read through all of them to get a feel for when and how settlements regularly get done.
I highly recommend staying away from letter writing efforts to negotiate. You do want the deals in writing, but typically after you negotiate the amount and terms over the phone.
I have a question about settling a credit card and PayPal which amounts to about 5,000. It is worth settling both accounts? Will it hurt my credit score? I’m trying to get a mortgage loan and some of my debt is making it a bit of an issue.
Are those accounts current or in collection? If in collections, how long ago did payments stop, and who are the collection agencies involved (if you know)?
My husband I are attempting to settle about $76,000 in debt with money that he inherited after the death of his aunt. Among other credit cards, we each have a credit card with Wells Fargo with each about $12,000 and a line of credit with about the same. Wells Fargo is also our bank. We are 3 month or more behind on all the debt except for WF. WF is also our bank and mortgage holder. We have struggled to make these payments, We basically are paying it to use it so we have money to make the next payment. We are wondering if we stop making payments are they allowed to garnish or freeze our checking account?
It depends on if your agreements contain any cross collateral clauses or not.
If it were me, I would change your bank accounts. I recommend that to anyone thinking of settling a credit card or loan with a bank they have checking and savings accounts with.
The mortgage being with Wells should not be a problem.
why do you reccomend changing banks? are they able to drain the money in your account w/out a judgment? if so i will definitly change banks……
It is more about not having the main checking account you do all your banking with be at a bank you are also going to be settling an account with. Check out articles 3 and 10 in this series (linked at the bottom of the above article).
Do you know if comenity bank /garder white & marathon visa will try to work out something with me or do they sue ?
Comenity may not sue directly to collect, but those accounts get sold to debt buyers who do sue.
ok….Thank you so much.
Nov 28 16 Left you a message I have 2 liens on my home that I want removed
It was good to speak with you on the phone Iqbal. I got your message after we spoke and understand your goal requires speed. But call the attorney I referred you to and see what you learn from that consult and then let me know your thoughts at that point.
We hired an attorney to help negotiate credit card judgments for my brother-in-law – Capital One and Discover. We are providing the funds for the settlement. We need to clear the judgments in order to sell jointly held inherited property.
Capital One was still with another legal firm & we have successfully settled that one.
Discover had used the same legal firm to file suit as Capital One but the case is no longer with that legal firm & we were told that it is back at Discover. It has been a nightmare to find the right person to discuss the situation & when a contact was finally provided to our attorney, Discover will not respond at all to the offer made. This has been going on for weeks and we are running out of time to provide clear title to a potential property buyer.
Any suggestions? .
Who is the attorney trying to contact, Discover, or another debt collection law firm? If another law firm, which one?
After starting over and moving from Michigan to Texas I have come to a point were I am trying to take control of my credit again. I kind of went backwords by opening up 4 secured Credit Cards and keeping my car loan and two other accounts up to date with no late payments. I have abot $13,000.00 in savings after a death of a family member and money left to me. I have about $45,000.00 in Charged off credit Cards and no one has sued me. All charges off happen in 2015. At this point would: 1. settlement of these CC accounts be better then Filing CH-7? 2. how much would I need to settle? any advise would be helpful THANKS
The amount of money needed to settle will depend on who the accounts are with. Post the creditor name and balance. If it is with a debt collection agency include who that is. I can offer an estimate from there.
Check out this article about how debt relief options like bankruptcy and settlement hurt your credit.
If you would have to give up a good chunk of the cash in chapter 7, settling could be a better path to rebuilding from here (depending on the creditors).
Community Federal Credit Union
$5,031.00
Capital One 30 to 50 percent are the ranges for settling Capital One debts that have not reached the courts, or attorney placement.
$3,750.00
$2,722.00
$5,544.00
$5,623.00
ExxnMobil/CBNA 40%
$932.00
First American State Bank Same as with small banks mentioned above.
$7,504.00
SYNCB/CareCredit 30 to 40 percent settlements on Synchrony accounts and are largely dependnent on the debt collection agency or debt buyer that has them now.
$1,041.00
SYNCB/JCPenny
$3,334.00
SYNCB/LA-Z-Boy
$1,099.00
SYNCB/Lowes
$4,335.00
SYNCB/Sams Club
$637.00
SYNCB/TOYSRUS
$394.00
Collection Accounts:
Midland Funding LLC Sues a lot. Try to set up a settlement early to prevent that. If you need help getting this on a 40% with 12 month payment plan let me know quickly before the accounts are placed with attorneys.
$1,288.00
$3,523.00
Capital One
Portfolio Recovery ASSOC Sues a lot and settles for 50% more commonly.
$687.00
Maybe: ExxonMobil
JJ Marshall & Associate Target this one at 50%.
$5,031.00
Community Federal Credit Union
I forgot no payments, or contact of any kind has happen with any of them. I opened a Mail box so I could start getting the letters but none of the creditors have my address, phone number etc
I put my comments in the same reply you posted, but in bold.
I would target the Community Federal Credit Union, Midland Funding, and Portfolio Recovery Assoc accounts for settlements first. You can get most of the heavy lifting out of the way with the 13k you have.
Before doing anything, have a consult with a bankruptcy attorney first. Get a feel for what chapter 7 would look like. Your credit will bounce back quicker if you settle, but not by much. There are other, more important things to think about than access to financing.
Call in for a phone consult of you like at 800-939-8357, ext 2.
Michel how much should I try to settle a $560 dent that was sold to Midland for? I can offer $150 when I make the call. Also, should I ask them to mail me a settlement letter before paying? Once paid should it be reported as settled or paid in full? Which is best on a credit profiler? Thanks for the advice.
When did you last pay on the account that Midland has?
Midland will send you a written agreement after you set up the deal with them over the phone. You can get them to fax it too. If you are having it mailed be sure to have a paid by date for the settlement that leaves room for the mail delay.
You may have a really hard time getting them to accept $150. It is possible, but not probable. Small balances are harder to settle for a great deal.
The last payment was in April or May. The $563 total includes penalties. My credit score is 690, so I can absorb it. I don’t want to because I’m trying to purchase an investment property.
You may need to resolve it to get the financing to go through anyway.
That was my concern. So, what do you think would be a fair settlement to offer or agree upon? I appreciate you help very much.
Something this small with a debt buyer can often be settled at 50%, but I also see them holding out for more too. Start lower than half and don’t try to get it done in one phone call.
I am just starting the process to help my mom negotiate her credit card debt and was hoping you could help me. She lost her job a few months ago, got a new one but took a big pay cut, and there’s no way she can make the minimums anymore (some she has been paying on for 10 years!!!) She will be 60 days late on all her cards in November and has, of course, been getting phone calls, emails, and letters.
My plan was to start calling them in the next few days using the script you had posted — about not forgetting about the bill, she lost her job and is looking to get this straightened out soon. Is that a good plan, or should we wait a bit longer?
She has about $30k in debt spread over six cards:
Discover – $13k
BofA – $11k
AmEx – $3k
Target – $2400
Sears – $1k
Citi – $500
She will possibly have some money coming her way, but it’s only about 1/3 of what she owes. We could maybe scrape up a few extra thousand, but beyond that is just not doable. A few of those banks I know you said may settle early.
Do we wait another few months to try and settle?
Do we make contact with the banks now to tell them she hasn’t forgotten and is trying to figure something out?
Are chances good that she could settle for 30-50% of the balance?
Otherwise, she really might have to do bankruptcy and if that happens, they won’t get anything because she has no assets. We were trying to settle before we went that route.
Any advice is helpful! Thank you!
If she is going to proceed with settling those credit cards, be sure to read and implement the things I point out in this article about lowering the amount of collection phone calls she has to contend with.
I would actually have your mom (you go with her too) meet with a bankruptcy attorney about filing chapter 7 first. It could cost as little as $1,500 compared to 10 to 13 thousand needed to settle.
If chapter 7 is a no go, I would make the calls to each creditor. No reason to wait. I would only make one call until later when it is time to negotiate the settlements.
Thank you for your response! I will take a look at that article.
I guess we were thinking that settling would be the ‘easier’ route because it wouldn’t damage her credit so much and keep her from getting loans in the near future. She just turned 62 and they (her & her husband) are planning to work a few more years before retiring. Once they retire, though, they might be looking to move.
They do own a house with land, but I don’t think they have enough equity that the bankruptcy could ‘take’ from them (I think the first $60k is safe). So would you suggest bankruptcy rather than settlement in this case?
I would at least consult with one or more experienced bankruptcy attorneys and weigh what is learned next to settling debts, and the impact to accomplishing credit goals.
Be sure to read this thorough article where I compare all mainstream debt solutions for the impact to credit. You may learn she can get more done with her credit after a chapter 7, and quicker, than if she settles the debts for less.
So we’ve been discussing the bankruptcy decision and will be talking to a few attorneys this week probably. She is going to get an inheritance here soon and she has some equity in her home. Won’t bankruptcy take both of those? Only a small amount of her equity is safe (from the information I could find).
Talk over both of those things with the attorney. If they have too much equity to keep the home, or if the amount of inheritance is too much to keep, settling will then look better than a chapter 13.
Question. I had a card with Credit One Bank way long ago. Dec 2009. Got sold to Midland and never knew about it and paid Midland in July of this year. Midland not only closed it and also deleted it. For some reason Credit One kept the item on my credit report all this time and still has not removed it. Any other account I have seen that went from say for instance Cap One to Midland became Midland and Cap One was not a separate item in accounts? Is this normal. I started paying off all my debt in July / August and have raised my FICO 150 points. This is the only thing still on my report that is negative. THanks Michael for your help. You can do this yourself with a little hard work and talking to a lot of people and checking those credit reports with a fine eye. I found an item on Equifax that they MAILED to me after disputes and it SAID it was going to come off and then they never removed it.
OK. I am rambling. My main question is would it be logical to dispute the Credit One item on th eargument that Midland bought it and they should not be reporting it still as a charge off on the credit report. Thanks again sir for all your help.
It would not be realistic to dispute Credit One reporting based on them selling the debt. It is normal for banks, as of now, to still report the charge off, just with a zero balance owed.
I would check out this credit report dispute article and file my dispute based on Credit One being to old to still be on your credit reports. If it is from 2009, it should either be gone already, or is set to come off in a matter of months.
march / april 2017. The thing I have learned not painfully but really annoying to me is the entire issue where Trans Union and Equifax Deleted no problem in a dispute but experian is saying they can not delete until 7 year rule.
That just means TransUnion and Equifax figure it is close to dropping off and not worth the trouble. If the negative is really able to stay on until March or April of next year, the early removal was nice.
Hi Michael,
I am currently 29K in debt (11k at Citi, 9k with Chase, 10k across random cards) I also have a checking account with Chase. I am approaching the 120-150 past due mark on both accounts. I signed up with Pacific Debt Relief but I am scared of being sued in court. I currently have no money to offer lump sum settlements (hence my sign up with Pacific Debt Relief).. I realize I can settle all on my own, but again I have no money saved. I am currently moving all of my accounts away from Chase as I believe they will freeze and/or close my bank account with them. What would you advise I do in this situation? File Ch 7 bankruptcy? I do own a house and pay a mortgage, and have a paid off car. What I liked about Pacific Debt Relief is the ability to collect a large chunk of money from me, then also allow me to set some money in savings for emergencies.
I would consult with an experienced bankruptcy attorney and look at your options in chapter 7. It is far more affordable (under 2k) and can be completed in 90 days.
How much are you putting away toward settlements each month?
I make over the median income for my state. I am supposed to start putting back $570 beginning Nov 1.
How much over the median are you?
Chase and Citibank are not real risks to sue. Chase has not filed a collection lawsuit since 2011, but that can and will likely change. Citibank is not all the aggressive like in years past. But they do sell debt to buyers that sue.
List the little ones and I can help you assess risk with those too.
I am about $10k over the mean, here are my debts from highest to lowest – pacifc debt did say they would pursue the citibank account first.
Citibank- 11,165.00
Chase – 9210
Bank of America – 4656
SYNCB – 1606
TDBank USA/Target Credit – $668
CBNA – 815
Chase – 519
Your biggest risk of being sued is with Target (they sue directly), and then Synchrony and Citibank, as they both sell to debt buyers that sue frequently. BofA has been suing more of late, but still on a small level compared to prior to the recession.
Most debt settlement companies enroll people in plans that take too long in my opinion. Try to knock all your settlements down inside of 24 months if at all possible.
Thanks, will do … do you have any recommendations for legal advice/help in Houston, TX?
I sent you an email with many great legal resources in Texas. There were a bunch of experienced consumer law attorneys in Houston.
Hi Michael,
If I was wanting to offer a settlement amount to Chase. Where could I find the address to mail that letter?
Thank you!
I would not mail any settlement letter. I would negotiate with Chase over the phone. Once you have the terms you can agree to, let Chase send you the letter agreeing to the deal, and then pay them.
Sending settlement offers through the mail is not all that productive.
Hi Michael,
I ran into some major health issues and was unable to work and stopped making payments in march of this year. I am almost back on my feet and should be able to start saving toward settlement the end of next month. I looked at ch7 but with all my other cc debt etc its not much help in terms of monthly payments. what do you think I should do
prosper 16500 charged off
lending club 11500 charged off
avant 12500 charged off
karrot 10000 charged off
usaa loan 20000 charged off
usaa credit cards (2) 8500 and 6500 still in internal collections.
I have a bunch of cards but they are all current, but all have balances of 2-7 K
You would need about 37k to settle everything you listed. And being current on the other credit cards is going to come in to play. Call me for a consult if you like, at 800-939-8357, ext 2. I will go over the other accounts with you too. I can get right to the point though, you are at risk with several of these accounts. How quickly can you raise money to settle some of these priority accounts?
Thank you for the quick reply. I did call and left you a voice mail message. I can’t come up with that amount for several months. Also not all of my other cards are current I have I have several others that are behind.
Comenity 8k
Cabela’s 7k
Webbank 7k
Webbank 4k
Sterling jeweler 1500
A couple syncronry cards that are 30 days late.
I am current on payments to amex 8k balance
Discover 5k balance
And current on a few other syncronry cards .
I left you a message back a moment ago. I am on pacific time and in the office tomorrow. You can reply to the emails that you get from the site (those all come to me) and suggest some times tomorrow.
Hi Michael. I have a debt of $4231.83, originally of Citi Bank which is currently being handled by the Razor Capital, MN. I have myself contacted them via phone after I came to know about them when I called CIti in response to which they sent Citi statement of this amount by email. They told me to pay via check or money order with my id written in the memo.
Last payment made was in March 2012. I was out of country since then and just returned. I want to clear it asap.
How should I pay them — via check or MO? Thet told that they accept only these two modes if payment. They have emailed me saying that they would send a letter of “closing account” with account paid in full once payment is cleared. Do you suggest anything that I NEED to be cautious of, at this. I reside in MA while debt was originally in GA.
Are you paying this in full or after negotiating a settlement? Do you have anything in writing other than an old Citibank statement? I would want something from Razor Capital that stated the amount you are sending resolves the debt. Check out this article for more about what to look for in a settlement or pay off letter.
Hi Michael,
I came across your website and it has been very helpful. My current situation entails unsecured credit card and personal loan debt to the amount of approximately $71,500. I can provide a recap of accounts below:
Security Service FCU Personal Loan; $6,231
PayPal Extras MasterCard: $3,228
Amazon.Com StoreCard: $2,069
Chase Freedom Credit Card: $15,957
Capital One Credit: $9,400
Discover Credit: $2,800
SSFCU Credit: $7,478
Furniture Row (Cap One) Credit: $4,667 (60 mos/0% interest)
Conn’s Synchrony Credit: $4,981 (60 mos/0% interest)
Chase SW Credit Card: $15,027
I have recently agreed to enroll with National Debt Relief in an attempt to get these debts settled rather than my payments being eaten by interest charges every month. After facing some serious concerns about debtors coming to my home, calling my work, being sued, etc. I decided to do another (deeper) dive into researching my other options such as negotiating direct with my debtors to see if I can make a feasible plan.
I am currently in graduate school and will be enrolling in a doctorate program after the completion of my current degree. I would prefer to handle this debt without seeing major impact to my credit score if possible and I would like to stay out of delinquency.
What might you suggest as the best path forward?
It was good to speak with you Joshua. Please update this post with what you learn about consolidating through one of the nonprofit’s. It will help others who are doing their homework about whether to settle debts or not.
Michael,
My wife had forgotten about a $25 balance on a Kohl’s Charge Card that has since ballooned to $357.33 before it was charged off. I had tried to negotiate with them along the way but they were not willing to put anything in writing before I made the payment nor were they willing to reduce any late fees before my payment. I didn’t trust that they would stand by their word so I declined the deal. After many more months, they contacted us again about the debt of $357.33, and I again attempted to explain that that was a ridiculous amount based on the original debt. They stated the lowest they would take is 60% ($215). I countered with $100 to which they held tight to their 60% as the lowest possible. Now, they have given JC Christensen* the opportunity to collect on their behalf. I attempted to negotiate with them as well and they held fast to the 60% line as well stating this was all Kohls would allow them to offer. I have found several recent Kohl’s settlement letters online showing 40%, 45% settlements, After speaking with Kohls again, the 60% number came up and that is basically where the conversation stopped. What, if anything, can I do to break through this amount? I’m not unwilling to settle the debt, but given the fact I tried to take care of this before it spiraled out of control, I think the amount they want now is unreasonable.
Small balance accounts often do not settle for the best savings. Not just with Kohl’s, but most debts. Check out this article: https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/
So in the current charge off state, from a credit report standpoint, would it be better to pay it in full or take the settlement? If I do take the settlement, how long will that appear on my wife’s credit report. We are working to pay off all debt and close all credit accounts.
Thanks for the help.
Once you get to the point you are dealing with JC Christensen you will get no benefit from paying the full amount. You could not pay 10 times the balance and get anything other than a resolved collection. I typically recommend negotiating the lowest pay off possible. That results in the same thing… a resolved collection.
The negative will fall off her credit up to 7 and one half years from when regular payments stopped. But the negative will lose potency quickly once you resolve it.
We spoke yesterday about Debate Settlement with Navy Federal and One Main Financial. After reading information on your site, I really need to talk to you. I am interested in debt settlement.
Hi Deborah – I tried to reach you at the phone number I have for you. I could not leave you a message. Try me back when you are able.
Micheal ,I wish I can upon your website sooner. Its made me feel a bit more assured my wife and I made the correct decision .
I recently signed up a Debt Settlement Company (FDR) and established a plan to pay off our unsecured debt. of 61K over a 4yr time frame .
My wife and I are 67 and 70 years old and collect SS and I have a company pension. Our combined income is 60k a year. We still have a mortgage for another 15 years .
Unfortunately we are over our head and just getting by to cover all the debt and annual living expenses. Up until we decided to enlist in the Debt Settlement Program we have NEVER been late or missed a payment to anyone.. However In order to continue this method we needed to turn to credit cards over the past several years to fund family assistance and unexpected and non budgeted expenses.
Based on our situation to believe we made the right decision opposed to the other alternatives such as Bankruptcy?
Thank you for your website and time
.
In order to determine if settling those credit card bills is better for you, I would start with a bankruptcy consult about chapter 7. Check out this article about finding the right bankruptcy attorney for you. Get one or more consults under your belt. If you can qualify for chapter 7 without losing assets you want to keep, or that can be sold privately to fund your settlements, than bankruptcy will often prove to be the better solution.
If you can only do a chapter 13 bankruptcy, settling credit cards instead is often a better alternative, but I would not use the longer settlement programs that most companies sign people up for. Look for ways to fund your settlements much quicker. Post the credit cards and balances you owe. I can offer some more feedback about settling if you cannot do the chapter 7.
Hi MIchael,
I have a $11,834 credit card debt with Bank of America- the account has been charged off, but I am being sued. I called the agency 2 times to settle the amount but they offered to settle for %75 so I didnt accept that and I went ahead and took a court date- which is in 2 days- on wednesday, Aug 3.
Yesterday the law office (collection) sent me a letter saying call us to settle before court.
My question is- should I try again, or just go to the court? Do I have a chance to settle at a better rate at the court? I stopped paying the card about 2 years ago.
I would really appreciate your advise. Thank you!
You can sometimes settle prior to court. I would target 50% of the balance owed as realistic. Can you pull that together in a lump sum?
Thank you for your response.
50% would be really hard to come up with. I have 5,000 maximum.
So you definitely not advise going to the court?
My court date is tomorrow- I have about 51K credit card debt all charged off (long story, used by my (now seperated) husband. I have a 2,5 year old daughter to take care. If I cannot settle it today with the collection lawyer that BoA has, what is my chances to settle at the court- full amount? may be installments?
Also- do I need to open a separate bank account to pay them?
Definitely show up to court. You would not need a separate bank account to pay them, though that is something I encourage when you have more time to prepare and be deliberate.
Who are the other creditors you owe? This could just be the first of several lawsuits. Have you looked at how chapter 7 bankruptcy can apply to, and help you?
You can settle judgment debt later, but I would be more likely to want to try to delay this in order to regroup and focus on the right solution and not rush into settling just yet. It is possible sometimes to delay court.
Call me for a consult at 800-939-8357, ext 2, or reply to the email address you are getting these notifications from with your phone number and times that are good to reach you and I will call you, or reply with some alternative times if I am not available.
Hi Michael
Love your YouTube channel and website, THANK YOU! great information that takes the sting out of this kind of stressful situation.
Here is my circumstance. I have had an outstanding debt with JP Morgan/Chase since 2014 when my medical practice went bankrupt, I couldn’t meet my personal account monthly payment and CHASE did an account charge off in Feb 2014.
The current debt collector holds the remaining debt and I’ve been making payments since then. I’ve recently had major medical bills and am experiencing further difficulty making payments to the debt collector but haven’t missed a payment yet. My home was just refinanced this month to help lower that payment and better meet our medical bills.
I think I could pay 70% to 80% of the remaining debt if the debt collection company agrees. What are your thoughts and what concerns should I have about settling my CC debt. I am concerned about the taxes and how to calculate and plan for this. Any suggestions?
Settling your Chase debt for less can lead to tax implications, but for most of us, I say so what. Your saving money, and the tax you pay on cancelled debt (not all of us will have to), will still not add up to the full amount, so you come out ahead.
You should be able to come out way more ahead than settling for 70 percent of the balance owed today. Call me for a quick phone consult at 800-939-8357, ext 2. I will ask you some questions to see why you should not be targeting a much better deal.
Dear Michael,
this is Marya again – I am back after speaking with a bankruptcy attorney and then credit counseling. And ultimately, I feel that I just need to save enough to settle with at least my credit card debts and then move onto the loans.
My question is which accounts I should approach first and at about what time after delinquency.
Here are the suggested settlement amounts you sent to me before:
Nordstrom: $2400 (22%) 40%
Chase: $7166 (18.24%) 20% to 40%
Chase: $1444 (0% and then 23.24% after October 16) 20% to 40%
Discover: $5398 (0% right now, but I am not sure when it will be 25%) 50%
AmExpress: $3818 (20.49%) 50%
Dell: 992 (24.42%) NO
Crate and Barrell: $600 (22%) NO
Bloomingdales: $809 (25.49%) NO
Amazon: $3217 (26.24%) 40%
Citibank: $4359 (16.24%) 35%
BestBuy: $4039 (0 for 2.5 more years) 40%
Paypal: $3394 (not sure I think it’s above 20%) 40%
NIH Federal CU Loan: $16,194 (i think it’s 8%) 50%
LendingClub loan: $14,452 (10.38%) 40%
LendingClub loan: $12,185 (13.25%) 40%
Prosper loan: $6894 (14.97%) 40%
Barclay: $2433 (22%) 40%
TD Bank Loan: about 19000 (5 or 6%) 50%
I will be setting aside $2k per month starting at the end of July,so in 6 months I should have $12K.
This should take care of all/most of the credit cards.
But should I try to settle with any of them before 6 months (180 days)?
And if yes, which ones should I approach first?
Thank you!
You will want to call in for a consult Marya. I am at extension 2 when you call the toll free number at the top of the page. I am going to go over some strategies with you to include the loans at the same time as the credit cards, and lay down some priorities the way I would if these were my accounts.
I an not on the phones today (Sunday), but am in tomorrow at 7 am pacific time.
You can also email me to set up a time to speak on the phone. Just hit reply to any of the comment notifications you get from the site. That will come to me.
Hi Michael,
I will call you on Wednesday. Thank you!
Marya
Hello,
I am 24 years old grad student living in Canada, but I am USA citizen. I am just attending grad school in Canada because it is a lot cheaper. Anyways, I have 7 credit card total debt about $20K and personal loan at Discover $13K. Before being grad student I worked as a teacher. I quit my job and went off the grad school without thinking how much I owed… I managed about 6 months to pay my credit card with my saving and working a little. But now… I am at the end… I was thinking to do debt management plan and somehow I stumbled upon your site… so I am very confused where to go for help. Reading over your site made me think a lot. None of the options are appealing to me… I even thought of stop paying my debt and never move back to America for at least 10 years…. I won’t be jobless forever but I don’t know when I will be able to pay back all my debt… also, once I am out of grad school I have college loan to pay off… What can I do? Past few weeks I have been praying to win a lottery… I sinceely need your advice. Thank you.
Post a reply with who you owe, how much, and the interest rate. I can help you with some pros and cons about each debt relief option from there.
Thank you for your quick reply.
1. Amex- $2,000 (20%)
2. Amex- $4,000 (20%)
3. Barclays- $1,800 (0% until August 2016) (after Aug it is about 23%)
4. Capital One- $7,700 (20%)
5. Discover- $4,000 (15%)
6. Discover personal loan- $12,000
7. US Bank- $900 (20%)
Is debt management plan better? Or bankruptcy? Both options are not appealing to me….
past few hours I was thinking to pay some and toss some out… not smart idea but i have no way out… unless i hit jackpot and pay all at once.
Also, what is time-barred debt? From my research it is saying 7 years then the debt is gone… does debt ever disappear?
Let’s say I stop paying all my credits (or pay few) for 7 years I live aboard … then I come back America would my credit score very low….?
Anyways, I will be waiting for your reply.
Thank you for taking your time to help me out.
With your debt total of $32,400 assume your debt management plan would be 583 a month. Can you consistently afford that? If you are confident of that, read this series about working with a nonprofit debt consolidation company.
With those credit cards and balances, were you to stop paying and later settle each account, assume you will need 14k to get through it all. How long will it take to put together 14k? Most people save it up over time and settle one account at a time. But if you have a way to bring the money together quickly, you can mitigate risks. You are already reading the series about settling debts with creditors (the above article is part of the series), so continue on to the next piece linked at the bottom of the article.
If you can pull together $1,500, than chapter 7 bankruptcy will make a ton of sense for you. You can consult with an attorney about this more, but read this piece about finding the right bankruptcy lawyer first.
You do not have to file BK now. You could wait until you are done with school and back in the states, even though you may stop paying your credit cards.
Time barred debt is generally described as when the statute of limitations to sue you in a specific state has expired. California has a 4 year limit for example.
Negative items drop off your credit report after 7 and one half years.
If the debt is time barred, and also too old to be on your credit reports, it does not go away, but there is little that debt collectors can do to get you to pay at that point, even though they can still contact you.
Which option is better? Debt management or settle with debt collector later.
Some sites said debt management plan is helpless because credit score is messed up even after I pay the debt on time. But not paying all and pay later with the debt collector is still going to mess up the credit score.
Out of the two options, which one is better for long-run? I am only 24 years old So, I will be needing a good credit score in the future.
Also, will it affect getting gov’t student loan later?
I am not sure where you read about credit counseling messing up your credit score like debt settlement, but that is not true. Read more about how I compare the debt management plan with debt settlement.
If it is affordable and your income is stable I would look at consulting with a credit counselor and getting a monthly payment quote for debt management plan first. If it is workable, it will preserve your credit and should not impair your ability to qualify for federal student loans.
Settling for less can impair your ability to qualify for new credit until all the debts are settled. I have seen people get student loans with a few unresolved collections.
Michael,
Also pertaining to my previous question regarding the $13,000 debt to WF.
What do you think the approx.
Settlement offer should be?
Thank you,
Lee
There are different ways to negotiate with original creditors. Sometimes you start low and know you are not going to get this done in one phone call. Other times you target what you know the bank generally approves settlements for and get things done a little more quickly.
Your target to settle will likely be between 35 and 50 percent. Take that into consideration with the approach you use.
Michael,
The 3 loans my 27 yr old daughter has with WF are
1-5,263 104 days delinquent
2- 4,456. 46 days delinquent
3- 3,3354 45 days delinquent
I think the Third delinquent loan for 3300 is a credit card that she has had for four or five years the other two are only about a year to 2 years old.
She only has one other card for a little over a thousand to Chase she can manage that and a small balance on a Kohl’s card.
If Wells Fargo does not offer us a reasonable amount to settle…
My daughter wants to file bankrupt I hate for her to take this route at the early age of 27.
Due to these three delinquencies her credit score is at 540 right now.
With her rent , car and general living expenses she does not make enough money to pay these bills.
I am not in the position to help her financially.
What are your thoughts on any options that she might have?
Thank you so much for your time and help!
Lee
She should be okay. I am not a fan of bankruptcy either, but because of the amounts involved, not her age.
Assume she can settle with Wells Faro for 40%. That means filing chapter 7 over what could amount to roughly 5k.
She should look to save up money as fast as possible and settle with the recovery department at Wells Fargo once the loans and credit card are 7 months or more past due.
So…You do not think WF will turn the debts over to a 3rd party before at least 7 months?
Does WF typically turn debts over to 3rd party or do they keep their debts in house?
Correct, I do not see Wells Fargo doing early debt collection placement (before 180 days nonpayments) right now. They used to, and they could return to doing some of that.
Wells Fargo stopped selling debts more than a year ago. At that time I also saw them keep more accounts in their internal recovery too. This should change int he future as well.
Michael,
My daughter has 3 separate unsecured loans from Wells Fargo.
Total is, $13,000
She cannot afford to pay the debt.
2 loans of $5,000 ea. AND One at $3,000.
So far one of the loans is about 100 days delinquent when should we call the bank to try to negotiate a settlement offer on the one that is already 100 days delinquent and at that time should we try to negotiate on the other two or will we have to wait until each one of those are at their limit for the negotiation settlement time period?
Thank you!
Lee
Wells Fargo can be a bit difficult these days. I have seen them be tough to negotiating with for under 50% and also seen some deals get closer to 35%.
The later you get with payments the better the deals get (some of the time).
Wells Fargo is one bank that historically like to settle all of the accounts on file no matter if the other accounts lag in delinquency, and sometimes even if there were current. If you are prepared with the money to knock all 3 down at once… great. If they will not approve that then keep that money aside for when they do.
How recent are the loans with Wells Fargo? Has she been carrying the balances for a long time?
HI Michael,
Thank you for the help your providing and I have also seen your you tube videos. I am currently around $80k in debt. Just got into some bad investments and bad credit card purchased. I recently met with a bankruptcy attorney but a chapter 11 (did not qualify for Chapter 7) would be pretty much the same payment (minimum) I am paying now, I will only save $500 with fees. I am looking for a debt consolidation possibly or settlement. I spoke to Freedom Debt Relief but I am scared of getting sued. I have read some bad reviews on them. I am willing to pay the debt if I could only lower the monthly payments to half or less. My job is stable and could make payments.
Thanks,
Give me a call for a quick consult about your situation Rolando. You can reach me at 800-939-8357, option 2 rings to me. You can also fill out the consult request in the right column of any page on this site.
I can help you determine how low your monthly payments can be set, or how much risk there is if you opt for the settlement path.
Hi, my wages are being garnished $508. why would the debt collector not tell me who owns the debt. I did a little searching and it’s another collector / attorneys in another state, the collection agency says their client wont accept my payment plan offer. I tried calling the owner of the debt and they wont talk to me, said I need to speak with the collection agency. just so frustrating. I know I might be doing wrong. asked to speak to the collector’s supervisor, told her to offer a little more, said they will call me back with answer from their client. I have provided information of three loans I have. I had asked for (2)of my car payments to be moved to back of loan and I need to pay with this paycheck my car and insurance. after I pay only things I now owe. I am left with $100 for rest of month. should I do the exempt paperwork. I do not have children.
Debt collectors are not typically flexible when they are garnishing. I would definitely contest the garnishment as causing a hardship. If you are successful with this in the court, whether fully or partially exempt, you could then seek a better resolution to the debt. You might even try to do that right after you file to contest it with the court, but before the hearing.
Hello, I consider myself at a bit of a crossroads with one old credit card hanging over my head from college. I reviewed my credit report and the card has a status of closed-charged off. I have a remaining balance of $868 and it also lists a late payment amount of $350. The date of the first delinquency is 07/2011. My last payment was 05/2012. I am receiving letters now from a third party debt collector to settle this debt for less than the balance owed. I am wondering how to handle this situation. I understand that this card will likely be off of my report in 7 years. Which if it is calculated from the date of first delinquency would be in 2.5 years, 07/2018. Is that the correct calculation? If that is correct, which would have more positive or negative impact? Me settling the debt for less than the amount owed or me letting the debt hang around for another 2.5 years? I am in the process of repairing my credit and I feel like this is the greatest blemish but because of the age I am not sure what’s in my best interest. Any advice you can provide is greatly appreciated!
If that first delinquency was a blip, and you brought the account current after having missed a single payment, the date to count from would be later than that, and perhaps the May 2012 date. You will want to work with the assumption that the negative will stay on for 7 and one half years.
You can wait for the collection to fall off your credit reports without resolving it. Your score will increase and you will be able to make progress on financing goals. If you settle the collection for less now, that will get updated to your credit reports, but may/may not move your credit score up immediately. Your credit score will improve in a short while. The main reason to settle now would be to achieve certain financial goals, like getting a home loan.
Are you looking to improve your credit to accomplish a specific goal in the next 3 or so years?
Thanks for the quick reply Michael! I would be looking to purchase a home in the next 1-3 years. Surprisingly enough I recently got a car loan from my long term bank with 3% interest. So I am assuming this blip didnt hurt me too much with them. But the auto dealership sent apps off to other banks and I received a couple of denial letter referencing this account being an issue in their decision.
If I was to apply for a mortgage is it important for me to have this settled and not exist in the current status?
You definitely want to have the charge off showing as settled before you apply for a mortgage. If it were me I would settle it. It boils down to a few hundred dollars that will stand in the way of buying a home.
Hi MIchael,
I came across your website while googling debt settlements and followed a link to this site. Here’s my situation:
– A Citi card credit card with a balance of $6916 – charged off 07/15, I received a letter from United Collection Bureau on 9/15 offering to settle for $3000
– A Citi card credit card with a balance of $1966 – charged off 08/15, I received a letter from United Collection Bureau on 2/16 offering to settle for $865
– A Barclays credit card with a balance of $4131 – charged off 12/15, I received a letter from Northstar Location Services on 2/16 offering to settle debt for less. (Doesn’t give amount)
– A Barclays credit card with a balance of $1416 – charged off 12/15, I received a letter from Northstar Location Services on 2/16 offering to settle debt for less. (Doesn’t give amount)
I believe both agencies are working for the credit companies and have not bought the debt.
I haven’t answered any phone calls or mail from them, and the calls seem to have dropped off.
Besides that I have a car payment due on the 16thof every month for about $345 that I try my best to keep up with. I live alone in NY and have a mortgage of $2500/month, student loan of $122/month a discover card with $2358, I’m current on making payments of $60/month. I’m still employed and bring home $4000/month after taxes, but basically I have been out from work for 2 years do to a progressive life threatening medical illness and treatments, which is why pretty much all the credit cards I fell behind on are charged off. My credit score is all ready low 500’s,
My tax return this year should be about $10,000 and want to use that to try and deal with the collection agencies.I have been all over the internet and reading the crazy debt forums, I’m not looking play the Validate debt dance or pay for delete or dispute charges. If I could deal with credit card companies directly on this I would, and I would try and pay it all off and re-establish my credit. But if I have to deal with collections, I figured just try to settle and keep some money in case of emergencies.
Basically I know my credit score is all ready low and every thing is recent I just want to clear this stuff up/ avoid any lawsuits and move on, to be honest. I don’t expect to be around anyways for when it comes off my credit report.. I was wondering if you thought settlement was the way to go, have you dealt with any of these collection agencies before and what should I reasonably hope to shoot for and will the collection agencies deal with multiple accounts at one time or do I have to do each one card separately. And when I do call these collection agencies, I was wondering if I should keep my illness and it’s situation to myself, I’m not sure if it would work for me for settling or make them go to courts faster.
Thank you very much in advance for reading my lengthy comment and responding.
If I were working your file as a negotiator I would definitely make reference to the medical hardship. It plays to your strengths (hard to believe I know). I think you can get a little lower with UCB, maybe 35%. I would target 35 to 40 percent with Northstar on your Barclay accounts.
You will be dealing with the debt collectors. I would wait to call until you have the money in your bank account.
You can negotiate both accounts with each collector at the same time, but the agreement letters they send will often be separate.
Get your settlements in writing.
Use your bank account to pay the settlements if you like.
Hi Michael, I just called Citibank to verify who has the debts and apparently the larger citi bank card $6916 is now with United Recovery System, haven’t received any info or letters from them. I was just wondering if you have dealt with them before, n if it changes the settlement % you told me to shoot for?
I appreciate any input you can give, hope you have a Happy St. Patrick’s Day!
My target would be the same now that you are going to be negotiating a settlement with URS.
Hi Michael, just called Barclays to verify who has the debts and immediately switched over to Enhanced Resource Center in Fla., they verified correct debt amounts and ending account numbers. Went into a little about my hardship but did said I was employed, and asked them to send me letters concerning the accounts, do to my lack of good hearing from treatments. I gave them a number to reach me at and verified my address, they have had the account since 3/1/16 wouldn’t say how long they have the accounts til, no offers or anything made by me or them on the phone. Does this change on what to shoot for % wise for settlement?
Not really. The longer Enhances Resource Center has the account, the more reasonable the settlement outcome may become. But try to knock the deal down before they lose the account. I would try to work something out by end of April or May.
We had a foreclosure on our house by BECU on 2010, due to the 2008 crisis. We have a judgement, and arranged payment plan for 15 years for about 45K. We have paid about 8K of it in 3.5 years according to the plan. So we have 37K left to pay by 2027. We have no other debt. We would like to negotiate a settlement because the weigh is just too much on us, but we are not in a situation to pay the full amount.
What amount can we shoot for? I know the credit unions are not open to negotiation, but I assume they would want to have a lump sum pay than waiting for another 12 years.
Settling with BECU on a judgment can vary. I cannot offer a very optimistic target when someone is showing the ability to make payments like you are. If you stop paying you risk the extra collection efforts judgment creditors have… that we all would prefer to avoid.
Do you have any other unpaid collections out there?
Are you paying other bills, like credit cards, or a car loan on time?
Can you raise half or more of the balance owed quickly?
Thanks for the prompt reply Michael!
We have no other unpaid collections, We use credit cards, and pay the full balance at the end of the cycle. We are leasing a car. The house was on my husband’s name only. We can raise the half of the balance, but not the whole amount, as we are living in the most expensive area in the US. We don’t want to stop payments, but settle the debt by paying a reasonable amount. The house was on my husband’s name, but the judgement has me as spouse (as far as I understand WA law includes the spouse). His credit score suffered due to bank’s reporting; I have excellent score.
I think I was using the term wrong, We want to close the debt. Because we already had signed an agreement to pay it in full in 15 years, and have been paying a fixed amount the last 3 years.
Give me a call to go over some additional details and I can offer more direct feedback. You can reach me at 800-939-8357, option 2 rings to me. You can fill out the “talk with Michael” form in the right side bar too. That will allow us to communicate through email.
Hi Michael,
I came across your youtube videos (which are very informative!) and followed a link to this site. Here’s my situation:
– A Bank of America credit card with a balance of $3246.37 – since October (various people from) Sunrise Credit Services, Inc. in Farmingdale, NY have/has been sending me correspondence.
Mail dated Oct. 7th “When You Receive A Collection Notice…” from “Mrs. Silva” gives info on what happens next, no payment options detailed.
Mail dated Nov. 19th from Joe Thomas, offering to accept $200/month if I respond within 90 days.
Mail dated Dec. 8th from Regina Tabone, offering to accept $50/month if I respond within 90 days.
I haven’t answered any phone calls or mail from them, and the calls and mail seem to have dropped off.
– An American Express (Costco) credit card with a credit limit of $1,000.
Mail dated Nov. 22. A notice from “Central Credit Services LLC (Formerly Veldos LLC)” in Ramsey, NJ stating that they’ve been requested by AmEx to assist them in the collection of $1,024.64
Credit card statement from AmEx. Statement closing date Nov. 24 with a $1,073.93 balance (previous balance of $1,024.64 plus a $38 late fee on Nov. 19th and $11.29 interest on Nov. 24th – the statement close date).
Mail dated Jan. 28. A settlement offer from American Express. Balance owed: $1,160.39, settlement offer: 60% of balance owed, $696.24. The expiration date for the offer is/was Feb. 22 and I meant to send them money before it expired. They’re asking 60% of the balance owed over the next 6 months which would be $116.04 a month.
– A Wells Fargo credit card with a total credit limit of $5,100. I’ve been a member of Wells Fargo since 1994 (when I was 7 and my parents opened account for me), and I’ve had this credit card since I was 16, over 10 years ago. In March 2015 someone stole my wallet and used every single one of my cards. I reported them all stolen and got most of the charged refunded. My Wells Fargo credit card was one of those accounts. But the bank itself wouldn’t reverse the $975 charge to my debit card/checking account (which overdrafted my account and all of that fee ended up coming from my credit card anyway), so after being told I’d have to pay that amount, I decided I didn’t care about paying down the balance, which was foolish of me. Every so often I would send them a little bit of money to appease them, which I now realize was also maybe not the best route to go. Before this fiasco I legitimately owed about $3,790. I currently have an outstanding balance of $4,735.08. I paid $158 on Feb. 1st, am past due $155 which was due Feb 15th (and have since had interest of $66.01 and a late fee of $35 added – I’ve gotten a late fee every month since March 2015), and they’re asking for $304 by the next statement close on March 11th.
Besides that I have a car payment due on the 3rd of every month for about $401 that I try my best to keep up with. I had only about $250 income for all of 2015, and for 2016, I’ve been making and expect to continue to make about $500/month.
Thank you very much in advance for reading my lengthy comment and responding.
Can you raise money to offer lump sum settlements on one or more of your accounts? Here is what settling with BofA, Wells Fargo and AMEX might look like:
The collection agency with your BofA account will often settle for 30 to 40 percent of the balance owed. Done correctly, and given the right set of circumstances, it is possible to settle this account for less than 30%, you can call for a consult and get into the details of how that might work.
It is unfortunate that Wells Fargo treated you the way they did with your debit card. I would typically suggest you file a complaint against Wells Fargo with the CFPB. If it were me,and the credit damage from Wells Fargo had already begun, I might move in the direction of settling with Wells Fargo, for say 40% of the balance.
I would call Amex and let them know you want to make a settlement deal, but cannot raise that much (or commit to that high a monthly payment toward the settlement), but could work with them if the amount was, say 10 percent lower. Get that newly negotiated deal in writing before you make a payment.
You can only do what you are capable of financially. If you cannot raise the money to fund settlements, it just is what it is. You will be dealing with different debt collectors along the way, and there will be opportunities to settle these accounts and rebuild your credit as you go.
I likely have a page up about any debt collector you may here from moving forward. Use the search box in the upper right to find those pages and read up on what settlements and negotiations are looking like with each. Post comments and concerns and get feedback along the way. If you cannot find details about a specific debt collector you are hearing from you can start a new page about them using the Ask Michael feature at the top of the page.
Given the relatively low amounts involved, and your age, I would not suggest bankruptcy right now.
If you want to find out if your accounts can be consolidated to a lower monthly amount, with fees and penalties waived, call 800-939-8357, press 1 when you here my voice start in with the menu. That will connect you to the largest nonprofit in the country who can consolidate your bills in many situations. The call is free and friendly. You are mainly looking for that monthly payment quote in order to determine if it is affordable.
I just talked to chase to make arrangements to pay my credit card debt. I have 2 cards with chase totally 20,000. The only option they gave me was pay the full amount over a possible 60 months. They wanted to do an application over the phone but I refused because I can’t pay the full amount because my payments would be almost as much as I am paying now. I am 60 yrs. old and cannot pay that amount in retirement. I can’t afford to pay any amount in retirement. I wanted to pay it off at a half the total amount in 3 years. They said they didn’t have that option.
How many months late are you with your payments to Chase? From the sounds of it you are not behind enough for them to discus settlement options.
When you do get to the point of being able to negotiate, Chase indeed has no plan that allows for a reduction of the balance and 3 years to pay. But there are often going to be settlement targets far less than 50% that will play into your planning. Call in for a quick consult if you like. You can reach me at 800-939-8357, option 2 rings to me. I am on the phone a lot, so be sure to leave a message and I will return the call.
I am not late on any payment. I have not paid any principal on one of my cards in several years. The balance has been the same. My concern is that I definetly will not be able to pay my minimum payment of $256.00 in retirement in the next 3-4 years. I believe their 5 yr. payment plan will be even higher.. My balance is 13,000 on one card and 6,400 on the other. I have already paid about 9,000 in interest in 9 years on the 13,000 card. My interest on that card is 129.00 a month and 95.00 on the other. I cannot pay a lump payment settlement either.
Watch this video about entering into retirement with affordable debt that I published last month.
Post your thoughts in the comments of that video, or in this comment string, and lets go from there.
I am currently $42,000 in credit card debt. I have a special needs son and was recently diagnosed with SLE and lost my job. We pay a $1,000 a month in payments if not more… we are currently current. I was thinking about stopping payments… and then starting to settle one card at a time with that payment money. In a few months the promo interest rates will go up and we will no longer be able to afford them. I do not want to file chapter 7, I want to do what I can to pay off this debt. Is it better to let them go into default first?
It is typically not a good idea to let accounts go into default if you can avoid it. You may still be able to, but call me for a consult about your over all situation at 800-939-8357, option 2.
If settlement is your path to resolving your credit cards, than yes, you have to be in default several months before you can typically have any meaningful discussion with creditors about them accepting less than what you owe as payment in full.
My family had a bit of hardship which ran up my cards and I was unable to make min payments. It was a capital one card and my balance is almost $23.000.00. About a month ago I was telling them that I was going to get some money and could possibly make a payment. The wanted to settle for 13300.00
I have come up with 12,000 but now they have sold my debit to theBureaus Investment Group Portfolio No 15 LLC and they are using Stoneleigh Recovery Ass. LLC to collect. When I called the first time the person on the phone told me the best they could do was like 16,500.00. So I asked them to submit my offer of 12,000.00. I was told to call back the next day which I did and now I am taking to account rep that is assigned to my case has told me the best offer is 19,000.00. I owe other creditors money which none of them I am late with. Should I use my funds to pay other creditors since they dont want to give me much of a setttlement? f they were to sue me what is likley the judgment amount will be the entire balance.
Unfortunitly this account rep and my wife went round and round as they made there first call to her before I had called them. They were trying to stong arm her and she does not take that from me or anyone. He used bad lanuage which she returned. So I am woundering if this may have turned a little personal. So looking for advice on how to handle this matter
I am optimistic you can still settle the account for half. But you do raise a good question about whether you should focus on resolving other debts. Give me a call to go over your creditor specifics and I will help you prioritize your accounts. You can reach me at 800-939-8357, option 2 rings to me. I am on the phone a lot, so be sure to leave a message. You can also email me directly and set up a time to talk. My email is the address you receive these comment notifications from.
I could not find a coment notification in my email to email you. I am still struggling with collection company. They have moved me up to speaking to a supervisor who wants a call back from me tomorrow. The offer is now 18,000 and I can spread it over 6 months. I have stuck to my inicial statment that I could pay 12,000, but they will not take that offer. Of coarse they are getting reall pushy about me sending them a payment which I have refused to do. In my last post i told you I had other creditors that although I am current on i do have a sufficient balance. Do you think using the other creditors as leverage, is a good stratgie to tell collections that maybe I will pay them with my 12,000.00 to help push them to make a deal.
I am thinking taking the 50% to 60% settlement as my credit has already been hit for late and non payment. Is there any advantages for me to pay the entire balance to collector at this time as I have already done the damage? My thinking was to take the settlement as it will help me get out from under this debt I have got myself into.
I have to call the collection agency back tomorrow and just not sure what to tell them.
I only use other unpaid debts as leverage when negotiating. Bringing up credit card bills that are current does not have the same affect. It often makes you look like more of a collection target.
I put up a video about settling charged off debt while trying to limit credit report damage a couple weeks ago. Give that a watch as it will answer you question about the benefits of paying in full, or for much less.
I would target a much lower settlement. I am available to call at 800-939-8357, option 2 rings to my desk. The email notifications only come if you check the box to receive them before you submit any one of your comments.