Short answer
Debt settlement is negotiating a payoff for less than the total balance you owe, which the creditor or debt collector agrees to document and accept as payment in full. It works for the right person and the right situation, and it does not work for the wrong one. This guide is built to help you tell which you are.
Key points on this page
- A settlement is a lower payoff amount, documented and accepted as payment in full, paid either in one lump sum or over time under a term agreement.
- The three common solutions in one line each: credit counseling is “what can be paid should be paid”, debt settlement is “paying something is better than nothing”, bankruptcy is “what cannot be paid will not be paid”.
- Most people looking at settlement are in the middle. They cannot fully afford the debts they have, can afford something, and would rather handle it outside bankruptcy.
- Settlement is a way to resolve a debt for less at every collection stage: the bank’s own recovery department, a collection agency after charge off, a collection attorney, or a debt buyer that bought the rights to collect.
- Most of what happens is controlled by the policies and procedures your creditor or collector has set. Knowing them in advance lets you plan the money for the settlement opportunities as they come.
- Credit cards are the most common debt settled this way, but the same guides apply to business debts, medical bills and personal loans. CRN has provided this education and these services since 2004.
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
Hello Michael! I would greatly appreciate if you could advice as I am at loss! Citi did not follow through on the promised deadline and charged off one of my credit cards earlier. They reported it as PRL for Jul and already as CO for Aug although I was told on the phone several times that I have till 8/19 to accept an offer (and I have offer in writing) or make a min payment by 8/31 to avoid CO. My FICO score took a hard hit and dropped from 542 in Jul to 462, although I don’t see any points deducted specifically due to CO (using Credit Journey by Chase).
Questions:
1) does it mean that my score will drop even further next month when CO is fully reflected?
2) Citi internal recovery department offered to settle at 30%. I have asked if they could overwrite CO with settled if I pay the agreed amount by 8/31. – No. That card had a promo till mid 2026 and was not generating any interest, only late charges. Can CO be successfully disputed?
3) What would be the best course of action for me: BK, given the score is at min anyways (you probably recall my situation, I do qualify for Ch 7, but likely will not be able to realize full skills/job potential), or still settlement?
4) Should I prioritize settlement of my other credit cards now and deal with Citi in a few month once I gather more resources?
THANK YOU!
For Q 1: Does it make a big difference for the credit report to have one account charged-off (with later settlement) vs. 2-3 accounts?
In your situation it is not going to matter a whit.
I would not spend much time thinking about charge off. The credit damage from being late mostly happens in the first 3 or 4 months. That 6th month of a late payment that coincides with charge off could certainly drop your score a few more points, but there is not much difference.
That 30% of balance deal you had with Citibank is well under the typical floor for them. It may not get that low again. But… see answer to Q4 below.
You can try to dispute a charge off, but I am not sure why you would. The update to show you settled the debt happens whether your account charged off or not. I doubt your score would change much, if at all, if you got them to somehow remove the charge off, but still show the 5 months late before that, and zero balance owed, now that you have settled it.
I generally suggest chapter 7 bankruptcy for those who qualify. The amount of debt you have (I looked up my notes from our prior phone consult) screams get a fresh start with chapter 7. But how that could impair your ability to get the jobs you would qualify for, that pay really good money… it’s hard to go that direction.
As far as question 4 goes, I cannot really say. I look at your creditor list from our call and Citibank is not my first choice to settle. Not when you have far better moves to make with your available cash to avoid risk and maximize savings.
I may/may not have mentioned that I have a coaching program I offer on a limited basis. Having one on one access to me while you go about negotiating and settlement decisions will pay for itself several times over.
THANK YOU Truly!!!
This gives me some relief that I could still get my situation under control.
Correction: Citi offered 35% post CO, my apologies for the typo. Likely it is still a good deal.
Could you help me understand ( and probably other readers who deal with this for the first time) how credit report will look like after post-CO settlement? For example, my report states: Citi for July – PRL, Aug – CO. Let’s say I reach an agreement in Oct and split the amount into 3 payments in Oct, Nov and Dec. I assume the bank won’t retroactively correct the records for Jul and Aug but rather report under Dec – “Settled for Less”? What is going to be reported under Oct and Nov: do banks report the amount of settlement and/or those payments in Oct-Dec?
Sending you and email regarding the coaching program. Thank you!
If a creditor does report the first and second payments on a 3 part settlement agreement it would not matter much in your situation. The main update I care about is the third payment updating the credit to show a zero balance owed. The zero balance reporting is what moves the credit recovery needle. Not the words on the page.
Checkout my video about credit reporting on settlements.
That will provide some of the clarity you are looking for.
Thank you!
Hello Michael!
Thank you for educating general pubic on such an important topic of debt management!
My question is about the pros and cons of charge off for credit card debt. If records of settlement and charge off stay on credit report for the same duration of 7 years, but latter may give a bit more room to breath to struggling consumers as banks may be more open to negotiate better deal once the account was charged off, then why not to wait till charge off? Could you please provide more information on this . Thank you!
Settling debt prior to charge off is not a luxury the majority of people have in my experience. Sure… some people may be in a position to avoid charge off on some, or even all accounts. It is just not the norm.
Benefits to charge off could be:
Lower settlements (depending on the situation)
Much longer monthly payment flexibility on the settlements
Benefits to settling before charge off could be:
Better settlement savings depending on the situation.
Lowering or eliminating the risk of being sued for collection (again VERY dependent on the situation)
These days, no amount of credit reporting impacts go into my thinking about settling before or after charge off.
Hope that helps.
Thought I paid off a card during the pandemic and I haven’t paid attention to it since, was dealing with too much then. Just realized that it’s been on my credit report for years now dragging everything down as a Serious Delinquency. Turns out I _did_ pay off the final card balance, but because my payment was made after the end of business hours on the due date, it was treated as a late payment paid on the next business day. Instead of my balance going to $0, they charged a late fee & interest, then added another late fee and more interest the next month, repeated over & over & over… Until they closed the card several months later with a balance in the hundreds of dollars that is 0% principal and 100% late fees/interest. I looked up the cardmember agreement and it does say that payments must be made by end of business on the due date, but no one told me this when I applied for the card! Is it possible to dispute this? Or get a goodwill credit report removal? Any idea?
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.