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
I have about 10 credit cards. Balances are about 31,000. Most are different store cards but the issuing bank for most are synchrony bank. In December my husband lost his job and we can’t make the minimum payments anymore. Creditors are calling every day but none are wanting to try to settle yet. I can borrow some money but it would be no more than half what my total balances are. Some have tried to set me up on a hardship program but when his unemployment runs out or my job is over come June ( I am an aide at the local school, it is part time and only contracted through this school year) then I would not even be able to meet those hardship payments.
Is there a chance of them settling with me at some point and for what type of amounts?
The largest balance on a card is $5008. with a couple others being 4600, and 3800.
I target settlements with Synchrony at between 25 and 40 percent. It can matter the brand on the credit card, and how long your account has gone unpaid matters a great deal.
Call me to discuss strategy if you like at 800-939-8357. option 2 rings to me.
You can also continue reading through the first stage negotiation and settlement series by clicking through to the next piece (at the end of the above article).
Michael,
Thanks for the great blog with practical guidance around debt!
My husband and I are looking to buy a house, and some old debt is showing up on his report. Last payment was July 2009 so we are SO CLOSE to the 7.5 year drop off, but we find ourselves needing to buy before then.
For some reason, even though the accounts are old and charged off, they are still showing a “monthly payment due” which is hampering our debt-to-income ratio. Specifically, we have
BofA balance $8005, monthly payment $400
Capital One balance $2700 monthly payment $135
We have tried to negotiate the BofA balance in the past, but found them really hard to deal with. They wouldn’t accept a dollar less than the total amount owed. We are in California so I believe the SOL is 4 years?
Any tips/advice on how to negotiate with BofA or are they just notoriously stubborn?
Thanks for any advice!
I have always found Bank of America easy to deal with. There are accounts that get flagged for one reason or another. That may have happened with you. Give me a call at 800-939-8357 (press option 2 to get my phone to ring). I will go over your account history and situation and give you some realistic targets.
Yes, the SOL to legitimately sue in California is 4 years. That time having lapsed will often lead to better settlement outcomes, but not always.
Hi Michael,
I am so thankful to have happened across your site. It has been really helpful with understanding how the debt settlement process works which is what I was searching for.
My husband is self-employed and our income has drastically dropped this past year. We have come to the point of not being able to continue making the minimum payments on our credit cards. They are killing us. We’ve got a great history of paying on time and have only skipped one payment on each which only happened this past month.
The three cards are as follows:
Capitol One – $10,000 at 19.9%
Discover- $8,500 at 13.99%
Chase- $9,500 at 11.24%
Understanding how the process works, I know we will not be able to come up with 50% of that if we were to settle. What is the best way to go about this? We don’t have any valuables to sell and only have one vehicle which we do need.
Discover has already reached out with a hardship plan. It would drop the interest to 9.99% , with a minimum payment of $152 for 60 months. Even that is not doable to us for now. Do they generally go lower then that?
I guess my question would be, would it be best to hold out for settlement, do a hardship plan on only one (not sure if that is doable) or what is our best bet? Our income will hopefully increase again this spring but as of now our savings is gone and I stay at home with the children so our income is really limited.
Thank you for your help.
The Chase and Discover hardship plans will not result in much monthly payment reduction as those cards have interest rates that are already pretty low. Getting Capital One to drop interest will help the most. But with your household income dropping in the manner you describe, none of the payment reduction offers coming from any of the banks will be enough. Settling with your banks for less than the balance you owe is often the next step to consider.
Two of your three credit cards have aggressive collection policies (Capital One and Discover sue to collect), and one does not. And if it is going to take you a long time to come up with the money to settle (half-ish), say more than 18 months, I would first look at filing chapter 7 bankruptcy. If you learn something from consulting with an attorney that will prevent you from filing bankruptcy, then circle back and lets talk about what settling will look like for you.
My first question will be how long it will take you to raise 12k? There is no right or wrong answer, but your reply will impact the feedback I offer.
Hello Michael,
I have come across your website just the other day while researching my options to settle with a few cards. Currently live in CT and have been out of work for about 10 years on a disability pension so my income is fixed(no COLA, etc) my wife works and has been with the same company for around 15 years. We recently have been faced with the multiple calls from collection agencies due to not being able to meet our monthly obligation to our cc companies. On a couple of the accounts the interest rate was raised due to lack of activity(we stopped using the cards 2 or so years ago) Before this we were struggling to keep current on all accounts, but have eaten up quite a bit of savings, 401 accounts, etc) We have recently asked family for assistance and need to get the amount as low as possible as not to be a huge burden to them. here is where we are at:
1. Capital One (GM card) $14,472 currently has not been charged off (4 missed payments)and when speaking with them they asked for a monthly payment and then would discuss lowering and interest rate or after that payment would entertain an offer from us. Shows as “Cancelled by credit grantor”
2. Citibank $21,223 shows as “Cancelled by credit grantor” with 3 missed payments account is being handled by Alliance One.
3. Citibank $30,371 with 4 missed payments this is currently with GC Services and they have offered a hardship lump sum of $19,200 which is roughly a 70% deal which I believe could be settled at a lower number. Also comes up as “credit cancelled by credit grantor”
4. Home Depot/CBNA I believe that this is also a Citibank card $4,121 4-5 missed payments, have not spoken to them yet, but believe that the account is being handled by Viking Financial, also shows as “Credit cancelled by credit grantor”
There are some smaller store credit cards that we feel we can keep current, balances below $2k on each.
Up until a few months ago we have been current on all cards with no missed payments..
Can the 3 Citibank cards be pooled together and negotiate with just one collection agency? I have a feeling that the answer is “no” if the accounts were charged off, but “maybe” if they haven’t been, your thoughts?
Also when dealing with Statute of Limitations I know that CT is 6 years, does that pertain to when an account as a whole has been charged off or if there is charges that were made 6 years ago cannot be collected one?
Any assistance with this as far as what order to settle, rough estimates of settlement percentages I should target for, or any other help .that you can give would be greatly appreciated.
Thank You, DL
Not much has changed since I rated banks for how they settle.
It is unlikely that you would be able to negotiate all of the Citibank accounts with Citi, or a single debt collection agency at this point. You will have to focus on negotiating the best deal with each collector. Are you ready financially to pay settlements you negotiate?
Capital One is not likely goign to go lower than 50%. And you cannot realistically expect to get any lower than that when dealing with debt collection agencies.
Each one of your Citibank accounts has the potential to be settled for as low as 25% or 30% based on current trends. That said, I do not think you will hit that target on all of them. I cover negotiating with GC Services in the comments of my resolving debt with Citibank page. It will be difficult to get them to the best savings on your account when you are only 4 months late.
I cover Settling with Alliance One and Viking Financial in the comments here. I do need to dedicate a page to them separately.
The 6 year SOL will typically begin with when you stopped paying the accounts.
I have real concerns with your paying several smaller balance accounts when trying to negotiate and settle with others. Check out these 2 reports:
https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/
https://consumerrecoverynetwork.com/keep-credit-card-open-when-settling-debt/
Call me for a consult about those open accounts, and how to time your settlements better with all of the debt collectors. You can reach me by choosing option 2 when calling the hot line listed at top of page.
Michael, thank you for the prompt response, even on a weekend.
I will plan on calling you on Tuesday 12/8/15 as I will be able to have an uninterrupted conversation.
Do you suggest I attempt to contact any of the collection agencies prior to our conversation, or should I wait? I am currently making files for each one and putting together a negotiation plan for each that will include time frames and target payment amounts.
Talk soon, thank you!
Call me first. Our discussion will likely change how you approach them.
Michael, First, thank you for taking my call yesterday, the information and guidance is/was very beneficial to me.
Secondly, I plan on calling and hopefully start the negotiating process with Cap One tomorrow. I think I have a good grasp on what needs to be accomplished with them, not overly optimistic that they will want to strike a deal on the first phone call, but know that I have a few things going my way.
I will keep you posted.
Update:
Called Capitol One this morning went thru the verification of who we were and that it was our account(yada,yada) Told the woman on the phone that we were looking to settle the account, without going further she offered us a 60% deal. After she told us that is when I brought up that we were in fact working with other credit agencies in an attempt to settle with them also and we would not have that amount of money available, even if broken down into 3 installments. The woman on the phone put us on hold to check if she could do any better on her offer, came back with a 52% deal and knowing that realistically they would probably only go down to 50% we accepted. For our situation we felt it was not worth haggling over 2%.
We also asked how the account would be reported and we were told it will show a $0 balance and state “account paid in full at less than full balance”. We also asked for a letter to be sent as soon as our telephone conversation was over and we told that one will be sent and would take 7-10 days which should put the letter in my hands a couple days prior to our settlement due date of 12/24. one thing we did do that I learned from reading this site is we set up a new bank account that we will use solely for debt settlements and gave Cap One that number. We plan on placing the proper amount into the account a couple days prior to the settlement due date and verified with Capitol One that payment could be made directly from that account instead of sending a payment thru the mail and were told that yes they would accept that form of payment.
Next up the focus will be on settling with Citibank on 2 of the 3 account we have. Will be working with Alliance One and Viking Financial, the account being handled by GC Services we will let time out with them and let it get reassigned with a different company as per our conversation.
Thanks again, not sure we would have attempted this if I did not find your website.-DL
I have $19,000 owed on a NFCU (Navy Federal Credit Union) credit card. If i can’t make the payment anymore, will they garnish my wages? Would they sell my debt to a debt collection agency? Or would they come after me? I live in FL, and i have been making payments on time up until now.
Thanks for any advice that you have.
Most any debt that goes unpaid long enough can end up with an outside debt collection agency. But not all unpaid debts are sold. Navy Federal will not typically look to sell your account. They do work with collection attorneys though.
Ideally you will want to come up with a plan to resolve your Navy Federal credit card. I left you a voice mail in return of your message to me. I look forward to digging into the details with you when we speak.
Hi, I have a debt that keeps popping back up after it has been settled. The new collector (palisades collections) is telling me that this is a different debt and that I still need to pay it. I asked for them to verify the debt and all they keep doing is sending me a dunning notice in response. I don’t know what to do and I have disputed it with the credit reporting agencies twice now, only to have it reinserted again each time.
I have filed complaints with the Texas state attorney general and the FTC and it doesn’t seem to make a difference, the guy I was talking to on the phone at palisades thinks it is funny and just antagonizes me with ugly comments like, “if you just pay it, we will go away”.
I know that there are laws to protect me, but what am I supposed to do? I can’t afford an attorney to sue them and there aren’t any attorneys that will take my case (already checked) on contingency. They all just keep telling me the same things, “pay the debt, it will be cheaper”. I already settled the debt in ’06, I am not interested in paying for it again. what do I do?
I would get all your information together, being as detailed as possible, and file a debt collection complaint against Palisades with the CFPB. Review that article before you file.
Who did you settle the debt with back in 2006? Is Palisades appearing on your credit reports?
The SOL is passed in Texas. You could send a cease communication letter (send certified mail return receipt), and that will prevent any additional collection calls or notices. If they continue collection efforts, after you know they received your letter, post an update.
I have already filed 2 complaints with the FTC and I guess it just hasn’t been long enough. I did the cease and desist, they claim they never got it and just keep on calling no matter what I say.
I don’t remember who I settled it with, it has been too long and I don’t have records that far back. I think the original creditor was either Capital One or Citibank. it was for a credit card that was in default. I remember I paid 60% in two payments to get it resolved and I think they are reporting it, they said they were when they threatened to file suit against me. They said that the debt has been reclocked and that the SOL started over again. They say their records show that I didn’t do a settlement, but just made a big payment. From everything I have been reading, they shouldn’t be allowed to do any of what they are doing and reporting them to the FTC has really had no effect.
I did some more digging last night and have found some other information about suing them myself and that they will have to pay me 1000.00 for breaking the law and that I can do it myself without an attorney. The guide is called Weathering Debt, and it has instructions and sample letters. I am thinking about going this route. Do you know anything about suing them myself without an attorney?
To be honest, I am more than a little angry about it and would be thrilled to stick it them if I can. I would like your honest opinion though.
There is no need to sue a debt collector by yourself for debt collection violations when there are many attorneys out there that do that for you and only get paid after the case is resolved, and their fees are covered by the debt collector.
Given what you have shared so far I think you should pursue it. If you need help finding an experienced attorney to work with that charges the way I just outlined, let me know, I will email that to you.
Yeas, please send me that. I live in the Dallas TX area and I haven’t been able to find an attorney that doesn’t either want money up front or is telling me to just pay them off.
Thanks much!
I have about 20k in credit card debt. Most of it is from 2007/2008. My mom took out most of the cards, and then put them in a debt management program, but I was unable to pay the monthly fee when I left work due to maternity leave. I have not paid these cards in all this time, and I want to know what would be best. should I settle? (I only have a few thousand dollars in my account, I just finished graduate school and I was living off my loan money) or, should I file for bankruptcy?
What state are you in?
Can you confirm when it was the last payments were made on the DMP?
Whether to negotiate the debt, wait out the derogatory collections on your credit reports, or file bankruptcy and get a fresh start, is a big decision. I will be better able to help you make a comparison with the answers to those two questions.
Michael
This is a fantastic informative site. I watched your interview with Jared and sent him a request for a consolation but I would like your advice. I recently sold my home due to a job loss and tax increase I couldn’t afford it. During this time I racked up 30k in credit card debt. I am working now and making over 1k in minimum payments.
I have 11k with Citi Bank with a Sears MC, Home Depot, Best Buy, and good year.
I have 14k with Synchrony Bank for Lowes, SAMs , and a couple others.
I am current with all of them but 3 months I was several months behind until I sold my house. My credit is down to 500 from 730.
If I stopped the minimum and saved I would have 12k or more in a year to settle. Do you think debt settlement would be a good option?
Thank You
I generally see settlement as a good option for folks that can negotiate and fund all of their settlements inside of 24 months. I would estimate your time to completion at 18 months or less. If you have to one off your settlements, you could be dealing with some higher percentages, or even critical stage collections, on the last couple of accounts. But all of that is navigable.
Jared is great with this stuff. I expect him to encourage you to pull resources together earlier than what I implied is doable above. He is right to do so. You can often have better settlement outcomes when you negotiate the deals not only quicker, but in rapid succession.
Thanks for the tip. Resources are very limited so hopefully I can manage something. I did go ahead and write the junior lawyer that was on the litigation, as a kind of heads up and last chance for his client to get on the straight and narrow. Maybe that will suffice if it gets the job done. Otherwise, I’ll try your recommendation.
Following a civil suit in which I brought counterclaims in part dealing with wrongful charges, I entered into a formal settlement agreement and dismissal of case with a major credit card co. Original claimed amount was approx. $12K and following negotiations with their attorney the stipulated amount owed came to around $5K, payable in monthly installments, all of which have been timely for about a year, and one year to go. I waived claims for wrongful reporting up to date of settlement only. They relinquished all their claims too in exchange for the settlement so long as I pay the agreed amount. Now, I would have expected that if anything the card co. would stop the negative reporting but not only have they failed to report that going forward from settlement, I have been on time for nearly 12 months and paying as agreed (as to which I have numerous automated email confirmations of receipt of payment, so even if they want to try to skirt around and pretend the lawyer wasn’t their lawyer, their domain name is all over the automated email), they are also continuing to report charge off every single month. I have called them and pointed out the settlement and afterward faxed them the legal docs. I also disputed with at least one credit bureau early on, about 3 months after entry of dismissal and execution of the settlement (with proof of payment), all to no avail. I am nearly apoplectic.
What state are you in?
Massachusetts, originally CA, but the suit was commenced Feb 2013 in MA and settled/dismissed March 2014 in MA. The delinquency started end of 2012 after I’d been in MA for nearly a year.
If I understand this correctly… you were sued; you counter sued; you both came to an agreement; part of that agreement was that they would not report the late pays or that you account was charged off? If that was part of the agreement, you should be upset. If it was not, what you describe is normal when settling debts at all stages of debt collection.
Did you have an attorney helping with your counterclaim? If not, I would run the scenario by an experienced debt collection defense attorney in MA. I can help you connect with some for a free consult if you like?
I did not use an attorney but did pro se. That said, having done many settlements professionally (not debt or PI but other kinds of claims), I am familiar with release language and was careful to say I only release up to date of settlement. The fact is, the only binding agreement is the settlement, which does not say I owe $12K. It says something like $5K, and that should I be in default of the payment schedule (I also ensured to provide a notice/cure period to allow for inadvertant mailing delays or delays of address change before being deemed in breach) or if I should later declare bankruptcy, the only remedy to them is they can claim a balance of $7,500 or so, less the payments made. So it seems to me, they are in clear violation (now wilfull after having the opportunity to fix it and refusing to) of FCRA because it is agreed that $12K is not relevant and I am in fact making payments as agreed per the only valid agreement now existing.
If you are ready to take them to task, it sounds like you are capable of preparing for this. There are some experienced FCRA attorneys in MA you can connect with for a no cost initial consult. There are helpful case management resources for FCRA issues available from NCLC too, who are in Boston.
I see several times that you mention Bank of America has a dedicated line for debt negotiation. Would you please provide me with that number.
Just call the number on the back of your credit card, or on your billing statements. When you puch in your account number, your account will be recognized and will get directed to the correct department at BofA that still has your account. If your account is more than 6 months past due, it is likelier you will be dealing with an outside collection agency.
I have recently been sent to collections on some schooling I have done in the past and I was told not to come back.
They have sent me to collections for $3067.
I am wanting to try to settle on a lesser amount. But the collection agency tells me that they have to get with the school in order to do anything. I’ve been dealing with this for only 2 days and I just want to know what would be my best bet in getting this resolved without paying the whole amount of possible.
Settling student loans for less than the loan balance is possible when they are private.
How long ago were the loans issued?
Were any payments made, if so, when was the last payment?
What type of school is this?
Are the loans private (not government backed in anyway)?
This was cosmetology school.
All payments made were from pell grant and fasfa financial aid.
I started school January 2013 was asked to leave and not come back October 2013 they sent me to collections September 2014.
The documents the collection agency provided don’t match. For example: one page has an amount for tuition fees books and kit. And the next has a different amount completely.
Federally backed loans do not settle in the way we thing of negotiating a lower pay off amount. You may be able to get collection fees waived on them though.
Why were you asked to leave the school? Perhaps that is something to leverage.
My student loans are currently being paid.
That is not what they have sent to collections.
the 3067$ is money they say I owe them (the school) not the government.
She asked me not to come back because I offended someone with something I said.
And I wonder if they can do that… send you away without an alternative, and whether how it was handled, was without a cause clearly outlined in any agreement.
Did you talk to the school about their policy over such things, either then or recently?
The debt the schools is trying to collect on for themselves appears to be private, so can be settled. What amount are you able to pull together to put this behind you?
It was against policy to be offensive in any way so I understand that part.
I’ve asked the collection agency to settle on an amount I offered 1000-1500 and I haven’t gotten an answer yet because the collection agency told me they would have to get back with the school in order to do anything of the nature.
Okay. Post an update with what they say.
It is normal for a collector to have to get approval for something that is not automatic for them to be able to accept. That approval may have to come from a manager or supervisor, but it can also be required by their client, the school.
How can I set up payments to pay off old debt?
Setting up payments could be as simple as contacting the creditor you owed, or their assignee debt collection agency. Some debts are sold off to investors, so you may end up paying a company not connected to your creditors.
Can you offer more detail? Who was the creditor, and when did you last pay them? From whom, and when was it, that you last heard from anyone about your debt?
I entered into an agreement with Freedom Debt Relief (FDR) to help me when I separated/divorced in 2012 for 3 credit cards and one line of credit. FDR settled one card with Capital 1 for 50% after 6 mo0,000.00 I owed on the card with Bank of America. I only have a 12,000 balance with the final credit canths with a savings of about 10%. I came into cash after changing jobs and pulled one card from the service and paid it off. I have my final card settled at 50% but with FDR fees it only saved me about 20% of the 2rd debt BoA. I have about 6,000 in my account with FDR as they are paying 800.00/month for next 6 months to complete my settlement on the Bank of America line of credit. My question is can I pull this credit card out of their program and now negotiate a settlement with BoA on my own? It’s been almost 2 years that I’ve been in this program and am very frustrated with FDR. Their website lists typical monthly settlements with BoA for their customers saving over 70% of total owed INCLUDING their fees. After paying 600.00 per month and even putting in an extra 3,500.00 in an effort to expedite this process I feel like i have been duped!!!! And as a result my once sterling credit is ruined and I did not really save very much money in the process.will I nullify my current settlement with BOA if I try and make my own settlement with BOA and cut freedom debt relief from the process?
If you have a deal with Bank of America the Freedom Debt Relief already worked out, they will have, or are, already being paid their fee for negotiating the debt for you. Quit now and you may be out the full fees, as they are considered earned when the settlement is accepted, and the first payment made.
You can rework the settlement. But are you sure the deal was negotiated direct with BofA? From what you shared, it may have been reached with a debt collector, or a debt buyer. Find out who (if not BofA) and post an update. Who you may have to negotiate with can change my feedback to the point I would caution you from ending what is already in place.
The line of credit with BOA is already settled. I don’t want to pull it out. FDR negotiated a settlement for 50% of 20.000.00 for 10,000.00 to BOA. They charged me a fee of almost 5,000.00. My last card in the program is for 12,000.00 with BOA. My question is can I remove this card from the program and negotiate my own settlement without FDR or BOA negating the settlement already in place for my line of credit loan.
BOA has already charged off both debts, line of credit and credit card.
Find out who BofA has your account assigned to for collection, or if they sold the debt, who they sold it to. Post what you learn and lets go from there.
I was not sure if the account you want to negotiate already has been by FDR, and is getting paid monthly. If that BofA account does not have a deal negotiated yet, you can yank it from FDR and negotiate the credit card settlement yourself. For those inclined, I recommend folks negotiate settlements on their own whenever possible. Get everything done you can, and let a pro step in when you hit a wall, or if there are situations where the deal that can be done, is better reached by a negotiator.
Thank you.
I pulled the BoA Credit card from freedom debt relief today. Thank you for the advice as they did not give me any hassle at all as I was expecting. The credit card (charged off) has not been paid on for 2 years and the balance is roughly 12,000.00. Is an offer of 5,000.00 to BoA fair? Do you think they would accept this? I’ve seen others talk about settling for as low as 30% but 40% is what I can honestly afford to do right now. Should I start at 4,000 and leave me some wiggle room. Where/who within BoA would I begin to discuss/write/email this settlement to. I looked and couldn’t find an overdue accounts section. Thank you again for the information you and your site provide.
Call the normal number for BofA credit card accounts (look on the back of the credit card if you still have it, or old billing statement). It is unlikely you will be negotiating directly with BofA after this long. They will have the account placed with outside debt collectors, or sold your account to a debt buyer. Your calling to ask which, and the name of the company.
Once you know that, post an update and lets go from there.
I would start your negotiations at a round dollar figure around 25% of the balance owed, and work your way up from there. 40% is a very realistic goal, but I still see many settlements around the 30% mark too. But much can depend on who has the account.
I seem to have made things worse. I pulled the debt owed to BoA from FDR like we discussed earlier in this post and wrote BoA asking to settle the debt. I received an email from an attorney in New Orleans that had a copy of my letter sent to Bo A asking if this was me and to provide him with a telephone number to discuss this issue. That was mid January. Didn’t hear anything back until today when summons delivered from sheriff dept stating i have 10 days to reply to lawsuit by BoA seeking all 14,000.00 of past due amount. What are my options other than the obvious of getting an attorney? Do you have any experience when it gets to this point?
It is likely more cost effective to respond to the summons using an experienced debt defense attorney in LA. You can still settle the account after that, or call to negotiate now. But I would definitely talk your options over with an attorney first.
Would you like me to email you contact details to those I know of with the most experience? All of them offer a no cost initial consult, which will help you get your bearings regardless of whether you retain one.
Yes please do. I’m unsure of how to proceed and could use someone with experience in this type of matters to assist.
I am located in Bossier City LA. Zip is 71111
Shreveport, LA is very close also.
Thank You
Done. Like I said in the email, distance from the attorney you are working with is not always going to be an issue in these cases, especially if the goal is negotiating the lowest settlement.
I owe about $50,00 in an unsecured loan with NFCU and are about 5 months past due. I have no other loans with NFCU. I was thinking of doing a debt settlement with them. What do you think would be their response. Do you know if they are easy to work with?
Negotiating a settlement with NFCU is not complicated, and I have never considered them difficult. What you are able to settle for can differ from one person to the next.
Is that a 50 dollar debt, or 5k?
Can you help me with a quick credit report question.
I recently found i have 2 wells fargo student loans defaulted and charged off. I had too many seperate holders I lost track of two. All other student loans slowly paying off.
Original chargeoff $3700
Terms: $3556 per month, paid monthly for 141 months
What does that mean?
Hello Michael,
After reading other questions presented to you I thought it would be a good idea for me to ask questions, as well.
I live in Michigan and I had a terrible spiraling financial fall after I lost my job in 2008. I was able to pay my bills for 2 years after the job lost, but it in 2010 it all collapsed on me.
I have a judgement from rental company that says, satisfied as of 12/2013.
A judgement from a credit card that states “pending” for
A car loan that was repossessed in 11/2011, $4062 balanced charged off . I got a loan for this vehicle 10/2007.
How long will the judgement(s) stay on my credit report?
What should I do in regards to the car balance? Should I work out a payment at this point or leave it alone?
I have medical bills from a fall in 2011 that total $1275.
How should I address paying the medical bills off?
I don’t want to file bankruptcy at this time, if I can avoid that process.
Thanks for your help.
The paid judgment should stay on for 7 years from the date the judgment was entered in the court.
I would want to settle the car loan balance. It is best to negotiate a single lump sum payment. How much money can you pull together to settle this debt?
Have you contact the hospital and asked if they have a program for writing down, or off, services and bills for patients who meet a set standard, or qualify for indigent status?
Were any of the medical bills covered by insurance?
The most that I can come up with for a lump sum payment at this time would be about $1000-$1200. In regards to the hospital bills, I have not called the hospital regarding settlement, because for a long time I didn’t have any money. I was in between jobs during the time that I was injured, and I had no medical coverage. I am just at the point were I can begin to make arrangements for my past due bills. Once, I make arrangements on these bills and pay them up, will this increase my credit score? Do I need or should I get a secured credit card to rebuild my credit?
Thanks again for your help.
I think you have a shot at negotiating the repo collection balance for 1500-ish. You could start that conversation now, or perhaps wait until you have a couple more hundred to add to your stash. How long wil it take to save up another 3 hundred?
You can often settle medical bills in your situation. My goal would be to settle for around half. And you are at a place where you could pay the medical debts outright and/or settle.
Getting a secured card is more likely at this point (with the unpaid collections), and would give you a head start on rebuilding. What are your credit and finance goals? Are you planning ahead to purchase a home, car, other?
Hi Michael,
I could probably save another $300 by the beginning of the year. I am keeping things realistic because the holidays are coming around, and I know I need to have money for the occasion(s) to come. In addition, I am seeking a part-time job to help with getting things paid up.
In the future, I will want to buy a car and home, but I mainly want my credit restored so that I can freely do as I wish. I’ve always had been a responsible person with my finances, and never lived above my means, so to have financial freedom back again would make me happy.
Thanks!
Because the collections are as aged as they are, and with no real collector efforts (unless you have received recent collection calls and notices), I would hold off on negotiating anything until you have the money in hand, or will have inside the same month.
End of year is a good strategy similar to end of month negotiation timing I discuss elsewhere on the site, and on the dealing with debt collector videos.
Find out if your bank offers a secured credit card program. I like Bank of Americas because they will convert that secured to unsecured with proper use, and relatively quickly.
Hi Michael,
I will look to the end of the year to do start the negotiations. I’m glad you mentioned Bank of America, because that is the bank that I plan to use for the secured credit card. Once last question(s), should I start with one secured card or two? I want to get my scores as close to 700 -720 within the next year, right now it is at 568. Or whatever other suggestion that you have to help me get there.
Thanks
I would use the one secured account, and then after the medical collections and deficiency balance are negotiated, and showing paid for 90 to 180 days, apply for ONE unsecured card with a lower credit limit. If you are declined, wait another 6 months.
Slow and steady will win this race.
I will do as you suggest. thanks for all the value information.
Notify me of answer. thanks
Stacy – You should get an email notification of this reply. You can also subscribe to the comments of this, or any other page of the site directly, by checking the subscribe box before you submit a comment.
Continue reading through the first stage debt settlement sections of the site. You will want to have a full understanding of what to do, and when to do it, with each of your creditors. You can skip ahead to this article about timing: https://consumerrecoverynetwork.com/best-debt-settlement-timing/.
You cannot hire CRN to negotiate for you at this time. I shut down customer coaching and direct negotiating services 6/2013. But you can still reach out for help at 800-939-8357.
Hi. I owe 36 in credit card debt and am ready to pay each a lump sum and be done with it. My last payment to each of them was in July. I have not paid August or September. When I called one of them I was told that it had not reached the point of negotiations. Are there a certain number of payments I need to miss before I begin to negotiate? Or can I offer you a lump sum amount that I can provide to go towards paying off each debt and allowing for payment to you for your services and be done?
I am helping my sister put together a plan for debt settlement (or perhaps chapter 13 bankruptcy). She currently owes about 15K total in credit card debt (CitiCard -~5K, CapitalOne-$7K and Kohls-~$3K) and has some equity in a house owned jointly with our brother. Between a part time job, child support for her two children and food stamps she has roughly $2k in monthly income. Because of the equity, I believe she would have to file bankruptcy which would protect $15k in equity. If need be, my brother could also file which would protect another $15K in home equity in Ill. I think they are both “judgment proof” His only income is Social Security disability. There may be about $15K additional equity in the house (total home value estimated at $140K – first mortgage at 85K, second mortgage at 10K). They went through a HAMP modification last year and had the principle amount owed reduced by 10K on the first mortgage and a second mortgage covers the remainder of $10K (only payable upon house sale).
We are wondering about the pros/cons of trying to settle the debt or to go through bankruptcy.
all the accounts are current, car repairs of $2K is the straw that broke the camels back
Thanks Mary. I did not see this comment until after responding to the last one.
How much money will be available to use to settle credit card debts in 6 months time (credit card payments are not being made for those 6 months)?
Is she paying the credit cards currently? If not, when did she stop?
How much money is available to your sister after all of her other expenses are paid (what is left over to set aside in order to save up and settle)?
Are there other cash resources she can tap in order to settle with her creditors as early as possible?
Assume she can settle with Citicard, Capital One, and Kohls, for under 7k. Set that beside the cost of a chapter 13, and what will likely be a 5 year repayment plan, and I tend to like debt settlement over chapter 13. But if she were to file chapter 7 bankruptcy, where the cost would be more like 1500.00 total, and all the credit card debts are discharge in a matter of a few months, I would like chapter 7, but only if that can be done while keeping the home (that seems to be the goal from what you wrote).