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
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.