Short answer
If your goal is to resolve the debt, and you have the means, settle it. Sending canned dispute or validation letters, or electing arbitration, is a good way to lose a settlement you could have had at 40 to 50 percent before the account charged off.
Key points on this page
- Current trends for settling a Discover credit card directly with the bank run between 40 and 60 percent. Lower settlements happen, but they are not common.
- The best savings usually come in the last few weeks before Discover charges the account off at about 6 months late, and they come from speaking with a Discover collections or recovery representative. Some accounts are flagged for no settlement based on usage before default, a short account history, or a collectability assessment.
- Sending a canned settlement offer letter can get your file handled under a different internal policy, and can cost you the chance to settle before charge off.
- Discover does not sell much of its defaulted debt these days, so it likely still owns the account, and its law firm will have no trouble meeting a validation request. A dispute buys little time here.
- The arbitration play has lost most of its force. Card holder agreements were adjusted, arbitrators see it as a ploy, and Discover will dig in and spend more than the debt is worth. It can run more than a year, you can lose, and you can end up owing more than you started with.
- If the account is heading to the courts, speak with a consumer law attorney who defends collection lawsuits before you decide your next move.
This post was inspired by my comment exchange with a site reader about negotiating a settlement with a Discover credit card that is now in the hands of a collections law firm. My comment would have been too lengthy a reply on the page the discussion originated, and this is also something that is not all that topical to the Debt Relief Program Intro page. What follows is food for thought; not just with Discover Card, but with creditors like Citibank, American Express, Capital One, etc.
For context, you should read the comment string with Jay about settling with Discover.
From the other page Jay said: “I have a Discover card owe $5200 on it. I was communicating with Discover via mail, and offered to settle for 25%. I called Discover and they said my account has been sent to an attorney.”
Resolving Discover Credit Card Debt After Months of Not Paying
If you want to settle a Discover debt, and have a plan and the means to do so, sending them form letters offering a deal is not the best way to go about it. Yes, there are websites full of anonymous posters who promote sending letters for this, that, and the other thing. There are merits to, and strategic goals, that can be accomplished with these letters. Using them effectively is situational though. But the promoters of their use rarely dig deep enough to learn about someone’s goals and financial situation to compare alternatives. And readers of these sites often fail to volunteer the particulars of their goals and finances in order to receive more useful feedback. In fact, most people reading this, and other debt and credit related websites, do not post at all. That is not Jay. He IS on other websites, and here, looking for more feedback. That’s great. But before he got to the place where he started looking for more feedback, I assume he read somewhere that sending in a 25% settlement offer with some canned wording to Discover Card, in order to settle with them, was a good idea. It is not. It is a good way to blow the opportunity to settle with Discover for 40% to 50% before they charge off the account and place it into their collection pipeline.
Current trends for successfully settling a Discover credit card directly with the bank are between 40% and 60%, with some one-off events that can settle lower, but it is not all that common. There are also accounts that can be flagged for no negotiation and settlement that would result in a lower pay off with Discover. Historically, my experience suggests Discovers criteria for refusing to settle, prior to outside debt collection efforts, are based on account usage prior to defaulting on your payments, length of account history (account less than a year or three old), or when a “collectability” assessment suggests the account not be settled. Settling your Discover card before it gets charged off (6 months late), is most often going to be accomplished by speaking with a collections/recovery representative employed by Discover. The best deals and savings from settling with Discover will typically be in the last few weeks leading up to them charging the debt off as noncollectable on their books.
I cannot know whether Jay’s account would have been one that got settled prior to charge off and placement with an attorney for further collection. But I do know that his goal has been to settle, because he sent a letter to Discover offering to, and has said that remains his goal in the above linked comment string. Had he been able to settle early, he could have potentially avoided the charge off entry on his credit, and would have avoided being in the position he is in now. But I suspect Jay read somethings online that, while probably intended to be helpful and useful, may have helped to over complicate an otherwise straight forward opportunity to resolve his Discover credit card bill.
Based on my experience, I would say there is at least some likelihood that the letter Jay sent to Discover Card offering to settle, led to his account being treated differently than others that get placed in the collection pipeline after charge off, or placed even earlier than 180 days of nonpayment. I say differently, but that is a misnomer. Discover, and other large credit card lenders, do have policies and protocols in place that, to them at least, would be the normal treatment applied to a small percentage of accounts where they receive canned letters (perhaps like the one Jay sent), from their card members. Creditors will also develop different attitudes for how they handle, or dig their heels in, when settling, or not settling, with accounts that go in the direction Jay read about, where arbitration is elected, and is primarily why I am writing this post.
In a comment Jay said: “Some people have ask me to opt in for Arbitration with JAMS but i do not know much about Arbitration. I really need advice with this soon. All I have to do is send them a CMRRR saying that I dispute this debt, request validation and elect arbitration with JAMS to resolve this matter between us.”
Disputing Your Discover Card Debt and Electing for Arbitration
There is a long sorted history with using arbitration to collect unpaid credit card debts. I cannot possibly cover it in this post, even if I wanted to (I don’t), but I am very familiar with the history, and the strategic purpose of someone in Jay’s situation electing for it now. And though I may come off as not supportive of the different ways you can succeed with “alternative methods” for resolving debt, I am actually all for using different strategies to best resolve a debt when someone is well informed of the risk/reward of the alternatives, like disputing a valid debt, or serving notice to a debt collector that you will elect for arbitration of any dispute. But that does not appear to be a good alternative for Jay when considering what he shared in the other comment thread. Nor is it going to be an effective or realistic option for many who try it. Here is why:
Jay’s goal is to resolve the Discover Card debt.
Jay has access to the resources to help him do that.
Electing for arbitration, or other alternative methods to dodge a legitimate debt, may in fact lead to a HUGE time commitment in order to succeed. What is your time worth? If you have to spend what could be countless hours researching and applying what you learn if the CIR Law Office receives his letter and does not do as that website Jay has been reading suggests (CIC) – where the debt collectors “run for the hills” (man I hope there is more to what he read over there than that) – are you prepared to follow through? What if the process takes more than a year (it could), and you lose anyway (you could), and end up owing far more than originally owed to Discover (could happen)?
In the first comment Jay left on the other thread he said he owes a debt to Discover for 5200, but is being encouraged to dispute it. I do not know the context of what Jay read, or any comment exchange he had on another site, so I do not know if there was an outline given for the strategic purpose of disputing a debt Jay already knows is legitimate. But it does not matter. The general strategic purpose for disputing a legitimate debt is to buy time for some other reason, or with the expectation that the debt will be treated as a “hot potato”.
Debt collection and playing hot potato: The incorrect assumption that all debt collection is a numbers game that relies on collecting the most, from those most likely to pay, for as little overhead cost as possible. If someone identifies themselves as less likely to pay by sending a dispute or debt validation request, the collector moves on to another file, sends the account back to the originator, sells it off, or assigns the debt to another collector. You then send a dispute, debt validation request, or cease communication letter to the next debt collector you hear from. Wash – rinse – repeat.
Sending a dispute and request for debt validation to the CIR Law Office in Jay’s case will not buy much time. Why? Discover does not sell much of their defaulted credit card debt into the open market these days, so I am confident they still own the debt. CIR will have no trouble meeting their obligation under the FDCPA to provide Jay with validation. I suspect the validation request, dispute, and serving notice that arbitration will be elected in order to resolve any dispute, will only lead to further complexities for Jay, and others who are faced with similar circumstances.
There is an Ebb and Flow to Debt Collection
Creditors deal with things the way they want to; assignment and contingency collection agencies do things a certain way (often as dictated by creditors placing debt with them); debt buyers manage their operations and collection files in the way that makes sense for them. They can all make changes to their practices and recovery goals due to changes in the economy, internal data, legislative changes at the state and federal level, lawsuits they may have defended and lost, or succeeded in, new case law, decisions from higher courts, etc. Consumers electing for arbitration was an effective way to cause creditors and debt collectors to treat the file as a hot potato after the National Arbitration Forum was shut down several years ago. The effectiveness of the strategy was/is real, but is ebbing towards non effective as card holder agreements have been adjusted to eliminate clauses, arbitrators see this as a ploy, and creditors, like Discover, dig in and become stubborn. Stubborn can mean Discover, and other banks, are willing to spend the money taking some of the cases all the way through – even though the costs can far exceed what they can collect (especially given the fact that if they win the consumer can elect for bankruptcy).
Playing hot potato with a debt collector can deliver the desired effect. But it is counterproductive for someone who:
- Wants to, and has the means to, resolve a debt.
- Wants to refinance or purchase a home without waiting until the Discover credit card ages off the credit report (7 to 7.5 years). And is not okay with the higher potential to be denied other credit products like future auto loans, and credit cards, and is not okay with paying a higher price for those credit products in the future (maybe even insurance products).
Should someone in Jay’s situation try the hot potato approach with his Discover credit card? No. Not in my opinion. Not when his goal is to resolve it, avoid being sued, and move on with his life.
Are there instances where someone should do as Jay is considering? Yes, but those would be very limited instances. And would be limited even further if the average person really had a grasp of how much time and energy they would need to commit to the process doing it themselves, and who were also fully informed on how to compare other options that would help them accomplish their mid to long term personal financial goals before proceeding.
My comment to Jay on that other page is to speak with an experienced consumer law attorney (with a practice focused in defending debt collection lawsuits), before making up his mind on what to do next. The attorney may recommend Jay take a defensive position now that his Discover account is likely headed to the courts if it cannot be resolved in the near future. The attorney likely has dealt with CIL in the past, and will be the best positioned to give Jay solid advice about what he is considering.
An Invitation
I invite anyone concerned with the topic I covered in this post, or whose goal is to settle or make payment arrangements on their Discover Card, to participate in the comments below. Just know that the bias of this site (and of yours truly), is to mostly publish content and provide perspective about resolving debt, and not playing hot potato with collection accounts.
If you would like to consult with me about your Discover debt you can reach me at 800-939-8357, choose option 2.
If you are dealing with an attorney collecting for Discover, and want affordable legal help to handle the court process while working toward settlement, fill out a profile on this site and get help. It’s as easy as clicking the “get started” tab under the consult request image below.
Parents are negotiating debt settlement directly with Discover card. Card balance is $12,000 and settlement offer is currently 40%. Their only income is social security which they use for mortgage and living expenses. Their credit is already very bad anyway and they have no cash on hand. The balance on the card is made up of primarily interest that has accumulated over several years and there have been no activity for 6 months.
Is it better to accept the 40% settlement or wait for a bettter offer when the debt is sold?
Michael – Also, what would be the criteria for negotiating a lower settlement – say 20%. They are on food stamps, get home heating help, Mother is disabled on Medicaid. They have about 45K worth of credit card debt and there are offers from settlement companies coming in at 25%. I would like to help with settlement payoff but particularly with Discover since the balance is mostly interest should we expect to negotiate a lower offer? Thank you.
When I see Discover settlements go lower than 40% it is often because the debts are much older (several years unpaid).
My comments are based on today’s realities. That does not mean Discover keeps to the same collection policies forever.
My main goal would be to keep this from reaching the courts.
My question for you is why not just encourage your folks to file chapter 7 bankruptcy and wipe out all the debts for less than 2k?
Discover does not sell debt. And 40% is likely as low as it will get for a long while. In fact, as much as Discover is suing these days, and if your goal is settlement, I would take the 40% on the table if it is doable.
I’m in Texas and have gotten a couple notices from organizations that settle debts with Discover from lawsuits. IT’s been years since I paid anything. The last time I think I was able to make a payment was either late 2012 or early 2013 when i got laid off. It was a miracle I was able to keep my house and I was unemployed for 2 years prior to starting work again in 2015. I’m only making $30K and my house payment is basically one of the two checks I get each month so I barely get by. The last balance I remember was $6100 or right around there. Through the years I ignored the letters and calls since I have had nothing to pay and really don’t right now. The only extra money that will be coming in in the next couple weeks is around $800 that is a settlement from the bankruptcy of the company (owned by family actually) that owed me over $26K in back pay I will never see, the last year before getting laid off I only got half my income roughly. A couple weeks ago I came home to a piece of paper stuck in my door from what I found was a PI with some kind of Texas State supreme court registered process server number, but I have not had any registered mails show up nor have I called the phone number on the paper. If I had the cash I would love to settle the thing in full but even that $800 is supposed to go to the parents who lent me that money to buy a POS car so I could continue to go to work which shows little to no signs of offering me a way to make more. Would you recommend I call Disc card to see if I can work something out with them? I have no cash for real settlement, nor know anyone I could borrow from or who would lend me the money. I would take out home equity loan but my credit score is currently 612, I need to be over 620 for that to be considered and paying any of this will of course lower it again. Anyway, would what would you suggest as I’d rather avoid going to court and in the process risk loosing my job as getting time off is not always easy. Thanks.
You would need to call the attorneys for Discover to set up payments. You can look up the case that is filed against you in your county court house, or call Discover and they will give you the attorney information.
If you could raise enough to settle in a lump sum, it would likely need to be half of today’s balance, and that is on the low side. How long would it take you to save up?
I have a Discover card debt of about $21k. Lawsuit was filed and I answered. Motion for summary judgement was filed by Plaintiff. I believe sufficient evidence has been provided to award summary judgement. Is it too late to negotiate a lump sum settlement for less than the balance. If so, how negotiable would you expect them to be?
You will typically be looking at 50% of the balance as an optimistic settlement on a Discover debt in the courts. That is sometimes a stretch to get approved. How much can you pull together quickly?
I have/had an account with discover, owe them $1026. To make a long story short, I have been away for the past year and return to the amount being in collections. I have a letter from a collection agency offering me to pay them 30% or $307 and it will be counted as paid in full. Would it be in my best interest to speak with them and pay that amount or to contact Discover directly? Would they consider deleting my fault from my credit history prior to the seven years?
Discover will not delete early.
What is the date the offer expires on that collection agency letter? If that has gone by, call and get a new one sent before you pay.
Interesting comments ! I learned a lot from the details – Does anyone know where I could get access to a template FTC Identity Theft Victim\’s Complaint and Affidavit copy to fill in ?
Check out the website the FTC put up to help with all things ID theft https://identitytheft.gov/
Good Afternoon,
My husband had a lawsuit filed against him from Discover Bank through Weinman Weisburg and Reis. We hired a lawyer and the hearing was today. The judge found in our favor thankfully. My concern is the appeal. I know they have 30 days to appeal and I was wondering if you knew how likely it is that they will appeal? our lawyer said if they appeal it will be tough to fight it cause they do have their paperwork on order, i’m not sure how our lawyer won but he did. Do you see it where more time than not they don’t appeal or vise versa? The total due is $4000. I’ve heard bad things about them and am worried. It was not our intention to run up the card but there was tons of vehicle repairs within a year time and we needed the vehicle to get to work and then right after that my husband started getting garnished for child support and we couldn’t pay everything. Plus there are some fees that we don’t agree with and a few charges he doesn’t admit are his. Thank you.
It is not all that common to see an appeal on a dismissed collection lawsuit. Discover does take some cases the distance though. Continue to save up any money you can to resolve the debt and put yourself in the best position to navigate anything that comes up.
I have disputed charges with Discover and requested that verification and retrieval information and have been denied of both . I carried their identity theft protection products paid for for nearly 3 years and recently settled a lawsuit against experience for selling my information that was misused . On top of that I have identity theft and Ftc affidavit of identity theft and when I went to use my identity theft protection with Discover I found out that the provider was in fact Experian. I’m currently being sued by Discover for those disputed charges and their attorney is going to great lengths to get me to pay a debt for which I do not owe. He’s lied under oath filing motion for summary judgment based on my not returning discovery and his secretary verified receiving the documents on three separate occasions prior to filing for the summary judgment . He is licensed in Nevada but does not reside or have an office here in Las Vegas and telephonically appears so far . Discover has never shown a bona fide offer service a $2000 payment was made that did not reflect my balance they’ve ruined my credit repair the Tivoli told me that my only recourse is with the merchant that did not exist according to the Attorney General’s office in Arizona and I have snowed them with documented proof that the merchant in question for the transactions have a long history of scamming consumers out of money and never giving them any service or refund. I also spoke with the merchants account holder and verified that the merchant infected been shut down for high percentage of chargebacks and questionable activity. Three other banks that I had credit card accounts with have done the same neglected their fiduciary responsibilities to me as a cardholder and facilitated three party payment processors and high risk merchants in there fraudulent activity against me. I have sought the help of every government with authority and not one of them is helping me nor can I find an attorney that is in Nevada that will take my case for less than $20,000 which I do not have now. I’ve spoken to corporate office and an advocate has spoken with me and they have opted to reopen and investigate my case. And responded only to say time and time again that the charges were valid and provide no documentation to support that decision. Nevada attorney general’s office suggested I file a private right of action. But I have no idea about court proceedings and one wrong or incomplete act can be a game changer and make me liable, not only for the debit but attorney fees as well. The situation has affected me and my family and I live in fear and anxiety. I’m angry all the time paranoid trust no one and struggle to provide for my family. Any credit cards with a zero balance in good standing have been closed and my credit is annihilated at best. I don’t know what to do anymore I’m devastated it’s incomprehensible demoralization the way the banks get to treat and have treated me when I needed them. I’ve been a faithful and responsible card holder for 20 years and the first sign of adversity, I was thrown under the bus. In the actions of Discover have been willful and strategic with disregard to me as a whole. They act with the attitude of sticking it in my face like saying “what are you going to do about it “.
I can email you a list of attorneys with debt collection defense experience in Nevada if you like? If you have not spoken with the an attorneys whose practice has a daily focus on these things, you may have a different experience.
Hello Michael,
My goal is to settle my credit card debt totaling about $26,000, mostly principle, with 2 creditors. I can take money out of my Mutual funds and Stocks, two accounts that I have but do not want to deplete.
debt:
Discover: $5,000 (60-90 days past due)
Chase:
card A $ 12,500 (close to 60 days past due)
card B $ 6,000 (close to 60 days past due)
card C $ 2,200 (61 days past due)
card D $ 500 (current)
card E $ 500 (current)
Card D and E i want to pay them off eventually. i want to settle debt on all the other cards and with the Discover card. I read that Discover can see that I am making payments on chase cards through my credit report. Called Chase about card C and they offered for me to pay only $45 (minimum payment after they take off the fees) to keep the account from closing the next day. Didn’t know if that was a wise move or not so I didn’t pay them yet, so the account should be closed after today. What do you say? Who should I negotiate with first? Chase or Discover and what is the best priority of the card to start with in chase?
I racked up the debt during and after grad school by buying a lot of supplies to make art, which didn’t sell as I expected and hasn’t yet this year. I expect it will start selling within a month or two but I won’t see much profit. I have one part time job and a side gig where I make barely enough to cover my living costs and having to borrow a bit here and there from family.
I’ve been making minimum payments to the chase cards after they offered to take off the late fees for the last few months because i told them I want to just keep the accounts open, but can no longer afford to do that.. Card D and E i’ve not missed a payment and can afford to pay their minimum.
Discover comes first due to their more aggressive collection policies as of the time I am writing this reply.
As far as which Chase account to tackle afterward, that can depend on the cash flow you have available. Done correctly, settlements on the Chase account should not differ greatly, so it will come down to which one you can clear away based on the money on hand, and then do the next one, etc.
Assume you need as much as 9k to settle all of these accounts. How long would it take to raise the money?
Without tapping into the mutual funds and stocks accounts I have, and luck aside it would take about 3 years, with luck of sales of my products could take less than 6 months. If I call and tell Discover before the 120-180 days that i’m broke and don’t have enough to make minimum payments, and they ask me to make a small “in good faith” payment of say $20, what is the best response? Thanks,
Call in for a consult Raphael. You can reach me at 800-939-8357 ext 2, or fill in the talk to Michael form in the right column of this page. I am out of the office today, but will reach back to you tomorrow and go over this in more detail. You really want to knock Discover out of the way if possible. There are some hybrid approaches you can take, and one of them is giving them a small payment, but only if it makes sense, which I can help you determine better on the phone.
Hello! My husband currently owes around $17,000 on his Discover card. He has been on disability for around 3 years now making only $1000 per month. I have worked hard to stretch my pay to make the minimum payment each month but we are not making any dent in the principle and never will. With other medical expenses and household repairs adding up I am finding it harder and harder find the money to make the minimum payments and feel very hopeless. On the other hand we currently have a fairly good credit score and I am nervous about doing anything to damage that.
It is my understanding that that Discover really will not work with us until we are past due on our account. Would it be worth it for us to skip a payment before calling and trying to negotiate a reduction of some sort? A family member has offered to pay off the card in a lump sum amount with the agreement that we would then begin paying them back until the balance was resolved, interest free. They have asked however that we try to negotiate a lower pay off amount before we proceed. As generous as this offer is it still is going to be very difficult and anything we can do to reduce this amount would help. Do you think there is any chance of discover even taking a few thousand off the debt as we have been current on our payments? I am just very confused on what our next move should be.
You cannot negotiate a lower balance payoff with Discover while current, and you cannot do that by missing one payment. You will have to miss 6 payments to get to a place where you can negotiate less than half off with Discover. Anything earlier than that and Discover may offer 10 to 20 percent off, but not much more.
There are still some rare instances where I see Discover offer their 60/60 plan that I talk more about here: https://consumerrecoverynetwork.com/review-top-7-credit-card-lenders-best-offering-debt-relief/
If your goal is to save the most money you are fortunate to have someone in your corner with the money you will need. It is a process to get where you are going. Do you want help?
HELP. Husband been ill no income. Discover sent offer Feb 5, 2016 offfer to lower interest to 7.9%. On this letter showed Feb 29. As charge off. We wrote accept offer to reduce. Got Mar 2016 statement. No interest deuction. Mailed pyt Mar 2016 (last pyt prior Dec 2015).
Mailed less than min pyt April 2016 and rec’d summons from attorney May 2016. Paid May 2016.
Filed answer & affirm defenses and REQUEST VALID as THIS SUMMONS WAS FIRST CONTACT OF LAWSUIT.
Never settlement offer never knew in collections.
Huband was mentally incapaciated 2013-2015.
HELP MEDIATION & HEARING IN 7 DAYS.
NO VALIDATION GIVEN. Just affidavit from litigation specualist Disc Bank, Feb & Mar statements.
HELP WIFE MUST HELP ME. PLEASE ADVISE
In state of GEORGIA $2738 but error as I been paying little amounts
I want you to talk over your issue with an attorney with experience in debt collection defense. You may have some issues about having accpepted their offer to reduce payments, where you did your part (if I read your comment correctly), but they sued anyway.
I can email you attorneys in Georgia that practice this type of law if you like?
Need lawyer consult asap in GA zip 30540
Mediation & trial july 20.
And i am disabled with zero income
I sent you an email with some contacts that have the experience you need, but you should first see if you qualify for low income legal aid, and if there is an office in your general area.
-$2200 owed to discover in balance transfers from other discover accounts
-28 days delinquent
-not charged off yet.
-set up google voice account to decline their soliciting calls
-Answer their phone calls once a month
-looking to settle for 40% of the original debt
-debt will be charged off after 220 days delinquency
I’ve asked discover about debt settlement opportunities and they’re very adamant about refusing to settle and claim “settlement is not something we offer”. They advised me that the debt will remain with discover and will not be sold to a collections agency after 220 days which leads me to believe they commission an agency to retrieve the debt for a percentage. My question is when would be the most appropriate time to offer a settlement to discover and what would be an appropriate amount to start from. Will discover offer me a settlement in the form of a letter in the mail? Thank you.
Discover stopped selling debt years ago. They will use outside collection agencies and a network of collection law firms.
They do offer to settle, so I am not sure why you were lied to. You do appear to be really early in your negotiation effort. How long has it been since you last paid?
Settling is a discussion I generally encourage having with Discover between 180 and 210 days delinquent.
There is a chance that Discover will not be all that receptive to settling based on the balance transfer activity. There is always a chance a creditor will not be receptive to settlement, but that often changes once you are dealing with an outside agency or law firm.
I have seen Discover send out settlement offer letters in the mail on older accounts. They are not nearly as consistent with those offer letters as some of the other banks are.
Thank for your response Michael! The last payment I made had to have been in April. I’m just kind of nervous that’s why. Should I pick up the phone on them when they call? Or should I continue picking up once a month?
These balance transfers are from past discover accounts that were closed due to lost or stolen cards I reported so the debt isn’t from a different creditor.
How apt is discover to suing? Will these law firms be more likely to settle? Given that I am 30 days late, what should be my course of action?
I am a fan of talking to original creditors a few times leading up to your negotiating a settlement with them. I encourage people to make those calls rather than pick up those calls from Discover. Your mindset is often better that way. Here is more on the topic: https://consumerrecoverynetwork.com/handle-collection-calls-from-debt-collectors/
Discover sues to collect more than most banks. Your risk of being sued for collection by Discover will typically begin once they charge off the account. You can often settle before that happens. I do see better settlement outcomes when you work things out directly with the bank as opposed to waiting for an attorney to contact you. In other words, Discover lawsuits can be negotiated, but at a premium.
If settlement is your goal, your next step is to pull the money together and then hurry up and wait until the optimal time to negotiate the best settlement arrives.
Hi Michael,
I am very close to chargeoff, about 170 days delinquent, and Discover has offered a 40% settlement upon my prompting. However, they want me to make a good faith payment of $150 or so before they send a letter out. I have learned that this resets the process another certain amount of days. Should I resist this request or is this a necessary and legitimate request?
I have seen them request that payment, and they do follow through with the letter and the settlement. If you are nervous about it record the call, and tell them why; because they are not willing to send the letter without the payment.
Hi Michael,
I have an old delinquent account with the Discover Bank since March of 2012. My delinquent debt is more than4 years old, and the statute of limitation (SOL) is expired. The SOL in my state (Maryland) is 3 years. Yesterday, Discover sent me a 30% settlement offer letter. Although it is good offer (70% off), I am not able to pay it now. So, I like to call Discover to discuss about further discount, perhaps 10% to 15%. But, concerns I have is that if I call, my telephone conversation recorded by the Discover resets the time filing a suit and the phone recording can be used against me in the court. Please share your opinions on my concerns. Thanks.
Talk to an experienced Maryland debt collection defense attorney about whether your phone call with Discover would potentially reset the SOL to sue.
I do not see Discover go below 30% much at all no matter how old the debt is. How long until you have the ability to pay the 30 percent?
We are trying to purchase a car. I’m tired of getting high interest rates, so over the last five months i’ve slowly build up my fico score from 470 to 625. I was able to get 8 items deleted from my report(EQ and TU, EXP is very slow to respond).. i have 3 positive very low revolving CC accounts that are also helping to boost my score, but the the Discover Card(DC) charge off is a major pain. According to the myfico simulator if i were to payoff or pay down the DC I would be hitting the 700 mark. My goal is to one day hit 750 and remain there.
This one item is messing with my head, spent countless hours researching.
So please clarify this point, if i were to settle the DC and they report $0 balance to the CRA, This means that the $2932 revolving account BAL would go down to $0 and my current Utilization of %143 would disappear and my score could increase, correct?
Thanx for your prompt response.
S.J.
Credit scores do not always immediately improve when the account is settled and brought to zero. But your DTI is indeed going to improve right away.
Discover card
Credit limit : $2000
Amount owed: $2932
Hi Michael,
The $2932 cc debt mentioned was charge off by discover card. The Date Of First Delinquency was 1/1/2010. According to my math this should fall off around 7/1/2017.
However , this is still being reported to the 3 Credit bureaus as opened/charge off and $2932 balance, As the result, it is seriously Impacting my credit utilization ratio (143% or so).
I am desperately trying to fix my credit score. Discover card still owns this account. But they have outsourced the collection of the settlement to a third party agency who has offer me $700 settlement deal. Discover does not do Pay for delete, at least that is what i was told by both collectors and Discover.
My question to you is should I take the settlement ? Will this improve my credit score when I settle for less? I understand that Discover Card will have to report $0 balance to the CRA which should improve my utilization ratio (I believe) .Or should be patient and wait until it drops off credit report,
Also, i have the money to pay team $1500 or even $2000 if they are willing to delete.
Pls advise.
Thanks in advance for your response. Your website is very informative.
S.J.
Discover will not do pay for delete. You could not offer them 10 times what you owe and get that out of them.
Settling the account and getting the credit report to show you owe zero and a resolved Discover collection account is what you can expect.
Whether or not this settlement with Discover will improve your credit immediately will vary from one person to the next. It will improve your options with certain loans, like a refi or new home loan.
What are your credit and finance goals between now and summer of 2017?
Good Morning,
I have been current with Discover Card, but my interest rate is so high. I am paying $258 just for interest, with minimum amount payment of $350.00 My due date is March 1. I read a lot of articles, that they will give me a chance if I got late in payment, so I did. They called me last night, and I asked if they can drop the interest, and I am still willing to pay the balance, until paid in full. They only offer 9.99% for 6 months, then go back to its original rate. They are very pushy, and I spoke to the manager, and it is saying, same thing like the representative I spoke to. She told me, she will send my account to their lawyer. I said, then, I will have a better deal when your lawyer gets it.
What is my best option? In 2014, I asked them to enroll me in hardship because my husband has no jobs for 2 years. Then, they only lower the rate to 14.49% for a year, stop the card, then after a year, I asked them for a break, they said no. Now, they told me, try the 6 months, and we will figure out the best for you after this. I said no, because you already did it to me in 2014.
Please let me know, what am I supposed to do next? Should I wait? to get a better deal? I owed $18,400.
Are you will to be reported 30 days, or even 60 days late to find out if they can offer you a better/longer hardship payment plan?
How long have you had this account?
Do you have other credit card balances besides this one, and if so, what do they all add up to?
Hi Michael, Discover Card sued me for a credit card debt for $4,468.85 in 2013. I didn’t have an attorney but I responded to the petition asking for an original copy of a signed contract and proof that the plaintiff owns the debt. I didn’t hear anything back from them until January of this year.
They sent me a motion for summary judgment. As for a day to show cause, all of this information was left blank. They also provided over a 100 pages of statement printouts with an affidavit from someone they claim is the litigation support specialist.. I responded to them asking about the original copy of a signed contract, proof the the plaintiff owns the debt (as they didn’t provide neither) and also who is this litigation specialist and what are the qualifications for such, .
Monday, February 29th, I received the motion for summary judgment paperwork again, but this time it had a hearing date of March 30th on it. They sent the same printouts again with it and affidavit with no original copy of the signed contract or proof they own the debt.
I really do know what to do as I don’t know how the judge will look at it and I don’t want a judgement on my credit report. Discover has charge off on my credit report at this time.
Discover is who your account was with and who owns the account now. They have not sold unpaid debt for many years.
Now that you have engaged in defending the court case, it is not all that common to win and get a dismissal when sued by your original creditor. If your goal is avoiding a Discover judgment, you stand a better shot of negotiating a settlement if you can afford one.
Can you raise half or more of what you are being sued for?
Yes I can raise half or a little more of what I am being sued for. The thing is that I don’t want to make a payment before I have the agreement in writing first. I don’t know if I should try to negotiate with Discover’s attorney on my own or by other means such as an attorney, etc.
If an agreement is met, I know the amount should be given but what else? Should it include credit reporting request such as paid in full or paid as agreed? Should a request to dismiss the motion for summary judgment dismissed with prejudice after payment? Thank you.
It is not a bad idea to talk this over with an experienced debt defense attorney. Post a reply with your state and I will email you contact that offer no cost initial consults.
You should not send a dime without the negotiated agreement in writing.
Discover has to update current and correct information to your credit reports. If you settle the debt they are good about sending those updates. It can take 60 days. It will show settled for less usually, but as a resolved collection, which you can then begin to bounce back from. Discover will not agree to remove the credit reporting,and the law firm suing is not in a position to agree to that for them.
The goal of your settlement is to get the case dropped.
Thank You. I’m in Louisiana
Hello! I live in NC and have received a letter from Zwicker & Associates in Andover, MA regarding a past-due balance with Discover Card. The letter states Discover has retained their firm to collect the balance owed, currently $7742.00.
It goes on to say, “at this time, no attorney with the firm has personally reviewed the particular circumstances of your account. This letter is not a threat of suit and should not be considered a threat of suit.”
So how am I to take this?! I havent made a payment on this card since last summer (2015) due to unemployment, illness, and family issues. I have explained to DC that I have no means to make payment and I am actually filing for disability. Family has stepped up to keep my mortgage payments current and also a small balance ($24 monthly) on another credit card so I can retain it for emergencies. They are also helping me with my utility bills but absolutely will not pay anything towards the DC balance.
Should I consider filing Chapter 7? I hate to do it and the guilt of not discharging DC is weighing heavily on me but I dont see any other way out of this mess. How soon can I expect to be sued? This letter is ambiguous to me.
Thank you for your time and help!
If the Discover balance Zwicker is now collecting is the only reason you would file bankruptcy, than I do not like that option. The debt is too small if you consider:
Settling with Zwicker for roughly half would mean coming up with about 4k.
You could probably find a bankruptcy attorney in North Carolina and pay $1,500 for the whole process.
That means you are filing chapter 7 over what may amount to $2,500 or less.
Look to raise money as quickly as you can in order to settle. If you’re sued for the Discover debt, you can still negotiate a lump sum settlement or payments with Zwicker then. Even if your sued and judgment entered, it appears there is little they can do to collect, given your disability status.
I cannot say how long it will be before Zwicker sues. I would suggest that it is more likely now that Zwicker has your file.
Discover card took me to court in 2010 for a $5,800 debt, judgement went in their favor with payment stipulation for $2,900 to be paid in monthly payments of $20 each. Payments have been made on time, every month since. The problem comes in now when they say I defaulted on the agreement in August 2011 and want me to pay the $5800. I have money order receipts and bank statements all showing I made the payments. This happened in NY, now I live in Florida and the letter I received is from a FL lawyer attempting to collect the debt. Will I have to pay the whole amount? How do I respond to them? Thank you
If it were me I would respond to the Florida attorney letter with a dispute letter of my own. I would point out in the dispute that the debt they are attempting to collect is not valid. Include a copy of the settlement agreement and list out all payment transaction dates. I would state plainly that any further collection efforts will result in your consulting with your own fair debt attorney, and your filing a debt collection complaint against the law firm and their client with the CFPB.
If you do something like that be sure to keep a copy of what you send and use certified mail.
You could also call Discover and verify all of the facts of your settlement and see what they have to say. If you were my customer, and this happened, that is what I would do. This would give Discover the chance to pull the account back and could be the cleanest resolution to the mistake that was made in the first place.
Post an update with anything that happens from here.
Thank you for your response. So even though they allegedly took it back to court & judge enforced the full amount, this can stil be reversed to the agreed amount? Also shouldn’t I have been notified with court papers of the decision? When I look up the case in the civil court, I only find the original date not anything in Augusy 2011. Thank you again.
Perhaps I misunderstood you. Did you make an agreement to settle/pay, make all of those agreed payments, and think this was resolved? That was how I read your original comment.
Is this more about having worked out a deal and not made all of the payments?
Stipulation was made in front of a judge to make monthly payments until paid off, then 8 months later they said I defaulted on the agreement and court enforced the full amount (I never received any paperwork on this) plus interest. However, I always paid, on time and have the bank statements to prove it.
Since the payments are only $20 a month it is not paid off yet and I have no problem continuing to make the payments (on the $2900)
Weird. Give me a call tomorrow to talk about your situation at 800-939-8357, option 2 rings to me.
My first inclination is to file a complaint if you can show ALL payments made timely with no default.But let’s go over some things in more detail tomorrow.
I have filed a complaint with Consumer Financial Protection Bureau (www.consumerfinance.gov/complaint/). Will update status as soon as I receive response from the company, should be less than 15 days according to CFPB.
Thank you again for your help!
Hello,
Update ! Company responded and agreed on putting account back on original settlement of $2,900. They stated they contacted Discover who also agreed to put it back on original settlement amount.
On my complaint I included copies of bank statements for the month in question as well as the following month.
I will now print a copy of complaint & response in my files just in case they suddenly forget a couple of months down the line.
Thank you so very much for your help!! So glad I found your page.
That is great JH! Post an update with any new developments. And if you later find yourself in a position to offer a lump sump settlement for less than the balance still owed, it is often an option.
Hi Michael,
I’m new to your site and this post was very interesting to me. I had been researching online among the various forums and was planning to send a form letter to Discover requesting a settlement.
Now that I’ve read this, I realize this may not be the right approach.
I would still strongly prefer to send a letter instead of call though (I have clinical anxiety and have been avoiding collection calls for years, as I just can’t face them… if I decide to call instead of sending a letter, I fear I’ll simply never do it) — but I wanted your advice on whether a polite, from-the-heart letter that is not demanding and not a form letter would be ok, or whether you believe that a letter should never be sent at all, period.
Here’s a summary of my situation (apologies in advance for the length):
– About 6 years ago, personal reasons forced me to leave a professional degree program, less than a year from when I was to graduate. This has left me with >400K in federal student loans, but without the degree and ensuing career that would have enabled me to pay them down. I am in the income based repayment program because my student debt is so out of proportion with my income; my payments don’t even cover the interest, so the debt continues to balloon. After 25 years the debt will be “forgiven”, but not tax-free… the projected forgiveness amount is over 600K which may leave me with a 200k tax bill… so I need to try to save as much as I can towards this impending doom.
– After I had to leave this professional school, I was struggling to find a new career/job and it was not long before I defaulted on my credit cards. I was first in hardship programs and did my best to keep up, but eventually, there was just no money to pay.
– Due to my anxiety (and an inability to pay anything until recently), I have avoided collection calls. It’s been years… 2 of the debts are still within the SOL and currently in active collections, after being inactive for a long time. I know more about these things now, and realize I am incredibly lucky I did not get a judgement on my credit report after all these years of avoidance, and I don’t want to push my luck.
– I now want to settle the accounts (including a third account that is past SOL) and remove the threat of being sued and getting a judgement. My motivation is partly because these accounts are now close to dropping from my credit report, so I’m close to getting a fresh start (not counting the student loans of course) and don’t want a judgement on my report. For the account that’s past the SOL, I worry I won’t even know about the judgement until it’s too late so I get the chance to tell the judge it’s past SOL and I’ll be in a mess.
My other motivation is because I just got married, and while I have no assets myself, my husband and I want to open a joint checking/savings and I don’t want to put his paychecks at risk.
– The bigger of the two accounts still within the SOL is Discover (16k), and is in active collections with Cavalry (though Discover still owns it). My last payment to Discover listed on my CR was in February 2010, I live in NY where the SOL Is 6 years. I believe this means the SOL will run out in March 2010. (However, it’s set to leave my credit report in December 2017… which implies the SOL may be 1 year – 180 days before that which would be July 2016?) I have access to enough funds to settle with Discover for 20-25%, but from what I have read this is pretty unlikely. So I’m worried that by initiating contact 4-7 months from when the SOL will expire, and I don’t have more than 25% to settle with, I may trigger their attention, and end up triggering a lawsuit if they won’t settle for what I can afford. They may have written me off by now… I read an analogy somewhere (forget if it was on your site) where sending letters to creditors is like hitting a sleeping rhinoceros on the head.
– The smaller of two accounts is only 1k. I could pay this in full. However, I’m worried if I do this before resolving the Discover account, the new status of “paid/settled” on my credit report may trigger Discover to think I’m now a good candidate to sue. (I read that creditors monitor your reports for changes like this)
– A third account that is past SOL (barely) is in active collections, also with Cavalry. I don’t know if this would complicate settling the Discover one.
So I’m torn on what to do. I want to resolve these accounts and now have access to some funds to do so, but I worry it will backfire.
Do you have any thoughts on:
1. whether it’s okay to send a (polite, non-form) letter to Discover offering 25% at this point in my timeline? They haven’t had any contact with me in about 5 years. My priority is to avoid a judgement on my credit report (and being on the hook for 16K if they get a judgement). Or should I contact Cavalry instead?
2. Whether sending them a letter only 4-7 months from the SOL offering 25% has a greater chance of backfiring and doing me more harm than good.
3. Whether I should wait to resolve the smaller 1k account until I’ve resolved the Discover one so it doesn’t trigger notice from Discover?
4. Should my approach change given that 2 accounts are with Cavalry (Discover + one they purchased that’s past SOL) ?
Sorry this is so long! Thanks very much for any thoughts.
I would look to make contact only if you have the ability to resolve the account. 25% settlements with Discover are just not common, but I could see yours being an account with potential to hit that target. How a collector will look at your ability to pay is favorable to getting the best deal.
A polite letter is usually a waste of time, and will often go overlooked and/or not achieve maximum benefit (save you the most). There are instances where a written hardship letter is still useful in negotiating a debt for less, but that is often when there is verbal negotiations and the written hardship explanation is requested as part of building out your file on the creditor or debt collectors side. I am doing that on a second mortgage settlement right now (much more common in secured loan transactions).
There is also the element that a written offer can reset the SOL to sue, where a verbal one will not in many states.
I would wait to resolve the smaller balance until the larger one is out of the way.
I do think your approach should change given that Cavalry is involved in your Discover account. Call me this morning for a consult to go over some things at 800-939-8357, then choose option 2 which rings to me.
Hi Michael,
Thanks so much for your thoughts, I really appreciate it. I’m at work so it’s difficult to call, I will try to find an opportunity.
You can reach me through that hot line number as late as 9 pm eastern most weekdays. You can also email me direct to coordinate a time to speak. My email address is the one you get comment notification emails from.
Hi Michael,
I owe about $4700 with Discover. I’ve have been a good consistent-payment client for almost 10 years up until this year… when I moved back home after a year working overseas on a unsuccessful business venture. Ironically, it is when I moved back to the USA this year that I have been unable to make payments. I also was not good about being in contact with Discover during my time of late payment as I didn’t have any money to offer them and had not yet thought of looking online for information on what best to do… My account got charged off Aug 31st, 2015… Fast forward, I just got a letter this week about their intent to move forward with a law suit if I don’t respond in 5 days… which I don’t want them to do! I’m young and just started a new job and want to eventually buy a house and a car and all that good stuff…
My plan is to settle because I would want to move on with my life, but that being said I just started a new job and am barely keeping my other accounts from going under (but $9000 with Chase and $2500 with Citi are already with a collections agency)… as I also have over 200k of federal student loan debt..I read through the comments and plan to call the attorneys (Suttell Hanner & White) to see if I can settle at 40% with some borrowed money… What are my options? Your thoughts are greatly appreciated and I thank you!
Thanks,
Maymie
You will want to act quickly and be convincing with your hardship and inability to pay. The other accounts being in collection will help in this regard.
Only focus on information about how little money you have to work with; do not make enough at your job to pay all your bills; and the only reason you have the money you do to offer is going to be because of a friendly loan. 40% settlements on Discover accounts with Suttell and Hammer are not a gimme. You may be able to negotiate that but may need to have a little more cash than that.
What are your plans for the other two accounts?
Thanks for your reply Michael. I left a message with an account manager and will call back again tomorrow if I don’t hear from them first.
I got a letter from Nationwide Credit Inc on behalf of Chase to settle the $9k debt for $3.7k, but at this point I don’t have money to give them a “one-time payment of the settlement amount on or before 10/23/15”. I would totally take it otherwise. The letter also says I would need to pay income taxes on that, but I’m insolvent so I don’t know if that’s still relevant. I want to call and see if they will take a payment plan or extension on that amount… what do you think?
You can often settle Chase credit card debts with collectors like Nationwide, and get time to pay. I would try to swing the payoff in a few months if you get them to agree. I have a page up dedicated to settling Chase debt.
That notice about tax implication when more than 600 dollars is being cancelled or forgiven in a settlement is a standard disclosure. I use it in customer forms too. If you are insolvent it will be a nonissue. I have an article on the subject of forgiven debt and taxes with all relevant links to the IRS>
I would call Nationwide and see what you can do to split the payments.
The last account I haven’t thought about yet…since it seems the least urgent. In terms of debt priority right now, it is settling with Discover, and not defaulting on federal loans…because from what I understand, the government will be much harder to work with!
You have payment options with federally backed student loans. Check out that site for every option available.
If I were prioritizing debts to resolve based on the little information I have to go on with your situation, I would deal with the Discover account before Chase. Discover does indeed sue just outside of charge off more so than Chase (at least currently). And Chase is with a contingency debt collector, where Discover may be going directly to an instate attorney next.