I know that last article about the types of accounts to consider settling (if you have the luxury of choosing) was a lot to digest , but it’s a vital step in the settlement process. Settling credit card debt for less than what you owe is not rocket science, but there is a formula to follow. A good analogy I use to further detail what debt settlement is and how it works is to think of yourself as entering a race.
Comparing settling credit card debt to being in a race does not mean only the fastest runners win. Being quick in the context of settling just means you finish the race earlier than others. There are certainly benefits to running a fast race. But debt settlement can also be a marathon.
In a marathon, some runner’s finish, and some don’t. But you do not have to be a sprinter to come out on top.
NOTE: This post is part of our Debt Settlement Guide. If you’ve missed any of the previous content, or would like to start at the beginning, please see the links at the bottom of this page.
Telling you that you may have entered a race with your debt sounds like pressure, doesn’t it?
Describing debt settlement as “running a race” does not change the simple concept outlined in our introduction to this method, where we define exactly what settlement is. But this description has a tendency to make people uncomfortable about the process. In fact, most debt settlement companies offering to settle your credit card debt for you do so in a presentation that gets you to focus on a simple and easy lower monthly payment. This easier, softer form of marketing, gets more people to sign up. It also means selling debt settlement programs that take 36 months and longer to people who, if they knew the benefits to finishing early, would likely want to, or at least try to.
Running a longer debt settlement race is a problem for many reasons. You will learn how and why to avoid these problems in coming sections.
Everyone Can Run a Different Race
Participants in the debt settlement race need to first identify if they should even enter. Three things you will want to consider in determining your suitability for debt settlement will often include:
- The balances on your credit cards.
- Who your creditors are.
- How long it’s been since you made a payment on any account you are going to settle .
Each of your creditors has their own set of policies for timing, and percentage of balance they will accept when negotiating delinquent accounts with you. Skip ahead to take a peek at how the top 7 banks settle debt. You can post your account details (creditor/collector name, balance owed, when you last paid) in the comment section at the bottom of this page and get feedback about what debt settlement could look like for you. You can also consult with me, Michael Bovee, by submitting a consult request form.
Once you have creditor-specific details, you can better target how suitable a solution settling debt will be for you. I want you to next weigh your immediate and near term needs and goals.
Can your current budget and monthly income provide for your basic needs – now and into the near future – while meeting your time lines for settling credit card debt with your particular creditors? Your needs include your combined monthly bills and expenses. Calculate them as if you had no credit card debt at all. What cash do you have left over? Many people will only be able to run as fast as that leftover cash each month allows them to.
It is best to know your capacity to tap funding sources now, and over a projected period of time, in order to pay each negotiated settlement.
A dominant factor in determining whether settling with your banks is an appropriate option for you is how quickly you will be able to pay the settlements. There is flexibility with debt settlement that is missing from other legitimate options, such as credit card debt consolidation, or chapter 13 bankruptcy. That flexibility makes debt settlement a really attractive alternative, but you will not want to extend your plan too far. The faster you settle, the less risk there is when you are not paying creditors.
Historically, I don’t agree to take on a client unless they can realistically settle all accounts in 18 months. Along came the recession, and with it, some considerable impacts to how debts get settled, the longer they go unpaid. I have now shifted my recommendation of debt settlement to running no more than a 24 month marathon (this does not reflect people with much older accounts that may have gone without payment for a year or more at the time you are reading this).
Estimate How Long it Will Take to Get Out of Debt
Add up all of your credit card debts to come up with a grand total. Then, cut that amount in half. Next calculate your available savings, cash flow from monthly income, and all resources you can tap over the following time frames (this assumes you are current with your payments today). This decides if you’re sprinting or running a marathon.
6 to 7 month race – This is generally the fastest race that be run in a debt settlement program. The reason there are no shorter tracks in debt settlement has nothing to do with you. Creditor policies are what set the pace you run. And the best offers where you can save the most tend to be right before your bank drops your account into their collection pipeline.
12 month race – This type of pace for settling your debts is ideal for limiting the risk of a creditor suing you, and also allows you to settle some accounts that go unpaid more than 6 months using longer-term payment agreements (that are now more common).
18 month race – This long of a track is about as far as some people will want to stretch themselves. Accounts that go unpaid this long will see increased odds that a creditor will sue in order to collect. This pace is becoming more successful due to debt collectors’ and debt buyers’ willingness to settle an account for less, and give long term payment options along with the agreed balance reduction.
24 month race – This is about as long as I will recommend someone endure a debt settlement program. Your odds of being sued for unpaid debt have increased to a point that should make you uncomfortable. If you have not settled your accounts by now, and at least have the last remaining ones on some type of term payment agreement, you should probably not have entered the race.
There are some states with such strong consumer protection laws (PA, NC, SC, FL, TX) when it comes to unpaid credit card debt – it makes 24 month debt settlement tracks less of a problem. And there are sets of personal circumstances that suggest longer races will not be overly problematic. The rest of us will cramp up trying to stretch debt negotiations longer than 2 years.
Now… does running in a debt settlement race stress you out?
Sorry folks, that’s the reality. It does not mean 36 month and longer programs cannot be done. They can. I just don’t recommend them.
Settling Credit Card Debt is Not for Everybody
There are considerations when it comes to letting me talk you off the debt settlement path so easily. I do try to get you thinking about the reality of debt settlement as quickly as possible, and for good reason, but there are reasons you can be quicker about settling your debts than you may immediately grasp.
Here are some things to think about:
- You have debt you cannot keep up with and something has to change. Just because debt settlement can be viewed as a race does not make your debt any more affordable than it was before you read this article.
- Debt settlement is not all daisies and roses. It’s an alternative to bankruptcy.
- You are still only at the beginning of my Debt Settlement Guide. The next portion begins the how to’s, what to’s, and when to’s. You need to keep reading.
- The estimate of money you will need when settling your current bills I used above is a generalization using a higher end estimate. Some of your accounts could easily settle for 25% of the balance owed. That would make a 24 month track (or less) achievable.
- If you get a 36 month or longer program quote from a debt settlement company, the quote includes their hefty fees. Take out those fees, or cut them by half or more, and a shorter debt settlement track may be in your reach.
You can use this website as your trainer from the beginning to the end of the race. You will get many advantages from not just reading, but also participating in the comment sections of the many articles and guides we have. You can also work with someone in the network one-on-one. Getting dedicated help from someone who has traveled the course thousands of times before you puts you in the best position to not only compete, but to win your race!
So… you now know there is some level of pressure involved with opting for debt settlement. I am sharing this with you because it is the responsible thing to do – even if it worries you. Debt settlement is not for everyone. Don’t enter the race if you are worried you cannot finish it.
Let’s get started with the meaty part of the debt settlement process. In the next section, I will cover the math and the critical timing that you will want to know about when settling credit card debt.
Continue on with the next section of the CRN Debt Settlement Guide with How to Settle Credit Card Debt Quickly.
This page is a great place to stop and ask questions about what settling debt will look like in your particular set of circumstances. Post in the comments about your accounts like I suggested above. Get an estimate of what you are up against. Submit a consult request form if you need a short consultaiton.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement
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 (you are here)
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
Hi Michael,
Here’s a rundown of my debt situation… Can you help, please?
I owe $9687.31 to Barclays/Law Offices of Harris & Zide & stooped paying in March 2020. I have not been sued, but my account is placed with them. They have “offered” 2 years to pay the original amount off at $404 a month for 23 months and $395.31 for my last payment.
OR a Settlement Option of $6780, $565 for 12 months. I cannot afford either.
My next debt is $3,169.87 to Citibank, which I stopped paying in March 2020. It is now with Superlative RM, who is calling me regularly. Previously, you said that I have 12 – 24 months before it gets sold to Cavalry or Midland, and I should not worry about them now. Last week, I was told by a debt collector on the phone that I am in “Pre-legal status,” and my account may get turned over soon. But to whom? A new debt collector or an attorney’s office to sue me? I don’t know how to proceed… settle or wait until it’s sold? Should I not worry about them since they may sell my debt to the next business? They “offered” me $2,852.88 with a down payment of $570.58 and 24 payments of $95.12 per month or a 6-month hardship program, which will prevent them from suing me during that time: $316.99 down payment and $50 for the next 6 months.
My last debt is with Discover. I owe $5156.29 and stopped paying it in March 2020. I’m on a 12-month temporary plan of $51/month until Oct. 2021. You mentioned previously that this one would catch fire in Feb or March 2022. My questions, why then? Why doesn’t it catch fire in Nov. 2021? When is the best time to reach out to them? What can I expect as an offer once this grace period is up?
I would not have told you Citibank debt does not get sold for 12 to 24 months. Their accounts often get sold right after charge off (6 months late). The debt buyers Citibank sells to we often get settlements that allow you to make payments for 12 to 24 months. One of the debt buyers will sometimes go twice that long.
Did Superlative say they are collecting for Citibank, or for a debt buyer?
You are not late with Discover while making payments on your plan. If you finish that 12 months with Discover this October, your typical risk for when they might send your account to an attorney would be 6 months after that. Not all Discover accounts go to attorneys for collection, but that is when I would start worrying about it.
You should try to come up with the cash, or a plan, to settle the Barclays account with Harris and Zide. They do sue, and that is where this account could be headed.
You mention you cannot afford to deal with the most urgent collection account, but what can you do? How much money do you have now, and how much are you saving up each month?
Do you get a tax refund?
Do you get a work bonus, or the option to pick up overtime?
Can you borrow money from a family member or friend if things get urgent with Barclays?
If you get sued you can fight the suit and buy time to save up more money in order to settle out of court. I think you are in California where defending a suit can buy you a good deal of time. That is not ideal, but it can help you avoid worse problems.
I am editing your name in this comment for your privacy.
Thanks, Michael, for the helpful info. You’re such a great person, and I thank you for lending a helping hand to me and so many others. What goes around, comes around! You’ve got a lot coming to you! 🙂
Regarding my Citibank debt of $3,169.87: Citibank sold it to Crown Asset Management LLC, and Superlative RM is the debt collector for them. I just spoke with Superlative today & told them I’m getting a tax refund, but I won’t have it until April at the latest. I have safely budgeted $50 to pay them monthly. This is what I can afford. They put me on a hardship plan for 6 months with $50 payments a month, BUT I need to call back on or before April 15 to renegotiate either a settlement or a payment plan. I expect a tax refund, but I also need to balance this with my Barclay’s debt. What would be two good and realistic options (settlement & payment plan), considering I could put money down?
Regarding Barclays/ Law Offices of Harris & Zide debt for $9,687.31: I can pay $67.07 monthly, but I’d like to negotiate down the original amount. I am willing to give them a downpayment, but I want to keep my monthly payments to what I can afford ($67.07/month). A friend recommended I write a letter saying that I commit to paying $67.07 monthly on the same day of every month until the debt is paid off. It would also mention that it is the best I can do given my current financial state. Finally, the letter would request that they only contact me in writing and not call me or anyone else regarding this matter. The plan would be to save up enough money as time goes on to settle later with them. What do you think about writing such a letter?
Crown Asset settlements are a mixed bag. I see some as low as 35 percent, and I see them sue people and hold out for the balance when they get a judgment. The payments to Superlative would typically allow them to keep the account, so that means a smaller likelihood of being sued while you are making them. Settlements with payments to a debt collector for Crown Asset can vary too.
I am not a fan of sending a debt collector a letter to only contact you in writing. Many interpret that as a cease and desist, and it increases the likelihood of being sued. Harris and Zide, a collection law firm, already has your account, so the risk of being sued is already super high, so that may matter less, but sending letters to negotiate is mostly a fail anyway (some exceptions), so I would call them to set up your plan. I am not sure they will go as low as you need them though. You are talking about trying to get them to take 144 month payment plan, which is not all that realistic.
Hi Michael,
First, thanks for all of your detailed information. It has been great educating myself with all of the resources you offer.
I just enrolled with a debt settlement company (Freedom) about a month ago. I’m just now learning more about debt conseling and how that might’ve been a different approach to take. Since starting the program, I’ve already had one of my accounts negotiated and we’ve begun payment towards settling that account.
My other enrolled accounts are:
Prosper – 18800
Prosper – 8000
Lending Club – 9000
Bank of America – 14500
Discover – 5700
Chase – 5300
Synchrony – 2000
Citibank – 1100
For what its worth, some of the accounts are now at least 30 days past due as instructed by Freedom, while only two have reached the 60 day mark.
For this program, I am sitting at $1026 per month and it’s estimated to take 4 years. I was planning to pay extra each month ($1500) to hopefully end the program around the 3 year mark or even earlier, if possible. I have even more motivation to do so after reading that you don’t like even going past the 24 month mark.
Would you recommend continuing on this path, especially if I do try and complete this program as early as possible or do you think it’s toon risky and suggest I withdraw from my current program and look into counseling? From my estimates, I would be looking at around $1600 or more for credit counseling, but this would also be no shorter than 5 years to complete?
Whichever route I choose, I would like to eventually bounce back from the hit I have to take so that I can eventually purchase a home. I’m trying to determine if it’s wiser to finish the settlement program within 3 years and immediately focus on repairing my credit after the fact — or pursue credit counseling that would take a little longer to complete, and I’m assuming there would still be some type of waiting period to repair my credit before buying a home?
Thanks in advance for any advice you can provide!
Fill in the talk to Michael form in the right column. I will see that and email you to set up a phone call time.
Because you are already 60 days late on some of these, and the ability to save more aggressively, I am inclined to favor continuing with debt settlement. But I will ask you some deeper, and more personal questions that would suggest you do something else.
I currently have an AT&T Universal credit card that was through Citi. Bal is just over 17k. I always pay on time as agreed with no late payments. I had the account for at least maybe 8 years. Went through a divorce and obtained medical bills as well. I called them to negotiate lower payments and they wouldn’t work with me unless I was in collections, which I want. So, silly me, stopped making payments altogether. Last payment was made July 2014. It has now bounced around different collection agencies. It’s now with Calvary Portfolio Sevices. I do have the means to settle a lump sum or payments now, but unsure as to how much I can try and negotiate to settle at. Much thanks in advance.
Correction – I called them to negotiate lower payments and they wouldn’t work with me unless I was in collections, which I WASN’T. All others debts I have are paid on time as agreed and always have been.
Fill out the talk to Michael form in the right column. When I get that I will email you to schedule a phone consult. Your next step for settling with Cavalry can depend on how collectible you look to them, and whether they have your account placed with an attorney already.
I definitely need to do something:
NFCU Platinum 23,102 (1 Month Behind)
NFCU Rewards 23,192 (1 Month Behind)
NFCU Cash Reward 23,066 (1 Month Behind)
NFCU Checking LOC 16,000 (2 months Behind)
All these others are current but barely
Capital One Visa 10,100
Capital One visa 10,698
Capital One Visa 5,502
USAA Visa 7,000
USAA AE 6,000
Discover 1,492
Barclay 1,618
Barclay 378
Conns (Synchrocy) 2,000
Care (Synch) 200
Walmart (Synch) 800
Sams (Synch) 200
Amazon (Synch) 1736
Tower Loan for furniture from IVANS 1900
Thanks
Brian
With roughly 135k, and an estimate of settling all of that for 54k, what are your options to pull the money together?
The sooner you can pull that amount together the better. If it is going to take more than 18 to 24 months, I would look at your options with bankruptcy.
What state are you in?
I am in Louisiana and Bankruptcy is not a option.
And I am sure will take way longer than 18-24 months
Good evening Michael,
I have another question for your. I have a Paypal credit line. Is settling debt with Paypal similar to that of Citi or Chase bank?
PayPal accounts settle in the same way as the banks you mention.
Hello again Michael
Is the settlement procedure the same for Paypal credit account?
What would I be looking at to settle a $3000 balance?
Thanks in advance.
Yes, it will work the same. Done correctly, I typically look to settling PayPal accounts for 30 to 40 percent of the balance owed.
Will I lose the credit line after settling the debt with Paypal?
If you are late a couple months, they likely closed your account already.
You typically cannot settle and still maintain your account.
Good evening Michael,
Last question, I promise. Will I be able to re open that credit line after settling with Paypal??
Not likely.
Good day Michael, thanks for such an informative website. My debts are as follows:
Chase – 7000
Citi – 2000
Citi (Best Buy card) 3000
At the moment I am 2 months behind on all of these. Roughly how much money am I looking at in order to settle these debts? Roughly when should I call these banks in order to try to settle with them??
You are looking at roughly 4k or less to settle all of them. That is provided they are established accounts that you have had for a while, and no unusual account usage prior to payments being stopped.
I see better outcomes by working with the debt collectors Chase and Citi first send your accounts to. That would be in about 5 months. Citibank does do some early placement with third party debt collectors, so there could be some earlier opportunities.
I have had these accounts for close to five years. No unusual activity before I stopped making payments. So should I contact them after 3 months or so or they will reach out to me? Should I just explain my hardship and make an offer of what I can afford to pay as a lump sum?? Thanks in advance for the advice.
Also, I was just reading an article of yours. So is it best for me to wait until the debt is charged off for a better rate or try to settle before?? What exactly is a charge off?? Any negative effects to waiting for a charge off??
I would let these particular accounts charge off and go to the first debt collector and settle then. My comment about Citibank sending accounts to collection at 90 days could mean you settle for a good savings and before charge off. But that is not always going to happen, or be the best option.
You can learn more about charge off impacting settlements, and here is a video about settlement strategies using charge off.
This is a bit over simplified, but yes, it does work that way. Continue reading through this particular guide and you will get a better grip on what to, and when to.
You may want to watch this list of videos about settling in first stage collection.
Good evening Michael,
Citibank sent me a letter in an attempt to offer me a payment solution for my Citi card and Best Buy card. Should I give them a call now or continue to wait??
Are you talking about the early letters Citibank sends at 60 and 90 days late? Is your goal to settle for less or to arrange a lower monthly payment for longer term pay off?
Yes, the letters which state that they will like to find a plan that can work for me. My plan is to settle for less.
Than I would not call them to talk about payment options at this point. You will end up answering questions in that qualification process that, were it me, I would not want in the system when it comes time to negotiate the settlement.
So I should continue to hold off until the 5 or 6 month mark?? Any particular ways to approach them at that point??
I will continue to read as much as I can,
Again, thank you for all this information.
I cover the what to’s and how to’s in the article series linked at the bottom of the above post. You can check out this video about negotiating your settlement with Citibank.
Good Day Michael,
The banks have began calling. Should I ignore their calls or answer and explain my situation to them?? Would it be a good idea for me to file for bankruptcy if I can not come up with the in due time??? Do you think filing for bankruptcy would affect me qualifying for financial aid in the future??
If it were me, and I was 90 days late and looking to settle, I would not be talking to the banks for a couple more months or more. Here is more about handling collection calls.
Chapter 7 bankruptcy can impair your ability to get student aid.
I would not file bankruptcy over these smaller balances. I would look to settle instead.
Hello,
I am writing this a little late into my own debt game, I have two large accounts (chase, 25k, BOA 35k) currently enrolled with a debt negotiation company. I have been making payments into the special funds account for about 8 months or so? I think there’s roughly 7k in there. Today I got a call from a 3rd party debt collector, (United Recovery Systems) stating that the Chase account had been charged off, and Chase had enlisted URS to recover the debt. The representative stated that they absolutely do not and will not negotiate with a 3rd party debt negotiation company, such as the one I am currently enrolled with.
I called my company, who stated the representative from URS “was just trying to scare me” . Do you have any experience with this? I was feeling more comfortable that my accounts were being managed by the debt negotiation company, but it seems like I can’t get a straight answer / I don’t know who is telling the truth? What will happen if what URS says is true, and that neither Chase nor URS will negotiate with the company I hired?
Should I be concerned, and pull my money out from the dedicated fund and start negotiating on my own? Any help would be greatly appreciated. I’m so worried!!
I am a huge fan of negotiating debts yourself, or having someone there with you as you negotiate, so that you can maximize the results by having a guide their to help you.
Chase stopped working directly with debt settlement companies in 2010. It took a little bit of time for that policy to trickle to the collection agencies they use, like United Recovery Systems, but that is how things are. URS is not lying to you. But companies work around that. One way would be to let your account move down the collection pipeline to another collector, but that may not be in your best interest.
Call in and talk with me some more about your particular situation at 800-939-8357, press option 2 to connect to me. Now is a perfect time to knock down one of those accounts, and you may be able to identify a way to do both once we talk.
Hello again Michael. I did watch the video. It sounds like even though I have no income of my own that all of my husbands income would count. Is that right? Also, we are holding a mortgage after we sold my father-in-law’s home that brings in $1100 per month and which is in both our names. And even though our house is mortgaged to the hilt, we also own 45 acres that’s free and clear. So maybe I’m not so judgement-proof after all? .
That would likely be correct. You are far more of a collection target than you thought.
Call in for a consult and I can help you understand what settling the debts will look like. You can also submit a request via the site by clicking the consult request tab at the top.
Yikes, Michael, can you please remove my last name? (I’m sure it’s my mistake that it’s there). As far as my debt problems, to be honest, I can afford to pay back some of it. Are you saying that since I’m fairly safe judgement-wise that it makes sense to not go that route? My husband is older than me so I guess part of it is I’m thinking about my credit rating if at some point I’m all that I’ve got.
Watch the video I linked to in my first comment reply to you. If you are still thinking settling the credit cards is a realistic option for you after that, call me for a consult at 800-939-8357, option 2 rings me. I will go over some additional details about settling as would apply to you.
Hi Michael, I have 3 credit cards, American express: $8000 – Citibank: $7000, and Chase: $7100. I also have a Discover personal loan with a balance of about $7500. The beginning balance on that loan was $16000. I am 3 months behind on all, however I just enrolled in a hardship plan with Discover making $181 a month pymt. for 66 months. Not a great deal, but a little relief. I’m not sure the best way to proceed with the other 3. Only my name is on the accounts. The only income is my husband’s pension and ss. Our home has only about $15,000 equity. My car is older. We live in NY. We have about $10000 in savings and I could put that in an account without my name attached to it. Would that make me somewhat judgement-proof? I’m confused about the idea that if you settle sooner rather than later, you can get a better outcome. I thought it was the opposite. Thanks in advance. sue…
Settling sooner rather than later can lead to a better savings outcome with some creditors, but not all. The trend is moving to settling with the first agency unpaid credit card accounts are placed with rather than with the original creditor. This trend is not quite to the place where I will edit the first stage settlement article series, but it is getting closer.
More to your particular situation… why settle at all? You would need roughly $8,500 combined in order to settle with Citibank, Chase and Amex. That leaves out Discover which you would need about half to settle.
You do not need all of this money at once, but the sooner the better to avoid being sued for collection.
You could handle your affairs to the point that you are deemed uncollectable. But there are stresses and pressures tied to living that way forever (and it may mean that if you are sued and a judgment entered). Why not just spend less than 2k and file chapter 7 bankruptcy?
Hey! I have aprox 2700 remaining on a USAA cc account to United Recovery. I have been paying $50/mo for 24mos. I was unable to pay a lump sum when I was first turned into collections, however I should be able to now. What is the maximum amount I should pay? What is a realistic offer for me to make to them?
I also have roughly 32000 in student loan debt with Great Lakes. It was about 4000 less when I defaulted and entered into an income based payment plan to pull my loans out of default. I am out of default and have a minimum payment of $0/mo due to my income and family size. Is there any way to reduce/cancel student loan debt?
Thanks,
Before you try to settle the credit card debt, I would look to connect and consult with an experienced consumer bankruptcy attorney about whether your situation looks like one that could qualify for discharge of student loans. That is not a common thing to occur, and there are few attorneys with the experience you want, but it is a stone to turn if you are being thorough.
If you are settling USSA credit card debt I tend to target 40%. My estimate when you are settling with a debt collector like URS would not change that.
Hi there,
First off, I want to thank you for such an informational website!
Please kindly advice me on my situation:
I am married and have a total of 5 credit cards that are only under my name:
Chase 4200
B OF A 2700
B OF A 4200
Wells Fargo 4000
Citibank 700
I am currently one month late on both of my B OF A credit cards. I simply cannot afford to pay the minimum amounts due anymore. It has gotten to expensive and the balances are not going down.
First question:
If I choose debt settlement, will my husband’s name or credit be affected? He has a joint mortgage with his Mother and I do not want to ruin that for him.
Second question:
How should I go about the debt settlement process? Should I contact B OF A now and tell them I can’t pay them?
Should I stop paying all of my credit cards now or should I continue to pay (I would have to borrow money from a relative) and tackle one at a time.
Please help! How much do you think I would need saved up to erase my debt through settlements?
Thanks.
Is your husband on any of those listed credit cards as a co-borrower or an authorized user?
Before you go about contacting any of the banks to let them know that you are experiencing a hardship, or that you cannot continue with minimum payments, post the interest rates for each credit card. Also, how long will it take you to raise an estimated 7k in order to settle?
Hi,
My husband is NOT on any of my credit cards listed.
Chase %16
B of A both %15
Citi %16
Wells Fargo 5%
I’m not sure how long it will take me to raise 7k. Currently, I have $1500 in cash.
Please advice!
I would encourage you start with getting an exact quote of what your monthly payments can be lowered to working with a counselor to consolidate those bills. You can do that by calling 800-939-8357, choose option 1 to connect live. The call is no charge and will cover some income and expenses.It is not a loan and your credit does not matter for qualification.
The reason for the call is to get the quote. If it is affordable given your monthly income and budget, you will have a plan to pay off the debt without impacting your credit score and dealing with the debt collection process.
If you cannot afford the lower monthly payment based on your monthly income, or it is too much of a stretch, I then want you to call me and lets go over what settling those credit card bills is going to look like for you. You can reach me at the same number, but press option 2 to ring to me.
Thank you!
I will be sure to request a quote. Is there a fee for this program? How long is the program? What kind of effects will this have on my credit?
Do you think debt settlement is the wrong way to go in my situation?
Please advice.
There is no fee for the call to get an exact quote. If you consolidate these credit cards in that type of program the fees will vary based on state law, creditor type, affordability, etc. You will be able to get that info during the call.
Consolidating the credit cards will not impact your credit score. You will have to close the accounts, but that would happen with settling too.
These types of repayment plans cannot go longer than 5 years. I think the national average is on the order of 52 months.
It is not that I think settling the credit cards is right or wrong. It is more a process of elimination to determine the right steps for you to take. You will get a quote that will benefit you (based on what you shared so far). You will want to compare consolidating your credit cards with settling them.
In couple of months, I plan to resign and leave the country and no plans to come back soon. Currently i have multiple credit cards debts over 20,000 and car loan balances approx 19,000 (had business that turned unsuccessful and car was voluntarily repossessed). My husband has no job and also have credit card debts and car loan balance of 6,300. I
How can i possibly settle this debt with only limited cash about 4000?
Post a list of the creditor and rounded approximate balances. If your main creditors are banks that offer the best settlement percentages pre and post charge off, it is possible to settle for around 25% as an aggregate. That 4k will not cover the deficiency balance on the car note, but you can save up for that over time and settle it later. The longer a car not goes without collection the better the settlement in my experience.
Hello! Thank you so much for your guide as it is helping me immensely! I’m a Louisiana mom in need of a solution. My husband and I have 5 credit cards total. When we started sinking, we started sinking fast.
We have 3 Chase cards: $8600 (Min. Payment $1871 now/originally $226), $3600 (Min. $772/orig. $75), and $1500 (Min. $523/orig. $35);
one Citibank: $5000(?/80); and
one Capital One: $2500 (?/50).
Six to nine months ago, we were faced with the option of paying the credit cards or feeding/diapering the kids. I had a BIG surprise pregnancy in February. My husband and I expect to receive quite a large income tax refund and we’d love to get ourselves out of debt. We own our car and house, so we aren’t too worried about our credit score, as it isn’t at its best anyway, and only suffers the longer the bills go unpaid.
Am I correct in thinking debt settlement is the way to go?
Thanks in advance!
With credit card bills of roughly 22k in collections I would want you to consult with at least one attorney about your options in bankruptcy. I think the home being paid for will be a problem in qualifying for chapter 7 (if you want to keep it, and based on the LA home value exemption in chapter 7), but you should be thorough in your research. If you can keep your home in a chapter 7 than it could prove to be the lowest cost path to eliminating the credit card bills.
When looking at settling your debts I would target Capital One negotiations at 50%, so 1,250.
I would look to settle the Citibank account at around 30% (depending on who is collecting for Citi), so 1,500.
I would estimate your Chase card settlements to combine for roughly 5,000, or a bit lower.
I would settle the accounts you listed in the order of priority I listed them in based on collection trends with each bank.
Given those estimates you can see you would be filing bankruptcy over potentially less than 8k. While I think that is too small a figure to file over when there are positives to focus on in your finances (steady income and the home as an asset), I do still suggest talking with a bankruptcy attorney to fully compare these options.
Will it take you longer than 3 to 4 months to raise the money to settle?
Well, I am in a real pickle here. The total debt I owe is $165K. Earlier this year me and my live in boyfriend of 3 years parted ways, therefore I lost an income source.
I kept up the payments (approx $3,800 per month) until October but I was robbing Peter to pay Paul to do so. Since then I have paid nothing but living expenses (mortgage, utilities, rent and cars). So I am 2 to 3 months behind on all cards.
The cards with the highest balances are:
American Express $22K – $450 per month – 3 payments behind
Barclays $12K – $300 per month – 3 payments behind
Navy Federal Visa $26K – $500 per month – 2 payments behind
Navy Federal LOC $16K – $300 per month – 2 payments behind
Lending Club $25K – $705 per month – 2 months behind
Those payments alone are $2,220 per month and that I can’t afford that. If I cut back to the bare bones I could possibly squeak out $1K per month and that is obviously not enough. I know that I can’t let this linger on and am just looking for another solution besides a bankruptcy. I just don’t want to be caught up with the court system for 5 years. I would gladly do it for 5 years or even longer without the courts involved. My credit has already tanked from over 800 to less than 600 so at this point I really don’t care about that.
I would like to make good by trying to settle these out of court, but I don’t know if this is realistic with the total amount of debt that I have.
Do you think that debt settlement is an option for me?
My first impression is that settling will not be a good fit if it is going to take you 5 years. That opinion could change depending on the state you live in, how willing you are to weather aggressive collections, and how debt collectors will view your ability to pay along the way.
I would recommend connecting on the phone in order to go over some of the minutia that would help me better assess the pace you will be able to keep when negotiating your accounts one by one. You can reach me at 800-939-8357, ext 2. I am on the phone a lot so leave a message if you do not get me live and I will return the call. If you are subscribed to the comments, you can email me at the same address you get those comments from and we can schedule a time to talk.
20k Citicard, 8k Chase x2, 3.5k Capital One, 725 Discover
All of these are currently up-to-date, but I am about to miss my first payment in a few days..
If you are saving up about 800 a month while payments are not being made (using the math you provided about settling for 50% over 24 months), I would prioritize your accounts in the following way if they were mine:
Pay Discover card off fully right now. The math does not support settling when small balance accounts often do not settle for maximum savings, and that small balance is going to grow with penalty fees. Yes, you do give up about 700 you could use to fund one of the settlements you will make in a few months, and perhaps I get hung up on how often people change their minds about future credit goals, but it is what I would do.
Citibank is not going to settle that credit card of 20k for 4k, which is what you would have saving 800 a month for the next 5, and in order to settle with them pre charge off. They may go for 7-ish k, and you can often split that in to payments over 93 days. I would want to settle this one first for litigation or debt sale (to past horribly unbending debt buyers Citi has sold many debts to) type of considerations. And because Chase can be a softer target in second stage debt collection based on current trends (later readers of this comment should not assume same for their own situations).
So… what are the chances you can raise 7 to 8 thousand dollars over the course of 8 or 9 months (understanding that you need to be confident you will be able to complete all payments of the settlement)?
Chase settlement targets are generally between 30 and 40 percent. I do see some go lower with debt collection agencies Chase will first place your accounts with (even pre charge off). Just this morning a reader shared Chase settlement offers well below the norm. You will have opportunities to settle Chase accounts with collection agencies in that first 12 months, and often with monthly payment terms along with favorable savings. If Chase debts are sold off, your settlement options and target amounts are not going to change much, and because the balances are lower, will have a smaller dollar impact than if your Citi credit card were to settle at a much higher amount if it were to pass on to a debt purchaser.
Those are my targets and reasons for ordering of settlement priority. You could share something in response to my feedback, or even unrelated to it; you could post an update comment along the way about a mailed offer that beats expectations a few months from now; or something else entirely, and that could change priority and feedback. Nothing wrong with that. Settling credit card debts provides flexibilities, and the ability to adjust to changing realities, which is missing from other debt relief alternatives.
perfect! I was planning to pay off the Discover first, but wasn’t sure if it was the best idea.
I think I can get there, or close to there within 8-9 months for Citibank (I’m just saving the amount I normally pay for all of my minimums, which has been getting me nowhere); will that be too long though? How will I know if they’re about to charge off the account?
And the Capital One I can/should deal with last? A friend just negotiated about 40% with them after more than a year of missing payments, and she said it wasn’t very difficult at all.
I will certainly keep you updated as things progress. Thank you so much for your help!
If you negotiate the credit card with Citi bank between 150 and 180 days late, and you get the deal spread out over three payments, the time frame from first missed payment on the card, to when you paid the settlement off fully, is between 8 and 9 months. Sounds like you will swing it.
Capital One may jump ahead of both Chase cards, or in between them, depending on who they place the account with for collections. But post an update on that as you go.
None of your settlements should prove difficult. Your friend is right. There is nothing complicated to it when you have realistic expectations and resources to work with.
Got it! Thanks! I will update in some months….
Hi Michael,
Thank you so much for your amazing website! I am wondering about the order in which you try to negotiate your debts; I currently have five credit card debts. One of them is low enough that I can pay it off all at once. Another is about half of my entire debt, and the other three make up the other half. I am estimating about 24 months to save up for 50% of all of them, which I know is the longest timeframe you recommend. Is it better to pay off the big one first, or knock out the smaller ones before they charge off and risk not having the money for the last one for a while (the biggest one is with Citibank; the other three are with Chase and CapitalOne)?
And is it worth it for me to entirely pay the smallest one off if I can (Discover), or to wait and negotiate it down? I am not very concerned about my credit score as I do not want to buy a house or a car or have credit cards anymore.
Thank you so much!
It will help to know the approximate balances on each account (round to the nearest hundred or thousandth), and when the last payment on each account was made. I can then prioritize them according to how I would settle each card if I were working the file, or if the debt were mine.
I prioritize credit cards first by which offers the most savings the earliest, then work in some other factors, like Capital One being more likely to sue, Chase less so, etc.
I have a deliquent debt to MBNA credit card services. I know they turned it over to a collection law firm and they placed a lien so that I cannot refinance my home. Since the lien was placed MBNA, now apparently know as FIA card services has pulled the account from the law firm that placed the lien. I contacted thevlawyer who filed the lien to get information to try and settle the matter but the phone number she gave me for FIA is not a working number. When I looked the number up on the net there are multiple alerts that the number is from a fraudulent company trying to get a hold of people’s personal information and was not a legitimate call. How can I try to negotiate a settlement with MBNA if the debt has been given to a collection agency but I have had no correspondence on this matter since 2006. I want to resolve this matter but am at a loss as to how to fontact anyone.
Pat – MBNA was absorbed into Bank of America. FIA Card Services is part of the overall collection and recovery apparatus of BofA.
You are dealing with a judgment, so you may want to check review information about negotiating and settling when debts reach this level of collection. Check out: https://consumerrecoverynetwork.com/question/can-you-settle-credit-card-judgements-like-other-debts-stressed/. The comment portion on that article is long, and there is a great deal of useful info there too.
As far as locating the correct department to settle this with, I would start by contacting the main recovery number at 800-475-2025. After this long, and the fact that you are dealing with a legacy debt, you may have to explain the situation more than once to different people you are connected with.
Post additional questions or concerns as you make progress toward accomplishing your settlement goals.