What is the best way to negotiate an offer to settle your credit card bills?
I am no longer working and have closed my credit cards with high balances (the most is 00). I will be getting a chunk of money next month and would like to settle these debts on my own without having to use one of those debt management companies. What is a fair offer to make on a debt that size? How do I go about doing this, and what about my credit score? Please help.
Posted February 10th, 2010 in Debt Settlement. Tagged: chunk, credit cards, credit score, debt management companies, debts, money.
If you are current on these accounts, they may not be willing to settle. Although some credit card companies are actually offering 50% settlements to folks who have never been late. It really depends on what credit card company.
You might have a better chance of getting a settlement if you have some permanent change of finances — like disability. With high balances of only $2K, the best you deal will only be about 20% or 30% off.
The account will be reported to the credit bureaus as charge off/settled — a negative. You will also get a 1099 for the forgiven portion which will have to be included in your income tax return.
Frankly, I don’t think the small savings from the settlement would be worth all the damage to your credit. Use that chunk to pay off the highest interest rates first. You would have been much better off if you had not already closed the accounts. You might have been able to get better interest rates for a short term.
February 10th, 2010 at 11:50 amIf you’re not in default then they won’t settle. They only start settling when you are at least 4 months behind.
February 10th, 2010 at 11:50 amYou can only settle with collection agencies, but then your credit is shot. Why would they settle? You spent the full amount and that’s what they are gonna want.
February 10th, 2010 at 11:50 amif you settle your score will tank ,yu maybe able to save 25%
February 10th, 2010 at 11:50 amAre you current or delinquent? If you’re current, then negotiating will be not yield as big results. If you’re delinquent, say 90 days, they’re already getting ready to write off the debt. When they sell your debt, the best they can hope for is 5% on the dollar. You have much more leverage in that situation. They might even let you off for paying 20% instead of selling your debt to a collection agency for 5%. Oh..and any settlement will show up on your credit report, thereby causing you to take a hit. But with time, the effect of the negative impact wears off. Good luck.
February 10th, 2010 at 11:50 am