How much % do credit card companies settle for?

[kpapt]

Could somebody give me an idea what percentage of the debt do credit card companies normally settle for in case I want to avoid filing bankruptcy?

If I have say $15,000 debt on a particular credit card, what is the lowest they would come down to for a settlement?

Thank you.

[HHM]

There are way to many factors to consider in the settlement realm to even give you a ballpark %. But first, let's make clear what we are talking about, Debt Settlement is a program whereby you pay a lump-sum cash payment at some reduced amount to have your debt considered paid in full. Debt settlement is not a payment plan.

How old is the debt, how long have you been in default (and yes, before they will even consider settling, you have to default), is the debt with a collection agency, has the debt been charged off, is the debt in the hands of a debt purchaser? How much of the balance is due to interest, how much is "actual" principal?

The general rule, if you are not default (i.e. meaning you are current on payments) there will NOT be a settlement. They may have a program that reduces the payments (liquidate the balance into an installment loan), but they will not reduce the balance owed.

Also, Debt Settlement is not an ALTERNATIVE to BK, Debt settlement is for those that CANNOT file BK for whatever reason or who do not qualify for Bk. The main reason being, if you have the cash on hand to settle, then you have cash on hand to manage the minimum payments, so you're not really bankrupt.

Finally, there are the tax consequences, you will get a 1099 on the amount of the forgiven debt (however, if you can satisfy the IRS conditions for being insolvent, you will not have to pay income tax on the forgiven debt).

[lostinmich]

I think all of that is handled on an individual basis. It really depends on how likely they are to get money out of you. Many times it's easier for them to write it off and claim it on taxes. Of course this doesn't do anything for you since the debt would likely be sold off to 3rd party collectors. Probably best to ask them and use that as a starting point for negotiations.

[toby]

Need help on making a lumpsum payment to Creditor

Hello, I am a junior college student. I have very little income, no asset. I consider myself as a judgement Proof at least for a while. I have been hold off 4 bankrupty because of employment reason. I have about $15000 credit debt totally. I own about $7000 to Chase credit card, $3000 to Bank of America, $1000 to Capital One, $1000 to Orchard Bank, and $1000 to Citibank. I have some extra cash on hand to make the lumpsum payment. But I don't know how much percentage that I should ask for. I have been defaulted on all of the credit card for about 4 months already. They have been try to contact me through the phone, but with no success.
In the letter of offering the lumpsum payment, should I include the fact that I am judgement proof right now. Do u think it would have to increase my chance to negotiate with the creditors. I would be grateful if anybody can give me some insight tips how to negotiate to make a lumpsum payment.
Thanks a lot

[robivi3]

I doubt they will settle for a "lump sum" offer and any claim you make about "judgement proof" they will chuckle at. if you have several thousand on hand why not make some payments and start working? 15 grand isn't alot in the grand scheme unless you did it for medical reasons. It looks big but it is payable even with a crappy job.
That assumes that you are living at home. Your situation may be different and BK may be the only option. You may have needed CC's to eat.

[jal1129]

When I was 4-5 months late on my cards they were all offering to settle with me. The closer you get to six months the lower the offer will go. Its possible at almost 6 months you could get 50-60%. At 6 months they will write off the debt and you will start dealing with outside collection agencys.

Personally, I would'nt bother sending a letter, it will just get lost in the shuffle. I would call them up and tell them you want to settle. When/if you reach an agreement tell them to send you the agreement in writing and then you will pay. But be ready to pay, once you reach an agreement they will most likely want thier money within a week or so. I would'nt mention the part about being judgement proof. If you do a google search on settling cc debt thier is lots of info out there.

Just a warning though settling cc is just as bad on your credit report as bk is.

[keepmine]

Just to throw some numbers out.
Chase offered to settle with me for 45% and Cap 1 offered 50% at about the 120 day mark {of default}. One thing to consider on a settlement is the possible tax consequences. They'll send a 1099C for the unsettled portion.
I went ahead and filed bk.

[HHM]

How did you accumulate the debt in the first place. Since, as you said, you have very little income...how will you pay any expenses that you do have. If you paid off/settled these credit cards, could you stop using them, if the answer is no, don't settle as that will not solve the underlying problem and therefore the cash you do have would be better spent elsewhere.

And I agree with the other poster's, don't bother sending a letter, it will get noted in your account and then thrown away, you want to talk to them directly. Given your current circumstances...50% or more is probably what you are looking, (more likely 60%), if you get an offer for below 50%, that would be a "gift".

Also, judgement proof is somewhat of a myth and most people don't understand what that means. Judgement proof does not mean the credit card company cannot get a judgement against you, it only means that at present, if they were to get a judgment against you, there are little assets available to satisfy the judgment...but that does not make the judgment worthless. Also, in your particular case, being young, you will not be judgment proof foreover, and there is effectively not statute of limitations on judgments, then can generally be renewed indefinetly.

[BKOnce]

10 cents to a dollar or 20c maybe !?

[spell]

50% is a general guideline for old/bad debt.

Your claim to being judgement proof won't work. Because you're not. They could easily slap a judgement against you, call you to court with a Citation to Discover Assets. They'd clean out your bank accounts and present you with the bill of what you still owed. As soon as you decide to hide it under your mattress, they'd show the judge your letter stating you have lump sum cash to make a settlement and you'd get a long cold stare and you'd have some 'splainin to do.

[kpapt]

They'd clean out your bank accounts and present you with the bill of what you still owed.

How would the creditors or trustee or judge know which bank accounts you have? Bank accounts (cheking/saving) are not listed on credit report are they? Then how will anybody know if you have bank accounts for example in other states? Just curious.

[lrprn]

How would the creditors or trustee or judge know which bank accounts you have? Bank accounts (cheking/saving) are not listed on credit report are they? Then how will anybody know if you have bank accounts for example in other states? Just curious.

When you file bankruptcy, all current accounts plus those closed recently must be listed on your Means Test forms. That's how the trustees and court know.

Deliberately leaving accounts off your forms is bankruptcy fraud. You don't want to go there.

[WantToBeDebtFre]

I made an attempt with MBNA to settle. I owe them 20k and went 4 months without paying. I told them it was my last attempt before filing bankruptcy. They said they don't make settlement offers. So it was pointless to even call my other credit cards.

[HHM]

I made an attempt with MBNA to settle. I owe them 20k and went 4 months without paying. I told them it was my last attempt before filing bankruptcy. They said they don't make settlement offers. So it was pointless to even call my other credit cards.

MBNA, depending on where you are located, are one of the tougher ones. Just because MBNA won't settle, doesn't mean other's wont. But keep in mind, it is RARE for the original creditor to settle...usually the debt needs to go to 3rd party collection before settlement becomes an option.

[ssdsco]

When I was 4-5 months late on my cards they were all offering to settle with me. The closer you get to six months the lower the offer will go.

Same with me. I'm getting unsolicited settlement offers.