Interesting offer from creditor....

[Sammy]

We just received a call from MBNA about our debt. For some reason, my wife answered the phone and spoke with them. They offered to reduce our debt by 75% with the remainder to be paid over "a spread of several months".

We have already retained a lawyer who is working on filing Ch7 for us, but has not yet filed.

a couple of thoughts:
(a) the 75% they will remove will likely still be written off and sold to a junk debt buyer for collection
(b) we would probably receive a 1099-C and have to pay taxes on the 75% they removed

We told them that we can't make their current minimums, we certainly couldn't make a series of $1,000-ish payments on a reduced principle.

I'm passing this info on to our atty, but I'd never encountered this offer before and thought I'd put it out here for the other members of the board to see in case they have / will receive similar offers.

[anonymuse]

I got something like that from Discover. Basically, it was a request to pay 25% in a lump payment and the rest of the debt would be forgiven.

They do write off the rest and they can't (shouldn't) sell to collections agencies.

Probably would receive teh 1099-C but you could still try to prove insolvency to avoid the taxes.

[monlyba]

i get letters offering deals like that all the time! i'm like you - i can't afford to pay them anything, even if they "forgive" most of it.