I have credit card debt with 2 companies. I want to try to settle the debt for about 2/3rds of the total with each one. Anyone know hwow I can do this without using a credit professional?
How can you settle a credit card debt without using a "credit counselor"?
Hi mawmaw mary!
Looking at the other answers so far, I see some good info mixed with some incomplete info and also some inaccurate info.... So here's a quick step by step guide for you to accomplish your goal:
Settling for 2/3rds is a reasonable goal.
First let's clear up a few things, then I have three "keys" for you to follow...
Overall, "doing yourself", consumers average settlements of about 75%. Professionals average less than 50%, and usually charge about 15% in fees, putting the total cost to use a professional at about 65% or less on average.
Creditors do give professionals "special treatment" because they deal with each other every day. Large professional negotiators are the bread and butter for most collector these days. Also, when a professional representing many clients comes to the table with $ Millions of dollars, this creates serious leverage and creditors are willing to settle for substantially less than any individual would ever be able to achieve on their own.
Still, I've helped many folks who have a knack for negotiating, documenting and following up (the three critical skills you'll need to do this) to get settlements as low as 45-60%. Here's the keys to accomplish this yourself:
KEY # 1) Your accounts must be delinquent.
Creditors will not settle for anything less than the full balance until your accounts are seriously past due, usually 180 days + after "charging off". This is because when creditors "charge off" an account (an accounting entry), they are taking a tax benefit on the account by writing it off as a loss. This devalues the account, and it is no longer worth the full balance owed. In fact, the normal course of business is to sell the "bad debt" to a third party debt collector.
FACT: In 2006, "bad debt" was sold to collectors for an average of $0.034 cents on the dollar. That's 3.4%! Keep this in mind. This is exactly WHY debt settlement works so well, because it's a better deal to the creditor or collector than any other option, such as a lawsuit, collections or bankruptcy.
KEY # 2) Documentation BEATS Conversation, every time.
DO NOT make any payments by phone. Collectors will almost always ask for a check by phone. Say this:
"Unfortunately I’m unable to make a payment at this time; and am hoping to bring resolution to this matter as soon as possible. I understand you want me to make a payment right now, but that just isn’t possible. I will have $_________ (state an amount that's roughly 35-50% of your balance, not a percentage) soon and want to settle one of my two accounts, whoever will give me the best deal. Can you please send me an offer in writing?'
Track everything (documentation)... who you speak to, their name, phone number and extension, date and time. Keep everything organized in a folder, easily accessible.
HINT: You can do this initially or in response to a settlement offer that's too high... Write a "Hardship Letter". Hand write or type up a letter describing your situation, your inability to pay and include information such as, divorce, medical issues, loss of job, disability or reduced income. Any information regarding your personal hardship will help your negotiation, so don't hold back. Send this letter along with a request to settle the account for $_______ (again, a random amount roughly equal to 35-50% of your current balance).
NOTE: Certain creditors such as CitiBank, Chase if you live in FL, NY or OH and Target will not settle for such small amounts. You should accept 60% to 75% in these situation and consider it good. All three are more likely to pursue legal action as well.
KEY # 3) Use certified mail with return receipt.
Once you get an acceptable settlement offer in writing, send a check, but first... Write your account number for the account you are settling on the check and in the memo write "FOR PAYMENT IN FULL". Send the check along with a COPY of the settlement offer certified mail with return receipt.
BULLSEYE LETTER? In over seven years full time in this debt and credit business, I've never heard of a bullseye letter. I'm an optimist, but it's unrealistic to think you can settle your debt for about half of what you owe and at the same time have the creditor send you a letter to have the account removed from your credit report. However, once the account is paid to a zero balance, then you can do the normal process of credit repair and quite possibly have the account removed through disputing it and requesting verification.
FYI: "credit counselors" do not settle debt. They usually are able to reduce interest rates but collect the full balance through a debt management plan where you pay them one single payment each month while they turn around and pay your creditors for you (hopefully), in full.
** If you ever consider professional debt settlement, be sure to READ THIS WARNING FIRST: http://ezinearticles.com/?Debt-Settlemen...
Reply:If you have cash and are ready to settle, contact the credit card company directly. Make sure to sift through the maze and talk to someone who can make a decision, or send an offer by certified mail with a return receipt. Start out with an offer of 40%. When they counter at 60%, accept under the condition they give you a "BULLSEYE" letter. It probably won't work, but if you can get that letter, you present it to the three major credit rating agencies and they remove the negative credit ratings for that account!
You do not need to use a service %26amp; can handle this yourself, but they probably will not talk to you unless you are ready to settle (by paying) immediately.
Reply:Your credit card companies are not going to offer you settlements like 50%, for example, if you are current (not behind) on your payments. Basically, the only way you can get into a position to negotiate settlements is to deliberately let your accounts go into default.
If you are current on your accounts, this process will ruin your credit rating as your accounts will all go into default.
You don’t have to pay any firm to attempt settlements. You can try this own your own. Just remember, if you currently have good credit, this process will ruin your credit and there’s no guarantee that your creditors will accept settlements. If you are currently in default on your credit cards, you can make your own settlement offers. You don’t need to pay anyone to do this for you. Your credit card companies are under no obligation to accept any settlement from you or any outside firm that you you hire....so be careful. They have every right to refuse.
Get all terms about the settlement IN WRITING and get this BEFORE you pay them anything. NEVER accept verbal promises over the phone regarding any settlement....if you do, they might deny that any settlement was ever made once they get your money and continue collection activity.
Reply:contact each company and make them an offer, see what they say, they may decide that they can make more money by selling the debt on, sometimes Credit Counsellors have more clout , print out a Common Budget Statement from the internet, fill that in and include this with your offer, it may help.
Reply:What you can do on your own the credit professional can do as well. Banks do NOT cut special deals with credit professionals -- I am telling you from real experience.
Unless you are seriously delinquent no bank will negotiate with you! Sorry if this is not what you wanted to hear but it is the truth :)
Reply:
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Reply:yes you can call them they would rather settle then to not get any money from you at all
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