Consumers Ask Three Questions about Credit Card Debt Settlement
Do I have a legal right to settle my credit card debt?
While credit card debt settlement firms may assert otherwise, settling a credit card debt does not involve a legal secret.
A credit card account is a contract between two parties. That contract can be changed if there is agreement between the consumer and the credit card bank. In this context, the most important part of LEGAL is for the consumer to get the negotiated debt reduction and its terms in writing, according to the Credit Card Debt Survival Guide.
Can I settle my credit card debt while my payments are still current?
Credit card companies will only settle with those consumers who have missed monthly payments. If the banks negotiated debts with current account holders, most consumers would want to settle for less than the full amount.
To settle a credit card debt for less than full value with the bank, a consumer will have to risk not making monthly credit card payments, then save those payments for a lump sum settlement. The risk comes from being in arrears and having the bank not agree to the lump sum amount.
What percentage of the balance will a credit card company settle for?
On Internet consumer forums you can read of individuals negotiating credit card debt down to 20 to 70 percent of the current balance. Credit card banks prefer dealing directly with consumers rather than going through debt settlement companies, according to Charles Phelan, a debt settlement trainer. He also says consumers who negotiate on their own get the best settlements.
According to the Credit Card Debt Survival Guide, banks are most likely to settle for the lowest amount right before they write the account off as a loss. Six months after payments on an account stopped is generally when that happens. At this time it is common for a bank to approach the consumer with a settlement offer. Before this period, when a consumer in arrears approaches the bank with a settlement offer, the bank wants to see evidence of need such as low income, job loss, family death, illness, etc.
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