Can I Get a Credit Card Company to Settle for Less to Pay Off?
A credit card company will sometimes allow you to pay off your credit card account for less than the full balance, according to the website MSN Money. The process is called debt settlement, and usually requires a negotiation between you and the credit card company. MSN Money says you can expect to settle for about half the balance owed. However, the Federal Trade Commission says credit card companies aren't obligated to offer settlement agreements.
Other People Are Reading
-
Time Frame
-
Credit Card companies will offer to settle only delinquent accounts. After all, there's no incentive for the card company to settle an account that is being paid as agreed. MSN Money says settlement generally becomes possible after your account becomes past-due by a little less than six months.
Considerations
-
Settling your credit card account will have a negative impact on your credit. Your credit score is likely to drop as you continue missing payments before the settlement. Also, the Black Enterprise website says that after the settlement, your credit report will be updated to show that your account was "settled for less than the full balance." That's considered a negative entry and could affect your ability to get new credit.
-
Warning
-
A failed attempt at debt settlement could lead to increased collection efforts if you aren't able to negotiate some other plan for getting your account back on track. MSN Money says card companies generally close an account once it falls six months behind. From that point, it could be assigned to an internal or external debt collector with legal action possible if you refuse to pay. However, MSN Money says that if you are sued you still may be able to settle before going to court.
Expert Insight
-
The Federal Trade Commission says you should contact your credit card company for a settlement if you are falling far behind on your credit card payments. The FTC says that if you are turned down for a settlement you should continue to call back and remain persistent.
Documentation
-
Black Enterprise magazine says you should get the terms of your settlement agreement in writing. All the details of the agreement should be included in the letter, such as the amount that you have agreed to pay to settle the account in full.
-
