What You Need to Know Before You Honor a Credit Card Debt Settlement
Have you been flooded with calls from credit card collectors? Are your finances so out of place that you can barely deal with them? Have you been getting debt settlement notices in the mail? If you've been receiving notices, that may be a good thing for you.
When creditors get tired of dealing with debtors that haven't paid, they use a credit card debt settlement so they can write if off their books.
Most of the time, the collector will agree to the settlement amount that you can pay.
Other requirements include paying the one amount that is settled upon and the payment should be made within a short time frame.
The reason the collector will take less of the amount that you owe is because they probably think that the debt will not be paid off.
Since it has been tagging along for a while (probably a few years), then they think it's fitting to just get rid of it, once and for all.
The collector would prefer to have some of the money than none at all.
The account has to be at least past due for at least 90 days or more.
If this is a new account that you are not making payments on, then the settlement process won't work.
Before you make the decision to honor a credit card settlement with your collector, there are some things that you need to know: Get a copy of your credit report.
Check to see if the debt is actually there.
If you don't see it, then don't make any arrangements with the creditor until you find out what's going on.
There is a possibility that the payment amount may not clear all of the credit card debt.
If there is any balance left, you may be contacted by another agency.
However, more than likely, that won't happen.
Creditors and collectors are not keen about holdovers from settlements.
Any credit card debt that is more than $600 is considered to be income and will be reported to the IRS.
You will also have to pay taxes on that amount.
When you do satisfy the debt, it will be shown as it was settled for a lesser amount.
This may go against you slightly, but at least you would have completed the payment.
It's always better to touch base with the originator of your credit card debt.
Send a letter letting them know of your intentions.
If you don't get anywhere with them, then write a letter to the collection agency.
If you can't pay the debt all at once, inquire about a payment plan.
Most collectors are willing to do that if that's the only way they will get the money that you owe.
Of if you go ahead and settle the credit card debt, then make sure all of the details are in writing.
This can help with any disputes that may pop up.
After you have paid the negotiated amount, ask the collection agency to send you written correspondence saying that you have satisfied the debt per the negotiated agreement.
Without anything in writing, you will be beating a dead horse.
After you have completed paying off the credit card debt settlement, let this be a lesson learned for you not to get in over your head financially anymore.
When creditors get tired of dealing with debtors that haven't paid, they use a credit card debt settlement so they can write if off their books.
Most of the time, the collector will agree to the settlement amount that you can pay.
Other requirements include paying the one amount that is settled upon and the payment should be made within a short time frame.
The reason the collector will take less of the amount that you owe is because they probably think that the debt will not be paid off.
Since it has been tagging along for a while (probably a few years), then they think it's fitting to just get rid of it, once and for all.
The collector would prefer to have some of the money than none at all.
The account has to be at least past due for at least 90 days or more.
If this is a new account that you are not making payments on, then the settlement process won't work.
Before you make the decision to honor a credit card settlement with your collector, there are some things that you need to know: Get a copy of your credit report.
Check to see if the debt is actually there.
If you don't see it, then don't make any arrangements with the creditor until you find out what's going on.
There is a possibility that the payment amount may not clear all of the credit card debt.
If there is any balance left, you may be contacted by another agency.
However, more than likely, that won't happen.
Creditors and collectors are not keen about holdovers from settlements.
Any credit card debt that is more than $600 is considered to be income and will be reported to the IRS.
You will also have to pay taxes on that amount.
When you do satisfy the debt, it will be shown as it was settled for a lesser amount.
This may go against you slightly, but at least you would have completed the payment.
It's always better to touch base with the originator of your credit card debt.
Send a letter letting them know of your intentions.
If you don't get anywhere with them, then write a letter to the collection agency.
If you can't pay the debt all at once, inquire about a payment plan.
Most collectors are willing to do that if that's the only way they will get the money that you owe.
Of if you go ahead and settle the credit card debt, then make sure all of the details are in writing.
This can help with any disputes that may pop up.
After you have paid the negotiated amount, ask the collection agency to send you written correspondence saying that you have satisfied the debt per the negotiated agreement.
Without anything in writing, you will be beating a dead horse.
After you have completed paying off the credit card debt settlement, let this be a lesson learned for you not to get in over your head financially anymore.
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