More Credit Card Lenders Offering Settlements
July 15, 2009 · Print This Article
If you’re like many other Americans right now, you may be facing a dilemma with your overdue credit card payments. Consider this. When the credit card company contacts you trying to collect on the balance, you could see if they’re willing to settle the debt for lesser amount—an amount that you might be able to pay back!
Even though these settlement options have been there, many cardholders haven’t taken advantage of them. That has begun to change. As first noted in the New York Times, a growing number of consumers are looking to settle up with credit card issuers rather than defaulting on their credit card debt. What’s amazing is that the lenders themselves are often the first to offer settlement plans on the spot.
This isn’t to say that every cardholder will qualify for settlement options, but a vast majority have a better than average chance. This comes down to leniency on the part of card issuers.
These lenders understand clearly that more consumers are falling behind on payments as the national unemployment rate continues to rise. Even the figures help paint the picture in starker hues. Credit card defaults soared to record-breaking 10% in May. This meant that 10% of the outstanding balances were deemed uncollectable.
This move on the part of lenders comes in the wake of the intense legal and ethic scrutiny that has been leveled at the debt settlement industry. Regulators have accused different companies of charging exorbitant fees while failing to carry out the promises they made to client, and ultimately leaving the consumers if worse financial shape than when they came for help.
Still, cardholders will have to deal with some consequences for approaching lenders for debt settlement. Obviously, your credit score will drop. Also, any debt that has been forgiven will be considered income; thus, it is taxable. If you are interested in credit card debt settlement, then the first step is approaching your lender. Who exactly qualifies for this aid is up to the discretion of the card company.
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Updated – Credit Card Debt Reduction – Why Are Lenders Cooperating to Offer Debt Reli…:
Send them this
Today's Date
Your Name
Your Address
Collector's Name
Collector's Address
RE: [insert account number or name of account or name of debt]:
Dear [insert collector's name or company name],
This letter is in response to your [letter dated xx-xx-2008] (copy enclosed) or [phone call on xx-xx-2008], concerning the collection of the above referenced [account or date].
I do not believe I owe what you say I owe therefore I dispute this debt. I am well aware of my rights under the Fair Debt Collection Practices Act (FDCPA) and my state laws so I hope to save both of us a great deal of time by letting you know that not only do I dispute the validity of this debt, I have also checked with my State Attorney General and verified that the Statute of Limitations for enforcing this type of debt through the courts in (insert your state or the state in which the contract was signed) has expired. Therefore, should you decide to pursue this matter in court I intend to inform the court of my dispute of this debt and that the "statute of limitations" has expired.
This letter is your formal notification that I consider this matter closed and demand that you, or anyone affiliated with your company, stop contacting me regarding this or any other matter except to advise me that your debt collection efforts are being terminated or that you or the creditor are taking specific actions allowed by the FDCPA or my state laws.
Be advised that I consider any contact not in accordance with the Fair Debt Collection Practices Act a serious violation of the law and will immediately report any violations to my State Attorney General, to the Federal Trade Commission and, if necessary, take whatever legal action is necessary to protect myself. Be advised that I tape record all phone calls and violations of the FDCPA can result in you or your company being personally fined up to $1,000 per incident.
Updated – Credit Card Debt Reduction – Why Are Lenders Cooperating to Offer Debt Reli…:
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It can be bad, If you are looking to buy a house, The lender could see all those cards as liability. At any time you could potently go out an max those cards out. Really what is the point of having that many cards. Two cards is plenty, pay themoff at the end of the month.
Just consodilate your bills through companies like CCC Credit Counseling. They'll give you 1 payment to them, and then dispurse it. And the cool trick is the CC companies won't accept you till you skip a few months. Your credit will fall downhill till its paid off, but stop stressing…people are out there to help!
My question is simple: how come people don’t get to buy their own bad debt for pennies on the dollar? Spread the question!
Yeah I agree that if you’re defaulting on purpose so that you can re negotiate with the CAs or your creditor, you must have the financial discipline. You cannot afford to be expensive, buying all the stuff that you wish to. This is the time that you need to be frugal and save up as much money as you can to pay off your debt when the CA or creditor agrees on the negotiated amount. If you don’t have the money, you don’t have the ground on which you will negotiate with the CA or the creditor.
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settlement always settlement
There is debt settlement programs which have become very popular now and there are so many debtors who have tried this option and have successfully got ridden of their debts. This method involves negotiations between the lender and the borrower, the borrower tries to convince his lenders to lower down the amount of arrears so that he can easily pay them back. Mostly lenders are accepting this deal because they are afraid that if they did not do so they will also end up being bankrupt. But it is
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If you have the option to settle for much less and are happy with the amount then settle. Get the amount in writing as well as an agreement to report it as paid as agreed for your credit report. if they tell you they cant do that they are lying they are the ones that report it as bad they are the ones who can change it. as for having to claim the wrote off amount on your taxes your right. Just figure on $100 per $500 worth that you are having to claim another words if you have to claim $2500 figure on paying $500 for the tax end of it. GOOD LUCK
First, do NOT cancel the card. It will appear on your credit report that you've merely paid the balance in full and as long as you don't close the card, it won't hurt you one bit.
If you can do so, your best bet is to transfer the balance to a card you already have, rather than take the bait on a new card. Every time you apply for new credit, you are increasing your potential indebtedness by the limit on the card, and that will move your credit score downward. Oddly enough, when you cancel a credit card, it can also move your credit score down a little, because it’s often interpreted as a move to prepare for borrowing more. Therefore, it might be better for you to just move the balance – or better yet, pay off the card if you can – then just cut up the card or stash it someplace safe.
Maximizing Your Credit Cards Limit
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The Credit Card Debt Settlement Act of 2010 will force the debt relief companies to live up to their promises and negotiate successful settlement deals. The days of collecting large upfront fees with no performance guarantee are over. The risk has been taken away from the consumer and placed on the debt settlement companies.
The Debt Settlement Option – Now the Most Logical Choice For Consumers in Debt