Settling credit debt 4 less than owed?

Question

I get solicitations from companies offering to legally reduce my credit card debt and get the credit card companies to accept a lesser amount as payoff. Supposed to be entirely legal. What are the criteria for doing this? Do you have to be behind in payments? Do they want all cash? And finally....how does it affect the credit score?

Frank Kriticos · Answer

A jeopardy question that I bet you guys  will know!

If somebody stops paying their $5k Citi credit card, how much $ does Citi lose? :)

Scott Williams · Answer

You can request a pay for delete, just depends on the creditor and your luck wether they will agree.

One thing for sure if they do agree make sure you get it in writing before you pay.

Richard Rabineau · Answer

If asked will it be removed after payment is made?

William George · Answer

Typically, the best deal that you can expect to get from a creditor or a collection agency is a fifty-percent settlement; i.e., you pay 50 cents on the dollar.

george

Kathryn K. · Answer

David,

I'll post a link if I ever get it done. Its kind of turning into an 800 pound octopus...I was writing about a process called "debt stacking" which I am using to pay off my cards, but there's all these other options out there and I am trying to check it all out. Eliminate debt, debt consolidation, credit counseling...you name it. And everyone has a different situation so the method or solution for one person may not be the right thing for another.

Will Barnard · Answer

I have read and re-read this thread (hey I'm a poet and didn't know it) and I believe there has been some confusion here.
Looks to me like it was Ali M who posted very incorrect information and the post seems to be an attempt to obtain a credit repair client. Taz's response to Ali's post was correct and backed up by the at&t actual contract.
I think Alina mixed up Taz with Ali.

Taz, the post that Ali mentioned about not understanding your email was not actually an email. I believe she was referring to the thread post but called it an email. Either way, her confusion is not with you, but with the incorrect info she has posted.

All that said, I think it is important to seek the proper legal advice, as suggested by Alina (great advice) when confronted with this type of senario. Getting some opinions from others on a legal matter may not be the best approach.
Just my $.02

Account Closed · Answer

Ali M wrote:  If I have a delinquent cell phone bill with at &t and I do not pay it and they send it to collection well, they have violated our contract. I have a contract with at &t , not an outside party.
            
            Taz is correct.  Let's go find an AT&T agreement for service, shall we?  Here's the link.
            
            http://tinyurl.com/6d2l6s
            
            Here's the pertinent portion:
            
            MISCELLANEOUS
            This Agreement, the signature or rate summary sheet, the terms included in the rate brochure(s) describing your plan and services, terms of service for products and services not otherwise described herein that are posted on applicable AT&T websites, and any documents expressly referred to herein or therein, make up the complete agreement between you and AT&T and supersede any and all prior agreements and understandings relating to the subject matter of this Agreement. If any provision of this Agreement is found to be unenforceable by a court or agency of competent jurisdiction, the remaining provisions will remain in full force and effect. The foregoing does not apply to the prohibition against class or representative actions that is part of the arbitration clause; if that prohibition is found to be unenforceable, the arbitration clause (but only the arbitration clause) shall be null and void. AT&T may assign this Agreement, but you may not assign this Agreement without our prior written consent. The law of the state of your billing address shall govern this Agreement except to the extent that such law is preempted by or inconsistent with applicable federal law. 
            
            Ali M wrote:  Don't ever take legal advice from someone on a blog who is offering advice out of the scope of their profession, not only is it a bad idea but it's also illegal.
            
            Credible citation, please.  :-)

Dave P. · Answer

That's good to hear K Gold.

Please post a link when the article is finished, I am very interested in reading your article.

Good luck.

Kathryn K. · Answer

Okay here's something new I came across. A company that uses contract law to get your credit debt reduced. Basically, along with the latest minimum payment sent intentionally late, they send a "new contract" to your credit card company with new terms, including a statement that they are assuming the debt. The new contract terms are  minimum payments of  10 bucks with zero interest and no late penalty fees, they must continue positive credit reporting on the previous client, (since they are now assuming the debt), and state that their (the credit card company's) cashing of the latest minimum payment is an indication of agreement with the new terms, including stiff penalties for violating the new terms. The credit card company invariably cashes the check, then issues a new statement that includes a late payment penalty,  thereby getting them  a penalty and reducing the outstanding balance.  It goes on like this until the balance disappears in penalties, and the credit card company settles for the terms under contract law or the company who assumed the debt takes them to court and sues for the outstanding debt they accrued in penalties. Anyone heard of this?

Dave P. · Answer

Well K Gold, doing what is "right" is an interesting dilema these days.

Only if you don't have a moral compass.

Don't be a victim.

I've never had a dilemma figuring out what the right thing to do was. As a good rule of thumb, paying off all debts in full as agreed is a really good place to start.