Joe Debt Settlement

We have several credit cards, a couple with over five (5) figure balances. We are not behind on any of the payments but would like to settle the balances and get out from under the “mountain of debt.”

How can we do this by ourselves without hiring a company? Where do we start? Is there a specific department at the credit card companies that handle these negotiations?

Joe

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Hello Joe,

Debt settlement typically involves a delicate balance of delinquent payments, saving up a war chest of settlement funds, and trying not to be sued in the process.  It sounds like you are aware of the ‘war chest’ criterion for settlement, but maybe not the other two – namely, delinquency and litigation.

One caveat to the above is if there is a true hardship along the lines of death or disability, then it is possible to settle credit card debt while current; however, for the most part, the account would have to be in default to reach the settlement stage and then (unlike a short sale where real estate is being sold for settlement) the question must be asked: why would the credit card company accept a reduction from a guarantor who apparently has funds to settle?  And this question is asked in light of the fact that intuitively the obligor is not broke and bringing a lawsuit to be awarded a judgment for collection remains the alternative.

Settlement is for those who are insolvent, or expert negotiators, or both.  Where do you start?  Start by asking and answering the question of: if you were the credit card company, would you accept a settlement from yourself.

Thanks for the questions and hope this helps.

Paul