Posted on May 21, 2009 at 7:07 am I have heard conflicting reports that some creditors will settle debts and others will not? Does anyone have any insight?

Posted on May 21, 2009 at 7:13 am So I have also heard that it depends on the creditor you are working with and how far past due your account is with that particular creditor. For example, if you are current on your credit card payments, they have no incentive to reduce the principle amount of debt that you owe because they are raking in the interest every month each time they receive a payment from you. So, from what I have heard, the accounts have to be several payments past due in order for a creditor to negotiate and settle the account. I have also heard that it is easier to settle with third party debt collectors because in these cases the debt is older and they have more incentive to try and get something rather than nothing at that point. Furthermore, it is my understanding that the majority of these third party collectors get a percentage of whatever they collect for profit, so it makes sense that would agree to a settlement as opposed to nothing at all. Does anyone know if this is fairly accurate? Also, who know what creditors will settle and which ones do not?

Posted on May 21, 2009 at 7:36 am I have heard that Discover can be very difficult to negotiate settlements with? Is that true? BigEd- you are correct, your credit card accounts must be delinquent for the creditor or third party collector to have a reason to work out a settlement. But the answer is pretty straight forward- the majority of credit card lenders and collectors will negotiate settlements. The main question is at what time and for how exactly how much as settlement percentages do vary depending on who is collecting on the debt.

Posted on May 21, 2009 at 7:46 am Big Ed pretty much hit the nail on the head.  I work for a debt settlement company basically negotiating with collectors and credit card companies all day.  To answer the above questions, pretty much every credit card company will settle with you - the thing that varies is how much they will settle for and when they'll accept the lowest possible offers.  I've never seen a creditor refuse to settle if an account is a) longer than four or five months past due or more and b) not being handled by a debt settlement company - some credit card companies such as Discover refuse to work with third-parties.   

Posted on May 21, 2009 at 2:17 pm Outside of Discover, is anyone aware of any other creditors who will not work with debt settlement companies? I am currently speaking with a few debt settlement companies and according to them if the creditor refuses to work with them they will will wait until the account goes into collections to try and settle it with a third party collector. Is this smart for them to do that? What about my credit score- won't it be worse if they wait until it goes to collections?

Posted on June 16, 2009 at 9:34 am Mayhew- yes, there are some creditors who will not work with third parties directly. Discover, as previously mentioned is one of those creditors. I also understand that Advanta (they issue credit cards for small businesses typically) will not work with third parties directly either. I also understand that contrary to popular belief Capital One will work with third parties but it is very difficult to communicate with their settlement department. From my time in the industry it is very hard to reach someone in person there- I usually had to leave message after message and never got a call back. Also, Capital One never really settles for less than 50% if they are still handling the account for collection. In terms of your credit- yes, if the account went to collections it is going to have a negative effect. Your payment history is impacted by past due accounts, so the longer the account is delinquent the worse it is for your credit score. Also, debts that are turned over to third parties for collection have usually charged off, which is a negative mark to have on your credit report. For most however, the short term ding to the credit score is worth it to settle the debt, save a lot of money and become debt free in a short period of time. Ultimately, you have to ask yourself if your credit score is more important than becoming debt free. Furthermore, most accounts regardless of original creditor settle for much less once they are in collections and even less of an asset to the books of those original creditors. And finally, keep in mind that most individuals looking to settle their debts do so in order to avoid filing bankruptcy- which is much worse to have on yyour credit report than a settlement.

Posted on July 14, 2009 at 6:46 pm I was wondering what the process is for the third party collection agency is if they are going to take you to court.  How long is it once it goes to them?  Will they send you a letter first saying that the next is we are going to court or do you just suddenly get a summons? 

Posted on July 31, 2009 at 11:45 am Hi worried- typically, if a creditor is going to pursue legal action to collect the debt, they will forward your account to an attorney's office who is licensed in your state. That office will send you a letter and call you to try and resolve the debt first (settlement or payment plan). If you actively work with them to resolve the debt, you should be able to avoid a lawsuit. Keep in mind that some creditors have in-house attorneys (I.e. Chase in IL, MI, NY and FL), which means that getting a summons out of nowhere is more likely because they will  send it to their attorneys after it is only a few months past due. However, they would also try and contact you first to resolve the debt, so that shouldn't happen as long as you work with them You could also fill out a form on DestroyDebt.Com for a free consultation to find out what your options may be for a resolution.

Posted on August 3, 2009 at 1:23 am Who is familiar with GE Money Bank? They were my creditor and were wiling to settle my debt with them. It was almost 6 months due and was able to get a 25% settlement.

Posted on August 3, 2009 at 2:43 am There are a number of creditors--credit card banks especially who offer settlements to their clients. The percentages that are offered depend on a number of factors, such as the delinquency status of the card, how old the card has been open, the payment history of the debtor, etc. Sometimes limited time offers are given to these customers and the settlement amount should be within a specific period of time.