Read the settlement offer carefully or have an attorney review the offer to be sure it’s legally binding – that the creditor or collector can’t come after you for the remaining balance at some point in the future. Your creditor may be willing to accept a lower settlement than the one offered in the letter.
What if a collection agency offers a settlement?
If your creditor accepts the offer, you’ll make the payment from the amount you have saved, and you’ll pay the debt collection settlement agency a fee, usually 25% of the amount saved. You’ll also have to pay tax on any debt that is forgiven.
“If you’re happy with their offer, and you should be because it’s less than what you actually owe them, then you should at least consider it,” he says. The alternative, according to Ulzheimer, is the creditor either outsourcing the debt to a collector or even suing you.
Do you have to pay to settle credit card debt?
1. Anyone can get their card balance cut in half for any reason. 2. I have to pay someone to help settle my card debt. 3. I have to pay upfront for settlement and the settlement company controls my money. 4. Debt settlement won’t hurt my credit score. 5. Using a debt settlement company won’t cost much.
Can a credit card settlement company collect advance fees?
The truth: Not anymore. Debt settlement companies that market their services are banned from collecting advance fees from consumers before settling or reducing a consumer’s credit card or other unsecured debt, according to a Federal Trade Commission rule that took effect in October 2010.
What should I do if my credit card company sued me?
Be sure you and your credit card company sign the agreement. At this point, the account administrator will be responsible for transferring funds from your account to pay your creditor. Speak with a tax professional if the debt amount covered by the settlement is more than $600.
Can you negotiate a debt settlement on your own?
Some people work with debt settlement companies to help them negotiate a settlement with credit card companies, but it’s also something you can do on your own. Debt settlement is not without its risks, however.
