i need an explanation of what pennies on the dollar is?

Question

i want to negotiate a price with my creditors and heard that i can pay them pennies on the dollar for the amount owed ?? how do i do this ?

Answer 1

"Pennies on the dollar", is sort of a "slang" term for percentage.

For instance, if someone says, 50 cents on the dollar, that means for every one dollar of the original price/value, they would be receiving 50 cents.

An easy way to do it is for every 1 penny on the dollar, multiply the total amount, in your case the debt load, by 1%.

Example

You owe 100,000 dollars. IF you "negotiated" it down to 2 pennies on the dollar it would be 100,000*.02= 2,000.

Answer 2

Any business that is owed a debt has to decide if they will be paid. When it looks like the borrower will not pay in full and on time then the lender will start to consider their options. Ways to cut their losses.

Some (all?) lenders will consider selling the debt to someone else for less than what is owed. As the debt becomes older and the possibility of collection is reduced then the value of the debt goes down. Some credit card debt is sold for 7 cents to 14 cents after repeated attempts to collect from the borrower has failed.

Note that any borrower who has not paid will be looking at significant negative marks on their credit. There is a cost to not paying.

When negotiating with a lender (sometimes through a collection agent) assume that they value early payment. They would rather have something now than more later. If the original lender sold the debt the buyer did not pay the full face amount. If they get less than what is owed it might still be more than they paid so they are open to offers.

Answer 3

Pennies on the dollar means that each penny represents 1% of $1.00. Example - If a creditor says he will take 50 cents/pennies on each dollar owed him, that means he will settle for 50% of the debt, to get at least part of what is owed him, and you don't have to pay anymore. But be sure you really want to do that though, because it could damage your credit for several years. Best to contact a credit counselor and let them do the negotiating for you.