Will a company write off a credit card debt if you make them a settlement offer?

Question

If you owe a credit card company £4,000 and you write to them and offer them a settlement amount of £1568 and ask them to accept this as full and final payment of the amount outstanding and write off the remaining, is this usually accepted? Does anyone know anything about this and how it works? Anyone out there work for a bank who actions this kind of thing? Your help would be greatly appreciated. Thanks

Answer 1

I work for a debt recovery agency (for my sins). A lot of banks will accept a 75% offer (£3000 in your case) without too much hassle, especially if they have already outsourced the debt to a company like mine. The lowest offer I've ever seen accepted was 25% but this guy was a professional debtor, we had no contact for him, he owed over £200,000 and it was basically a case of take it or leave it because he just seemed to be able to disappear at will.

Wait to see what the bank threaten you with. If they say you're being transferred to a debt recovery company, then, ironically, they'll be more likely to take a settlement, because it's like they've almost given up already. If this happens send me an email, if it's my company I'll see what I can do.

Answer 2

Put yourself in there shoes - would you accept £1,568 on a debt of £4,000? There needs to be a very good reason why.

For example, do you have any assets or are you worth anything if you were made bankrupt? Is the £1,568 more than they will get in bankrtuptcy or over a few years say. They are likely to say no, as they will make more money charging you interest for the next few years on the outstanding debt.

I would suggest making affordable payments each month until your credit rating improves. You could perhaps get another card with a better deal and carry on paying off the debt without paying too much interest.

Answer 3

Usually they will settle for 40-60% of the debt amount, although it can be substantially less if the debt is older. In some cases, you may even be able to convince the debt collector to remove any negative credit reference. The original creditor would still report the charge-off though.

One special note: UK laws are likely different, but in the states, you may have to pay taxes on "forgiven debt" as a form of income. The IRS requires debt collectors to report any forgiven debt through a settlement agreement of $600 or more.

Answer 4

The citizens advice bureau will help, you need to show that you are unable to repay the debt.

Usually this results in CAB writing to creditors explaining situation and debt in frozen and you pay it off at x pounds a week. The debt is not reduced, using this method, just frozen.

IVAs allow a partial debt write off though. Actions such as these will obviously affect your ability to get credit in the future.

Answer 5

my personal experience at doing this was they took off $800 australian $ from a $2000.au. debt and gave me 6 months to pay at a few hundred a month.all depends on who u deal with as well.do u have insurance for it if u cant pay sometimes its in the contract . or here in australia you could go to court and show your hardship at payback and get a ruling to pay back at a very low payement per month. or get another lender to consolidate all your debts for a new amount of repayment.

Answer 6

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Answer 7

If you are behind on your payments, they may take a settlement to just be done with you.

Answer 8

You may have to compromise on the settlement, but they do it all the time

Answer 9

from past experiences it will be noted as paid but will go against your credit rating, also any bills that a reminder has been sent to get noted on your scoring list

Answer 10

They do it all the time. You may have to up your offer to around 50% to be accepted. The bad thing is even if they do accept it, it will show on your credit like this, "Settled for less than full amount". So it will be a negative on your file.