How to Settle Credit Card Debt with your Original Creditor

[Text: Settling Debt with your Creditor] Hi there. This is Michael Bovee
with here on our Debt Bytes YouTube Channel and I’m going to talk
some more about debt settlement, the first stage of debt settlement which is dealing
with your original creditors. You can target settlements with your creditors.
Most settlements tend to get down over the years with debt collectors and outside
third party agencies that your creditors will hire or debt buyers who risk their
own money you know trying to get you to pay where your creditor couldn’t.
Often enough the best deals, the best reduction of the balance and the biggest
benefit to you is going to be settling with your original creditor.
It works a certain way. Here is what your targets are.
When you fall behind, you can’t pay, you know your creditors are going to call.
You typically want to engage in conversation with them and in fact your
negotiations with your original creditor will happen over the phone.
You write them a letter and offer some kind of settlement and you are just not
going to get a response. That is not how it works. You do have to pick up the phone.
I know it weighs a ton. You can get used to the process and ease
into the whole negotiation process with your creditor by being proactive.
Instead of answering all those calls and being annoyed by those calls they
are going to happen, get over it. You make a call, okay so be proactive.
Spend maybe as many as 3 to 5 minutes a month per creditor being proactive
staging this settlement effort. So in month one you have got 5 creditors,
let’s say you spend 20 to 25 minutes, talking with your creditors and telling
them what is going on with you. You don’t have to go into great amount of
detail, but something that has happened for you to be unable to pay your bills.
What was that? Keep it brief 1 to 2 sentences.
Hi, this is Michael. I know I am late.
It is not my intention to not be able to pay you, but this is going on in my life.
I have got a reduction in hours and my wife left her job and now we are down to
one income and that has impacted my ability to keep up with everybody.
I am sorry that means you are not getting paid. I got a few pans in the fire as
soon as something shakes lose. I intended to get caught up with you.
That is it, pretty simple. You are not going to be able to get
a settlement out of your creditor in the first month of delinquency nor the second month.
More often than that, not on the third month. That changes in month 4, 5, and 6 depending on
who your creditor is and their internal policies for operating lower balance payoffs.
They start to get reasonable around month 5. In fact your best opportunity to settle
with some of the largest banks out there, credit card issuers is going to be right
before you are exactly 180 days behind. There is a reason for that.
It is kind of technical. I will just briefly tell you it has to do
with how they have to account for losses on their books.
There is an accounting phrase. The term is charge off, and it is
used interchangeably with credit reporting and things like that, but it really is just
an accounting term and that is what banks have to follow.
They have to account for the loss after 180 consecutive days of none payment.
They can do it earlier. They don’t because it is bad news.
They have to share bad news with shareholders. At Wall Street so predominantly you have
a window of opportunity to settle with your original creditor between day 1 of
being late and 180 days of being late. In month 5 is where you are going to find the
best opportunities you have had dialogued with your creditor each month.
You have saved up money, you have tapped other resources, loaned
from family, sold off an unused item and you got cash, you need to be able
to target the right amount for each bank. We talk about all that at Consumer
Recovery In fact, up here on the screen I have got
our DIY debt settlement page up where we talk about how you can deal with your creditors.
If you have questions, we are right here on this channel on this page.
Post us, we monitor all the activity on our YouTube channel and on this video and every video.
So engage in conversation here. You can go to our website use the ask
CRN feature in the upper right corner. In fact there is an 800 number up there
that you can call any time and talk with one of our specialist for free about your situation.
So I look forward to speaking to you on the next video where we are going
to talk about settling debt with debt collectors and we also look forward
to helping you through any one of these mediums that we talked about today.

73 thoughts on “How to Settle Credit Card Debt with your Original Creditor

  1. You can settle debt after the creditor charges your account off. The settlement is often only reached with a debt collector because your creditor generally will assign accounts out for collection to an agency, or sell it off to a debt buyer.
    A garnishment is only possible with a judgment. It is true that people have had judgments without ever being served. If that happens you have to back out the judgment with the courts. Your goal of settling will prevent that from happening though.

  2. What if your credit card is already closed? If you settle can your credit score still be damaged. I'm still behind more than 90 days but for the last 2 years I have been paying on time every time. I owe about 2,866 more dollars but I would just like to offer them about $1,500 to settle. Is this a wise thing to do. Thanks in advance for any advice.

  3. If your account is already closed, but you have been making on time payments for a couple years since you fell behind 90 days, you will not get anywhere by calling and offering to settle right now. No creditor approves a settlement when you are current with payments (2 years without missing a payment would be considered current). You would not be able to offer a settlement unless you miss payments. The best settlement savings comes closer to 180 days late with credit cards.

  4. My apology It is closer to 180 days and when I asked for a settlement they said I could settle with $2,007 which is 70%. With that being said, is it worth it to settle and if so would it hurt my credit score?

  5. Is the debt with Capital One? Most larger credit card lenders offer better results closer to 180 days than that. CapOne… not so much.

    It is usually always worth it to settle a debt if you can afford to. It prevents further collection activity, having to deal with debt collectors, possibility of being sued for the debt, and will stop credit damage. After 5 skipped payments, your credit is already damaged. Settling the credit card debt will allow you to start to improve credit again.

  6. So is it monetarily preferable to not pay a certain loan, get into debt on purpose, and try to negotiate a decrease of the debt later? I mean, will this end up costing less money than if I had just paid on time every month? I understand that this is wrong and I would never do it, but I am just curious.

  7. Taking out a loan with the intent to not pay it could be argued as fraud. Hard to justify this type of behavior.

    There are obvious benefits from a dollar pay off perspective to resolving a debt for less than what is owed. But it is a debt solution that should be reserved as an alternative to chapter 7 bankruptcy – where unsecured creditors generally receive no money.

  8. is your information free or is there a charge.. forgive me as i have yet to read.. i just watched one of your videos.. thank you for good information by the way. I just have more questions

  9. There is no charge for all of the debt relief and debt settlement guides. You can get free feedback from experts on this channel, and in the comments on the CRN website.

  10. it bwtter paying your credit card when there is no balance and then make purchases that what I do so I dont get into debt

  11. i live in california had a juniper bank credit card (issued barclay bank) back in 2005 went to collections. I settled with collections and received a "paid in full" letter in 2007. i just signed up with barclay for a 0% credit card jun 2013 and when i login to account that juniper card shows up as another account with them. So i clicked on it and it shows balance owed $933 last payment received june 2006. If i send a copy of the collection agency "Paid in full" letter will they delete that bal?

  12. It is certainly worth a shot. You should perhaps call and speak with an account rep first and ask about the best way to handle the situation. Be prepared to ask for a supervisor.

    Just to make sure I am clear, the account is only showing when you log in to a Barclay card member account page, not on your credit report?

  13. Correct! when i login in to my new barclay account on the left side of the screen it shows both the old juniper card and the new barclay card. My credit report shows it as a bad debt & placed for collections ad has a comment: account transferred or sold charge off account.
    My thought is if i send a letter to barclay saying account was paid in full through collections and included proof from the collection agency that the balance would disappear from that.

  14. Sending the agreement to settle and proof of payment should get the result you need. If it does not, post an update comment and I will have some additional feedback for you.

  15. So i called barclays and it says if you calling about juniper card press 1 so i do and it calls LHR(the collection agency) so i call barclays about my other card and ask about the juniper account and tell them i sent the paid in full letter they put me on hold and then say their going to direct me to LHR collections. So i ask the collection company how to fix this account showing a balance online. They say their side shows closed and its "paid in full" and to disregard what that account shows.

  16. So everyone agrees that the account is settled and you do not owe money on it at this point. But Barclay having a record of it internally, and a balance showing not paid, while not a stress inducing mistake on their part, is a mistake nonetheless.

    If this is something you are committed to resolving, consider writing their correspondence department, public relations, or executive offices, and express your concerns. Post an update with what you do and the result. I can offer feedback from there.

  17. Dont settle credit card debt with the original creditor! You will pay a tax liability on the imputed income. Avoid creditor payback plans. If you dont have a burning desire to pay your debts back and dont want to pay taxes on the forgiven difference then contact for more information.

  18. THIS SUCKS …My girlfriend cant get a mortage on her house because her ex defaulted on a capital one card that she never used or new existed.But its on her credit report and she has no money to pay it. Now the bank wants to forclose…what can she do ??? why cant they just put half the dedt on her new mortgage ?

  19. ok if you wont answer that tell me what position she is in if she has a seperation agreement with the ex stating that he is responsible for the card …and the fact that she never used the card or even had one

  20. Does being able to pay min. monthly payments (and having a track record of doing so) hurt while trying to negotiate with credit card companies?

  21. good stuff,this is my issue,I got hurt on the job and am collecting workmans comp.
    from nov. 2010 every month i'm going deeper in debt at this point my master card 
    is maxed out and have been paying the minimum balance for 3yrs. it's killing me, i own a coop and am scared to lose it, can i settle with citibank!

  22. i have a 15k, five year old citi card debt , and i get letters and call from debt collectors should i talk to them or citi bank for best settlement. thanks

  23. I don't understand why debtors can not get creditors to work through letters.  I have read reasonable sounding blogs that say to never contact creditors by phone. "If it's not in writing, it didn't happen."   These people are skilled at getting worried debtors to pay more than they can, ect.    Is there legally any way people can make a request to work through correspondence? 

  24. I wish I would have seen this earlier. I fear I may have messed up my rights. I have a cc that was last paid on in 2008. I live in Alabama. Someone called me at work today and wanted to know if it was ok to have papers served at my work. So naturally I wanted to know why. They gave me a number to call. I called it and it was a lawyers office (or so they said) and proceeded to tell me I owed over $7000k on a $500 credit card debt. I know I should have paid it, I was young…things happen. They agreed to take $2200 and wanted me to put $500 down and payments of $142 per month for a year. I couldnt afford $500 so they said $250 now and $250 next week, so I agreed and gave them my cc number for $250. So, did I mess up my statute of Limitations by doing this??? Did I screw myself? Someone please let me know if I can get out of this. I really didnt want to be garnished 🙁

  25. It have examined my credit situation. It appears the only way I can settle is to stop paying them. My only concern is Capital One. I hear they are horrible. I owe them about 5k.

  26. Hi Michael,
    I have 1,400 debt and the collector entitled to settled to $450.00 with me. Should I pay? Would that help increase my credit? Please give me advice.

  27. HI Micheal. Id like to know if there is a way to negotiate and lower the entire balance and correct verbiage to use if I offer to pay it all over the phone. I have 2 citibank accounts, discover, AFSCME advantage. The highest balance is 6,900?

  28. For a better credit score, Is it better to close your credit cards once they have a zero balance or keep them open and not use them?

  29. Citi offered me a settlement of 40%, Original $1143.57, settle offer of $457.43. If I only had Citi to deal with, that would be great – but there are several others all at the same time. I called Citi, they are telling me the amount is computer generated and set in stone for the most part. Now, I could do $300, or 26.3% as that comes out to be in a couple of days by a sale of some things I have and a waiting buyer – but how to I get them to, or how do I ask to talk to, about making this onetime offer? As I mentioned, I have other creditors waiting, should I be blunt and tell them this is my offer, and if they cannot accept I will go ahead and call the next creditor in line?

  30. I have a charge off with Frontier, witch are my original creditors. My CR is stating that the original amount owed was 192, but the charge amount is 167. The account is about 4 years old, I was just wondering if I can still use the method mentioned in this video to come up with a settlement agreement leading to a removal of negatively reporting account. Provided I pay Frontier in full. Also do anyone know why the original and charge amount are different.

  31. I have a loan with lending club and have not been able to pay my monthly payments. what can i do to try and settle with lending club? this is just one of my many monthly payments i have to creditors which i cannot keep paying.

  32. Can I negotiate a settlement even if I haven't stopped paying my loan? I'm about to receive my tax return and would like to pay off my credit card. Also, can I negotiate a lower interest rate?

  33. It's been years since I've dealt with my credit issue… I'm not sure who I even need to call or who I owe… I got my free yearly credit report but it doesn't tell me what company has my debt… I tried calling one of them but they had no info on me on their data base… What do you recommend???

  34. Thanks for the video. I'm currently starting this process, have stated my hardships, I have been past due 4 months, almost 5. My bank asked for all our financial income and monthly payments I believe to prove hardships and I didnt want to reveal that info. Is that something I will have to do?

  35. I am from the UK – got £20,000 credit card debts with 5 companies… my income has lowered recently. I have been up to date with the minimums for a long while now. Planning to default for 5 months and hopefully come to some agreement before any court date. IS it the same procedure here?

  36. Hi I'm behind already 2 months, I am now contacting them because I still would like to pay them but the interest is so high and I won't be able to pay my bill at all with the high interest. Also I don't want to behind to where it gets reported to the credit bureau and then it will look bad that I didn't pay any bills on time. Also if I don't pay the card after the 5 to 6th months and my cc company wants to settle with me and I do will it be a closed account.

  37. Hello Michael, one of four banks has made an offer to settle. should I take on the bank's offer now n will it affect the other banks decision to make a similar settlement if the banks see tht I have settle with one of the banks?

  38. Hello Michael, I have family member that file for bankruptcy four yrs ago n is currently in a finacial hardship. can he seattle with his banks, too.

  39. how can you deal with the original creditor after the charge-off has happened and your debt has been sold to a collection agency. most of them will not deal with you once your debts been sold. I've paid that off before in the past with a collection agency and then seven years later I try to reapply with the same credit car company who charged me off and they told me that I never paid my debt and I told them yes I did and they said with whom I said a collection agency. they went going to tell me that they don't get that money after they sell the accounts. because my account was sold to a collection agency they will not do business with me again

  40. Michael, thank you for the wonderful resource and wealth of information!

    We (my wife and I) have credit card debt with several credit cards and were able to secure a loan through an interest free loan society run by the very philanthropic owner of the company I work for. I want to use that loan to pay off our highest-interest credit cards and hope to negotiate with those credit cards to pay a lower amount than the total owed. My questions are as follows:

    1. If my wife's name is on any of the cards, will they be willing to talk to me or will she have to be the one to call?

    2. Are you aware of Chase and Capitol One's base % that the are typically willing to settle for? Is there a particular formula for offering a settlement amount (i.e. Requesting a dollar amount equal to X% of the current amount owed?)

    3. Some of the cards are in my name and some are in my wife's name. I have slightly better credit than she does at this point and I wonder if I should pay off the cards in my name which are smaller amounts in order to better boost my credit and perhaps be able to refinance my mortgage to get money to pay off the rest of the debt, or is it best to pay off the highest-interest cards in her name and just get those off our plate.

    In that regard, does settling with the bank negatively affect credit scores?

  41. 40K In CC Debt. Just Starting To Fall Apart. . . . . Do I Not Even Bother With Talking Down The Credit Card Companies in 6 or 7 months or Just File Bankruptcy? I've Been Hanging On For A Long Time But The Hole Just Got Deeper and Deeeeeper.

  42. My original credit card was visa Bank of America which I can no longer pay and haven't for two months. So wait 179 days and make an offer of 25 cents on the dollar, lump sum and if not accepted then offer 50 cents on the dollar? Thank you for the Advice!

  43. hi I have two credit cards one with Walmart that I'm paying another one with Old Navy that I have not been paying for the last 5 months and synchronicity Bank keeps calling to pay off my Old Navy credit card which is $250 should I pay it or should I just let it go

  44. What if I am not late but for see future expenses that will take a big hit on my income (student loans). Can I be proactive and say in would like to settle because I know I will not be able to pay you back in the future. I don't want to hurt my credit score by purposely being late just to get a better settlement deal.

  45. Hi ..I want to settle my debt on credit card but the bank already forwarded me to a collection agency which offer a very high payment scheme..could call the bank again and ask for an affordable payment scheme? What should i do? Thank you..hoping for your reply..

  46. I want to settle with my collectors, its a difficult proposition considering the compounding nature of payments that I previously was engaged in. the years have gone by and I am dead in the water. this is a very precarious scenerio. I cant say i wasnt warned.

  47. Hello Michael,

    Thanks for your reply and all you do.

    I apologize in advance for the relatively long story here.
    To review, I have been living overseas in Eastern Europe since 1995 and maintained 0 cc and other debt balances until about 6 years ago when we had career and medical issues in my family. Since that time my balances climbed and minimum payments were made until May 2018 when even that became untenable.

    I have been trying to start a new business and do some freelancing when I can. I was employed for 1 year during the period. My US bank accounts are with Chase. Due to the unreliability of the local mail service, I have always received mail where I live through a private service that involves a NYC Mailboxes, etc. address and a local courier where I live…During the past several months, to cut costs I have not even paid those bills…but I have just collected my mail…fortunately, there were no major bad surprises.

    My current cc balances and status are as follows:

    Chase 1 – ~$19000; card cancelled, over 6 moths overdue:

    I had some calls with them in August-September but since I was in no position to act, I did not follow up further. It was appearing on my online Chase account until a few weeks ago and now there is no mention. There have been steady calls to my family home in NY and the caller, when answered was told how to reach me but never did. There were 2 letters from a collector in October with a December deadline…unfortunately I missed that deadline and have not contacted them yet.

    Chase 2 – ~12,000; card cancelled, over 6 moths overdue:

    The calls mentioned above are assumed to related to both of these Chase accounts. This account still appears on my online account and there are messages that if I pay $2+k the payments will be 'current'…
    Interest continues to accrue – it seems they have not yet charged it off…?
    American Express BLUE – $9,234; card cancelled, over 6 months overdue:

    I had a call with them in August-September and they were rather aggressive and said there was no point in talking until I had a constructive proposal.

    Cutting to now:
    On Dec 20, I received a call on my foreign mobile number from Nationwide Credit Inc and had another call a week later (yesterday). A 45% settlement was eventually proposed which is not feasible…half of that could be…but they would not accept that as a full settlement…only half, with other half to be paid over less that a year, which is not a commitment that can be made at the moment.
    We ended up with a potential agreement where Amex stops charging further late fees and interest (I was also advised that since it is in collection, no further interest or late fees apply…?) and I immediately begin 6 monthly payments of $50 followed by 6 monthly payments of $75 that would count against the current balance. At the end of that time or if my situation changes we have a call to discuss a new plan to resolve the remaining amount. If I miss a payment everything reverses to status as if there was no agreement.
    THey say that as long as I perform AmEx should take no further action and the case will remain with NCI…so this is attractive for that reason.
    I hesitated to let them withdraw directly from my account and they said I can pay Amex directly and I could call Amex to discuss this and confirm how to make the payment. They refuse to put anything about this in writing… WHen I called AmEx, the robot said the account is with NCI and I should speak with them. THe AmEx site gave the option to pay, but when I entered the amount less that the $1+k minimum about due, it said my rate could go to 29%… So in the end, I instructed the first $50 pmt on the NCI site and will see how it works out.

    Nationwide received this case on December 13.

    American Express Platinum – $3,712; card cancelled, over 6 months overdue:

    This account is now also with Nationwide (since 12/21) and was initially discussed with a different representative…There is no settlement being made available for this account – member in good standing including annual fees since 1988 although I did accept a low interest payment plan on a purchase that was carried for a while and part of the current balance.

    In the end we agreed to the same structure as for the Blue account: Amex stops charging further late fees and interest and I immediately begin 6 monthly payments of $40 followed by 6 monthly payments of $60 that would count against the current balance. At the end of that time or if my situation changes we have a call to discuss a new plan to resolve the remaining amount. In addition they said that if this gets resolved soon, there may be an offer of a new Optima card…

    On the face of it, the Amex settlements meet my immediate need to get some control of the situation and stop further actions and increases in the amount due so I can focus on getting into a position to reach some resolution with 12 months. I wonder what the risks are of such an arrangement? That is my pressing question.

    Chase is a different story and remains unknown…it would be useful to have your insights on such a situation.

    I have taken the 12 month deal with Amex and will try to Chase. As I said, it would be nice to know the cons of the Amex deal and what to expect from Chase.
    My only US bank accounts are with Chase and I have some balance there now to support some living expenses and the AmEx payments. I see that the first requested withdrawls, and other payment requests, are taking more time that they used to…it seems Chase runs all sorts of extra checks but releases payment in the end…is this normal?
    Thanks again for all you do – Happy 2019!

  48. Wow this was the 1st video i clicked on and i can say its great advice … i called my crditor and they woild not offer me anything.. i havent neen late nor have i stopped paying but im not working and wanted to just pay them off. But failed on my 1st time 🙁 thanks for the info just subscribed to the chanel and will share the link thanks again.

  49. I live in Texas. I got a phone call saying a credit card I had 30 years ago still had a balance and they we're suing me for my rental property. Im sure I pd this debt in full but have no proof. It's been 30 plus years. Plz help me. Isn't there a statute of limitations?

  50. 3 cards with Citi which are already on a pay down with 0%. Unable to keep up with the minimum payments and looking to settle. I won’t be able to settle all 3 at the same time. I can still manage to pay one account. Will it hurt the settlement offers for the other two accounts if I keep paying on one?

  51. I have 2 credit cards I'm behind with. Navy fed 6 months and CapitalOne 2 months. I wanted to try settling with Navy fed. When I call how should I begin the conversation? Who should I ask to speak to? They've previously offered PFI services through them but I didn't know if I should start giving that personal financial information out since I want to settle. I owe them about $20,000. Lost my job and am getting paid a lot less. I've got about $10,000 in retirement I was going to pull to offer to hopefully have done with. Please advise and thanks for the videos.

  52. I am approaching 6 months late on numerous credit cards. What should my first step be to negotiate and if I have multiple Chase Visa cards will they negotiate them as one single debt

  53. I paid a charge off in full to capitol One(Kohl’s charge card) from 2016. They never sold the debt to a collection company. So I was able to pay in full to the Original creditor. Let’s see what happens.

  54. Hello,
    I owe on some credit cards 2 of them are in collection's now they are willing to go to 50 percent off but I don't know if I can afford it the other 3 I have started this month to stop paying them I can't afford it on the 3 small balance there 600 each I was wondering do you have any recommendation's ? Should I work with creditors to settle for an amount less than 50 percent?

  55. What if you are on time with your payments but just want to settle to save money is that a good idea? Does it hurt your credit score?

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