Ask Experts Questions for FREE Help !
Ask
    suemorton's Avatar
    suemorton Posts: 1, Reputation: 1
    New Member
     
    #1

    Feb 4, 2006, 06:49 AM
    Credit card
    Why would a credit card company offer to take a settlement of $4,700 on a debt of $29,000?
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,303, Reputation: 7692
    Expert
     
    #2

    Feb 4, 2006, 07:11 AM
    Most times they would not.

    Without some more info

    1. it is a very old debt that is not legally collectible any longer

    2. they are afraid you will go bankrupt and some money is better than no money

    3. They are makinig a silly offer over the phone to get you to start paying money, and then will deny ever saying they made a offer.

    4. Unless it is in writing it is not a real offer, merely a collection person trying to get access to your money.
    tkrussell's Avatar
    tkrussell Posts: 9,659, Reputation: 725
    Uber Member
     
    #3

    Feb 4, 2006, 07:25 AM
    First of all, take the offer, this certainly should help decreasing you credit debt. Many creditors do this for several reasons, I know I did in my business. Not that I was even close to being as large as MBNA or Bank of America, it sure hurt my receivables, and my bottomline profits.

    Large companies will do this to get what ever they can from a debtor that they deterimine would be difficult to get the entire amount, either through court judgement, or waiting for the debtor to pay in time. Byond a court judgement, and calling to harass the cliet for more money, there is not many more instruments they have to recoup their losses.I am not sure if there is some magic number or percentage they seek when arriving at a settlement amount.

    I suspect this is being done more often nowadays, as any debt not received is merely put into their cost of operation, and now is considered as overhead, and passed onto other customers that do pay their full debt amounts,thus causing their other customers to pay for those who do not pay.

    I suppose the settlement amount may be the amount of interest due on the principal, at that time of settlement.

    Again to summarize, they collect what they can , or determine they need, and pass the remaining debt onto all other customers. The settlement is good for you, and expensive for their remaining customers.

    Path of least resistance for the creditors.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Credit Card law suit [ 3 Answers ]

I lost a substantial % of my income for approximately 7 months. It will be restored in March 06. Amex, however is demanding payment in full, and wish to proceed to collection and possibly law suit. They say there's no room for leniency. I know I owe them money and have offered to pay a smaller...

Credit Card Judgement [ 6 Answers ]

What is a credit card judgement and what are my rights?

When Paying Off Credit Card.. [ 6 Answers ]

Can I bargain when paying off credit card w/out damaging my credit? I currently hold a balance of $5000 each on two separate cards. $2000 each of which is actually purchase fees, the rest is accrued interest. Can I bargain with the cardholders to pay a lower amount without hurting my credit? Any...

I Need Credit Card [ 2 Answers ]

I Need Credit Card To Purchase Some Books

Credit card mess [ 5 Answers ]

I am over my head in credit card bills. So many companies are advertising about debt consolidation and debt settlement companies. Could someone help me decide which way to go. I am never late on my payments because sometime I use one card to pay another. I like the settlement plan because they...


View more questions Search