Why would a credit card company offer to take a settlement of $4,700 on a debt of $29,000?

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.

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.