Negotiating With Creditors- How Will I Know If The Credit Card Companies Will Settle?"

Negotiating with creditors occurs every day. During fourteen years of negotiating credit card debt on behalf of my clients, I've only witnessed six accounts that either the lenders refused to settle, or negotiated a payment plan. And I've negotiated over 2,500 accounts.

Why such a very high ratio of settled debts? Am I that good?! The answer is...no.

Credit card companies are similar to any other "for profit" business. They want to maximize profits. And by not settling with struggling debtors, they are not maximizing profits. Also, by not settling with credit card companies, overburdened debtors are also losing out.

By not settling with a consumer's delinquent account, the creditors are left with three main options. All three alte
atives are not promising:
1. Do nothing by walking away from the account and hope someday the debtor pays the debt.
2. Resell the delinquent account to a debt collector for a much lower price
3. Sue the debtor.

The Credit Card Companies Are Foolish if They Don’t Settler
For starters, if the creditors do nothing, odds are slim that they will get repaid. Since consumers aren’t legally liable to repay old, defaulted accounts, most individuals don't see the logic in paying off the account. They reason to themselves "why should I pay it when I'm not legally responsible for that account anymore?

Next, if a creditor sells the debt to a debt purchaser, the creditor will only receive about 5-25 cents on the dollar. Not very attractive., On the other hand, if your creditors settle with you, the average settlement is about 50%. That means that the creditor collects an average of about 50 cents on the dollar-much more profitable than selling your account the account to a debt collector and only getting 5-25 cents on the dollar, right?

Last, if a creditor sues a debtor that doesn't have a substantial amount of assets, the courts may or may not require the consumer to repay the defaulted (unpaid) debt. The courts use income and expense guidelines to determine if the debtor may qualify for chapter 7 bankruptcy, which is "debt forgiveness" . If the court permits the debtor to file chapter 7, then the debt collector will receive nothing. In fact, the creditor actually incurs a loss because of lawyer fees, court costs, etc.

The vast majority of creditors would much rather settle than sue. It's much too risky to sue. Besides, even if the creditor wins a judgment from the courts against a debtor, there's no guarantee that the creditor will ever get repaid. In that instance, the creditor will be in a worse situation than before-having spent thousands in atto
ey, court and administrative fees, and still not be able to collect from the borrower.

For these reasons alone, negotiating with creditors simply makes dollars and sense!