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cfortunato
cfortunato, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 8023
Experience:  Areas of practice: Landlord/Tenant, Bankruptcy, Consumer Debt
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You helped my on 5/7/2013. Im trying to settle on credit

Resolved Question:

You helped my on 5/7/2013. I'm trying to settle on credit cards and one creditor was calling my cell phone after I sent a letter saying to only contact me on the home phone. They asked for all kinds of info and a settlement offer. I sent the letter with a low offer and let them know they violated the law. Now they are playing hardball and sent me a letter demanding full payment in 10 days. Should I just contact an attorney now or try to work it out with the credit card company. Also please tell me what they would normally do. Sue me or send to collections. The balance is $6200
Submitted: 1 year ago.
Category: Consumer Protection Law
Expert:  cfortunato replied 1 year ago.

cfortunato :

HiCustomer

cfortunato :

There is really nothing an attorney can do with a credit card company that you cannot do.

cfortunato :

In fact, using an attorney can give the impression that you have more money available - because you were able to pay an attorney.

cfortunato :

When negotiating with a creditor, it is best if the creditor believes what you are offering is all that is available, that you just do not have anymore to offer.

cfortunato :

In general, credit card companies will negotiate a reduced amount only if the account is delinquent by at least one to two months. And those that will negotiate will usually accept 40 - 60 % of the outstanding balance.

cfortunato :

You have around 6 months to negotiate with the credit card company. If they will not accept your offer one month, you can send another offer in another month.

cfortunato :

A handful of major credit card companies (Capitalone, Chase, etc.) will sue a debtor directly, but the majority of credit card companies will sell delinquent debt to collection agencies. The former group are less likely to accept a significant reduction in the balance owed. The latter group usually will accept a reduced amount, because when they sell debt, they sell it for 50% or less than the outstanding balance.

Customer:

Thanks. What should I make of the letter they sent me demanding payment in full withing 10 days. This is Key bank. They did not say what steps they would take to get payment from me. It is around 100 days past due. I got 2 other companies to settle at around 40%. I guess I spooked them saying that I they violated the law by calling my cell. I offered 20%.

cfortunato :

I don't think your 20% offer was rejected because of the letter about your cellphone that you sent. They rejected your offer because it was too low.

cfortunato :

They are more likely to accept 40%.

cfortunato :

I have never seen a credit card company accept 20%.

Customer:

Should I send another letter before the 10 days are up. Say 30%? This is a bank.

cfortunato :

They can get 40% from a collection agency.

cfortunato :

They are unlikely to accept 30% because they can get 40% from a collection agency.

Customer:

Ok. I'll send a letter for 40% I just want to get this stuff resolved.

cfortunato :

You can also indicate in the letter the reason you cannot pay more.

cfortunato :

If you can convince them that 40% is the most you can pay, they will be more likely to accept the 40%.

Customer:

One more question. I settled with US bank and they said they will send written doc. They said on the phone they will give me 90 days to send it to them. Is that normal . I can pay Key then take 90 days to gather the money to pay US bank.

Customer:

If my credit is bad. How hard is it to get a small loan against my 401K or 403K?

cfortunato :

All creditors have different policies, but it is unusual for a creditor to allow 90 days to pay an offer that was accepted - most want the money within a few weeks. In any event, it is always best to get any settlement agreement in writing before taking any action.

cfortunato :

Your credit rating does not affect your ability to get a loan against your retirement account(s). That is your money.

cfortunato :

You are borrowing the money from yourself.

Customer:

That is what I thought. I can pay two cr settlements from my avail funds. The next two may need to borrow against 403K. When I am dealing with the Collection agency, will they take 20% since they only paid 40% for the account.

cfortunato :

No - a collection agency will want at least as much as they paid (40%) or a little more.

Customer:

They won't negotiate?

cfortunato :

No - they would rather sell the debt to another collection agency - which is what they do after a year or so.

cfortunato :

After a year or so, the balance due will be significantly higher - because of added interest, late fees, etc.

Customer:

Ok thanks. Good to know. You were very helpful. I will write a new settlement letter tonight and send it certified mail to Key.

cfortunato :

You're welcome1

cfortunato, Lawyer
Satisfied Customers: 8023
Experience: Areas of practice: Landlord/Tenant, Bankruptcy, Consumer Debt
cfortunato and 3 other Consumer Protection Law Specialists are ready to help you

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