I am getting ready to negotiate debts with two different collection agencies. They are for delinquent credit cards. One is $10,000 and the other is $6,000. I have read the following excellent article, which I highly reccomend to anyone else in my situation: http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp. I am wondering how much I can expect to negotiate these debts down to? I am able to pay the negotiated amounts for each debt in full, but I would like to get as low of an amount as possible. On the $10,000 debt I received an offer to settle at 60% if I made a one time payment. Therefore I assume they would be willing to accept much less than that if I made a one time payment. I have also read that collection agencies buy these debts in order to make a profit upon settling them. On my $10,000 debt, how much would they have paid for it? I would like to settle the debts for the bare minimum above this amount. In another article I read that some debts are settled for 10% or only slightly more. Is this true? Thanks in advance for your help!!!
Generally, you can expect to settle with the original creditor for anywhere between 50% to 60% of the total balance. If handled by a collection entity, the same typically applies. If the account has been sold, I would advise not paying the purchaser whatsoever. Others may vary in their opinion . . .
Don't mean to push your envelope... but I offered 37 cents on the dollar for a past due account, payable today citing that the account was very past due and you would remedy it today or keep it where it was until you could pay it off more. They agreed. Had to pay taxes on it, but still, went from 3K to $900 I negoiate with vendors all the time, if you don't ask for it, you never get it. I say, try 35 percent of the full debt, payable today if they agree. If they say no, raise it to 40.
Thanks for the replies. Apex, I am also wondering why you advise not paying the purchaser - the collection agency who bought my debt? PSChi, thanks for the tip!! I'm going to take your advice.
No problem bud. Let me know how it turns out. I was beyond shocked when I got mine knocked down so far...and my older sister who was going through something similair was really jealous after just giving up and going through credit counseling.
