If banks and credit card companies were forced by law to offer defaulted debtors a chance to settle their defaulted account for the same amount that the banks and credit card companies are willing to sell these accounts to ca's for would greatly reduce the number of lawsuits filed.If a consumer defaults on a 5,000 debt and before the bank or credit card company could sell that account to a ca for 500.00 the debtor should be offered a settlement of that account for the same amount.To avoid abuse the defaulted account would remain on the debtors credit report for 7 years and the remaining 4,500.00 that would be written off would have to be claimed as income on the debtors income tax form.The banks or credit card compannies would be able to claim the 4,500.00 loss as a credit on their income tax form.This way there would be 3 options the banks or credit card companies could sue the debtor themselves,settle the account with the debtor for far less that is acually owed or as a last measure sell the account to a ca.Comments? [Posted by 72.231.252.120 via WebWarper: saving traffic, antivirus, acceleration, anonymizer, optimization of sites This is added while posting a message to avoid misuse. Try: http://webwarper.net/webwarper.exe Example of viewing: Credit Talk - Credit Talk Forum ]
I think you'd have to sweeten the pot for the banks to make this more palatable and less like a "Free pass." e.g. - 10-year reporting period like a BK7 - Report the written-off amount as income to the debtor (as happens in some cases already) - Work out something better than the 2-5% rate they get with a JDB like 10-20% I think something like that would be more attractive to the creditors (whose money we're talking about), in that they're getting more than they would if it was sold to a JDB. It's more painful for the debtors so it's not seen as a "free pass" by either side. And it sticks around longer so people with good credit don't suffer dilution and debtors will think twice to accept it when it really is the only remaining option (short of bailing on it completely). It seems like a good idea but I wouldn't hold my breath on this. My guess is there are people who pay their bills, people who can't or won't (for whatever reason), and this would catch a few in the margin who are wavering between the two so I don't know if very many would take it up.
