Managing debt can be difficult, but when someone falls behind in their credit card payments, it can be a nightmare. Creditors are relentless at attempting to collect debts. They will call all hours of the day and night. They can call at work and at home and even call references put on an application. Some find that they cannot deal with the constant nagging that is caused by being past due on their debts. Once a debt escalates to the 90 to 120 day late range, the company will often send the debt to a third party collection agency.
These collection agencies can be very aggressive about collection activity. If the debt is more than $300, chances are they are going to head to court. Also, if a debt is above this threshold, they will want to place a judgment to get their money back. With a judgment in hand, they will garnish wages, hit bank accounts and cause your life to be a living nightmare. However, there is a way to avoid this nightmare and handle past due accounts without the embarrassment. Credit collection agencies know that people don’t have the money to pay off the absorbent fees, so they offer settlements.
The longer an account sits in collection, the more money is owed. They will tack on interest and other miscellaneous fees that are difficult to pay. There are many debt consolidation companies that will offer you a chance to settle your debt and pay just one small payment a month. There is no need to enter into such an agreement; you can do it for yourself. By writing a Credit Card Settlement Letter, you can easily negotiate a settlement to end the embarrassing creditor harassment.
Before beginning this letter, make sure you know what you can pay and what you can’t. Don’t make promises that you can’t keep, this will make the company less likely to work with you in the future. Make sure you set realistic payments or are ready to put a lump of cash to settle the debt. Typically, you can get the debt for a half to one third of its original amount, if you have the cash to settle. The older an account is, the more likely the company is not going to collect anything. Most companies are eager to work with someone who says they have cash to settle an account. If they have had a hard time getting a hold of you and have little activity on your account, they will be even more eager to settle.
These companies have guidelines that they must follow to settle the debt. While you may offer $400 on a $1,000 bill, they may not be able to accept that. In a case like this, they may counter offer the debt with a new figure. When writing the letter, state the low ball figure of what you have. If they think it is all you have, they will be more willing to accept it. Remember going to court and continuing phone calls costs money. Be honest with the company. If you have a reason why you fell behind, loss of job or other, be sure to tell them the truth. Companies know how tough the economy is and, they understand and want to help those who make an effort.
Be sure to put lots of information in the letter. The new collection agency probably gave the account a new number, plus it can usually be references by the old number. So, instead of leaving room for error, put as much information about the account down as you know. Make the offer and be sure to make it a strong one and the company will more than likely be interested. Here is a sample of a credit card settlement offer letter.
Sample Credit Card Settlement Offer Letter
Name of Debtor
Address of Debtor
City, State, Zip Code
Name of Creditor
Address of Creditor
City, State, Zip Code
RE: Debt settlement offer for ACCOUNT NUMBER
Dear Name of Creditor:
I am writing about an account that is in collection with your company. The account number on my statement is 189478593. The original creditor was Capitol Credit Cards and the Visa account number for that card was 4419-0389-3894-0987. The account has not been paid on in almost two years and I want to correct this matter.
When the economy tanked, I lost my job and also suffered from health problems. I didn’t have the money to pay my bills and this account soared from $500 to $2,000 with late fees and interest. I want to settle the account for the original amount owed $500. I have the money from a small settlement I received from my back. I am unable to return to work, but I still want to make this debt right.
Upon your approval, I will immediately release funds in the amount of $500 and settle this account. Please contact me if you have any questions. I can be reached during the day at 555-980-1234. I look forward to resolving this matter.
Signature of Debtor
Printed Name of Debtor
List of Enclosures: Financial Statements, Medical Records, Debt Settlement Offer