I have a client that has been considering bankruptcy for several months now. He doesn’t want to file bankruptcy but over that last several years his credit card usage just got out of hand. He would rather try to work out deals with the various credit card companies. I told him to go ahead and try. I game him the following pointers.
Generally, credit card companies are settling at about 30%. However, you have to get them at the right time. When is the right time? Generally, the end of the month. Even better are the end of the quarter or the end of the year. The collector’s work off of commission and they are usually looking to close out their period on a high note.
If you can’t get the deal you want, ignore the credit card company. The worst they can do is sue you. My experience has been you will get a better deal with the lawyer who sues you rather than the collector. It won’t hurt you to wait until you get sued. Don’t worry about the multiple lawsuits if you have more than one credit card company that won’t work with you. In fact that is better. In most states, only one creditor can garnish your wages at a time. Further, most courts will limit the amount of the garnishment so you can still meet your monthly necessary needs (even more so in this financial crisis). It is not usual for a judges to award $50 to $100 to a creditor.
Just think of it, you have a garnishment on your paycheck for $100. But wait, that is probably a lot less than the total amount of monthly payments you are paying the credit card companies now! Don’t be afraid to be aggressive with the credit card companies. You have what they want ….your money. Make sure you don’t give it away too easy.
Let me know what kind of experiences you have had when dealing with collectors and if you agree or not with me. Email me