Negotiating with CC companies

[cptacek]

Let's say you have $10,000 in credit card debt. Let's say you get a gift of $6,000. Would you try to negotiate with the CC company to take the lower amount and cancel the rest of the debt? What steps would need to be taken to do this, and what kind of assurances, paperwork, etc, would need to be done?

[Bob B.]

I dunno, but paying off 60% of your CC debt in one fell swoop will make paying the remaining 40% much easier. You should hold on to $1,000 of that for emergencies.

How many CCs does that 10K represent? Can you pay off any really high interest cards in full? Do that. You'll find that once balances start decreasing, more of your monthly payments will go toward principal rather than interest, and the balances will decrease rapidly.

[creditcardfree]

Unless I was near bankruptcy, I would not negotiate. I took out the debt, it is my responsibility to pay.

You would need to get the agreement in writing from the creditor. They creditor would issue you a 1099 for the differences which is then taxable as ordinary income. I would not do it because of this.

[kork13]

In most cases, companies will not even attempt to settle with you unless your account is already in collections (or nearly there, by being 3-6 months behind on payments), which means you would have to stop paying entirely .... bad idea, obviously, since that would rack up HUGE late fees and interest charges. In general, going in with the plan of making a settlement is a fairly poor one. As already stated, if you can use the windfall to eliminate a solid chunk of the debt, paying off the rest will be much easier. Honestly, $10k is not an insurmountable debt load. Even by making the smallest of payments on the debt, you can wipe it out within a few years.... particularly if you can erase half of it in one fell swoop.

[ValQue]

I dunno, but paying off 60% of your CC debt in one fell swoop will make paying the remaining 40% much easier. You should hold on to $1,000 of that for emergencies.

I was in a similar position a couple of years ago where I was able to apply a huge sum to my credit card debt. I had over $8,000 thousand to pay off and now I'm under $3,000 and it feels much less stressful. If you have a goal of paying as much off as possible up front with your gift, I'd say do that. Like Bob B. said, it will make paying off the remaining 40% much easier.

[cptacek]

Thank you all for the responses. I don't think I will do this...I will just pay the lump payment and continue making payments. I agree that I spent the money and owe it. Just wanted other opinions.

Thanks!

[bjl584]

They probably won't negotiate with you anyway. Unless you are behind on payments.

[kaleida]

I've never heard of a credit card company forgiving debt - and actually it kind of rubs me the wrong way.
If some people do that, the cost of it gets spread around to the rest of us.