Which Debts are Most Likely to be Settled for Less Than Payment-In-Full?
Most unsecured debts can be settled. An unsecured debt is a debt where there is no collateral. Unsecured debts include medical bills, credit cards, department store cards, personal loans, collection accounts, student loans, amounts remaining after foreclosure or repossession, and bounced checks. There are a few creditors who will never compromise, but most will take a lessthanfull payment as settlementinfull to close a troublesome account. (Utility companies, however, rarely settle for less than the full balance.)
Secured, collateralized debts (such as a home or automobile) are an entirely different story. If the creditor can simply repossess the property, why should he negotiate? You can often renegotiate a short payment relief with a secured debt but don't attempt to settle the account while you still possess the property.
Also, the creditor must have a good reason to want to settle. If the account is paid current and there is no recent history of late payment, it will be difficult to convince the creditor that it is in their best interest to settle. (This should not be read as a recommendation to stop paying bills that are current. If you stop paying your current bills, you will almost certainly make your credit situation worse.) Perhaps bad credit is not an issue for you at this point and you feel you must stop paying your bills in order to settle them and get back on top of your debt load. If this is the case, you make that decision at your own risk. In other words, don't do it.
Other Debt Relief FAQs
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Q:
What Control Do You Have Over Payment Of Debts?
A: If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do … More -
Q:
What Is The Fair Debt Collection Practices Act?
A: The Fair Debt Collection Practices Act requires that debt collectors treat you fairly by prohibiting certain methods of debt collection. -
Q:
What Debts Are Covered under the Fair Debt Collection Practices Act?
A: Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts. -
Q:
What Types Of Debt Collection Practices Are Prohibited?
A: Debt collectors may not harass, oppress, or abuse any person. For example, debt collectors may not: falsely imply that they are attorneys or government … More -
Q:
Can You Stop A Debt Collector From Contacting You?
A: You may stop a collector from contacting you by writing a letter to the collection agency telling them to stop. Once the agency receives your letter, they may not … More -
Q:
Can a Creditor Add Interest to a Debt?
A: Yes. The FDCPA allows a collector to add interest to a debt if the original agreement calls for the addition of interest during collection proceedings or the addition … More -
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Can a Debtor's Wages be Garnished to Satisfy What He/She Owes?
A: Many states allow a creditor to garnish the wages of a debtor who has defaulted on his or her loan payments if certain conditions are met. For example, most … More -
Q:
Do Creditors Have a Certain Amount of Time to Sue for Payments?
A: Yes. The first thing you should do is determine if the statute of limitations for collecting a debt in your state has expired. If the number of years has passed, the … More -
Q:
What's the difference between loan modification and debt settlement?
A: Debt settlement typically involves working with a professional debt settlement company to negotiate with the creditors to whom you owe debts. Your creditor may, … More -
Q:
What is a Lien?
A: Some creditors have special rights to collect debts in the form of liens. Liens may come up in various ways including judgment liens obtained as a result of court … More
