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How much are creditors willing to reduce a debt for a settlement?
Question : How much are creditors willing to reduce a debt for a settlement?
I’m trying to pay off all my debt and dig myself out of this hole I’ve created. I heard somewhere that if you offer creditors a certain percent of what you owe them they will take it. Is this true? And if so, how much?
reduce my debt
Best answer:
Answer by Judy
You have to know what you are doing.
Go to your bookstore and get a book on Credit / Debt Repair.
It will teach you like an expert to just pay 30% off that debt you owe – depending on the circumstances.
A $ 20 book and 2 hours of reading can save you hundreds if not thousands of dollars.
They will also teach you how to do the pay on delete on one time items.
Never close your oldest credit card account – it could destroy your length of credit history.
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#2 written by rcdrury 1 year ago
Other posters have offered some good information. Jay is correct that most creditors are resistant to discussing a settlement if your account is in good standing. While that may seem backward, and it is, they’re simply calling your bluff and hoping you’ll come through with your normal payments to avoid a default.
Ryan makes a good point that debt reductions constitute taxable income; however, only the PRINCIPAL being reduced is taxable. Make sure in any settlement agreement that the total debt amount is reduced by waiving all fees and finance charges before any principal is paid, and demand an itemized statement to that effect. This shouldn’t be a problem; the creditor just wants as much of his money as he can get. That’s much more important to him than where it falls in his accounting.
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#3 written by Ryan M 1 year ago
Yes it it true, but it will depend on the amount of the debt and the particular creditor that you are working with. HOWEVER, be aware that any debt that is reduced is TAXABLE INCOME to you. For example, having $ 5000 in debt wiped away can result in a tax bill of $ 1000 to $ 1500. Not to mention, your credit will STILL be ruined for 7 years.
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#4 written by Jose 1 year ago
about it you can get information from here http://infofinance12.notlong.com/8AAWiS6
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#5 written by Jay P 1 year ago
Creditors will take less than full payment if they have some doubt that they will get anything at all. This means that if you are current on your bills and in good standing, it is very unlikely that a creditor will accept less than the full balance. However, if you are late on payments, have missed payments, or have terrible credit, a creditor will likely negotiate. Start at 40% of the balance.
Let me warn you of one thing. This does not mean that you should go into default on all of your loans and arrange a settlement. That hurts you much more in the long run.
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here I found some debt reduction answers which would be of your help:
http://answers.yahoo.com/question/index;_ylt=AnSYqDZ1O7swB5uWNrSUiUKRHQx.;_ylv=3?qid=20080730140113AALuYnC&show=7#profile-info-eY3SWMdqaa