Financial Information
settling credit card debt with Bank of America?
Question : settling credit card debt with Bank of America?
Has anybody defaulted on their BofA credit cards very recently? If so, how much was your balance (if you don’t mind saying)? And if they sold it to a collection agency, how long after you had defaulted did they sell it off?
I’m asking because I’m about to default on my BofA credit card (over $ 30k) and I just got a letter saying that they will consider selling to a collection agency soon after default. I personally would like to deal with BofA’s collection department to settle the debt instead of trying to settle with a collection agency. So I’m wondering what BofA has been doing lately with their large (or small) defaulted accounts.
Any help would be appreciated… thanks
settling credit card debt
Best answer:
Answer by CatDad
You can always try to settle if you have already defaulted…Make an offer of 50% (assuming you have the money) and see what they say…there is no harm in asking.
- Get all terms of any settlement deal you reach with debt collectors IN WRITING BEFORE you give them your money. This letter should state the settlement amount and that the account will be settled/paid in full upon receipt of this amount from you. Keep the letter in a safe place. Never accept settlement deals over the phone that are not backed up in written terms. If you don’t, the debt collectors will deny that any settlement was ever made once they get your “settlement” money and will come back demanding more money from you…or they will resell your account to another collection agency months/years later that will start the collection process all over again and you’ll have no proof that the account was paid in full.
- Settled/Forgiven debt is treated like earned income with the IRS…any debt that is forgiven must be added to your next year’s income and you’ll have to pay whatever additional taxes
Most credit card companies charge off and sell defaulted accounts after the 90 day mark. Some credit card companies have their own in-house collection dept — I’m not sure about BOA.
You should also consider that BOA has the option of suing you — $ 30K certainly seems large enough for them to pursue court action.
Collection agencies are more likely to settle for less, because they paid a lot less for the account. You may be able to work out a settlement with BOA if you have a compelling argument and a lump sum. Get any settlement agreement in writing.
If you do work out a settlement with BOA, the account will be reported to the credit bureau as charge off/settled — a negative. You will also likely get a 1099 for the forgiven portion which will have to be included on your income tax return.