What is a realistic settlement percentage?

[rhoderider]

If I were to settle credit card debt. What is a realistic percentage that a credit card company may accept? I've seen things where people say they settled for 10 cents on the dollar. But is settling for 40% or 50% of the debt more realistic? So if I owe $10,000.00 is $4,000.00 or $5,000.00 a reasonable settlement they might accept?

[LadyInTheRed]

i've heard 40% is average. But, if you are making the first offer, start very low at 10% or even 5%. It's impossible to know how any particular creditor is going to respond to an offer by a particular debtor. There are just too many factors.

Before you settle with any one creditor, consider the position you will be in if the others don't settle and make sure you understand the income tax consequences.

[frogger]

And in addition to what the Lady has stated, you need to be 100% sure and can verify that your outstanding balance will not be transferred and/or sold to another collection agency. One of the games played is that you settle with one collection agency, who then sells off your debt to the next, and the game keeps going.

The only way I would even think about doing any kind of settlement would be if it could be done with the original creditor. And.... you want everything in writing before you settle anything.

Or, you can just go ahead and file bk. Your credit is screwed anyways.

[rhoderider]

If I settle with the original credit card company and I have it in writing from them that the debt is settled in full and put on my credit report as settled that would be good?

[keepsmiling]

There is no one right answer to this. We have settled for literally token (less than 10%) payments with agreements not to resell. BUT my spouse is educated in the system with every intention of pursuing a lawsuit if they resell. WHICH THEY OFTEN DO. Do educate yourself on tax consequences. In my case, it actually helped our tax situation as we got a bigger EIC. That's how little we make lol... and why we haven't filed yet. Most probably won't find themselves in that circumstance. It really depends on the individual situation.

So much depends on your assets- whether the creditor knows you have not much; how savvy a negotiator you are; and how MANY creditors there are.
BUT again, 40% seems to be the generally accepted number. I've had offers to settle for much less; but being self employed (they can't garnish) and with little in the way to take plays a big role in that.