Credit card settlement...

[csonly]

Does anyone know what kind of settlement credit card companies may offer, especially if they are nearing charge off? I saw a post where a person discharged in Ch 7 was able to settle her 2nd mortgages for like 5% of the balance. Would credit card companies go that low to settle?

[shark66]

That very much depends on the entire picture...

How much debt is involved?

What's the debtor's overall credit profile?

How "collection proof" he or she is...

I doubt that you'll get a good deal directly from the CC company. In most cases that I'm aware of, they prefer to charge the debt off...and then you haggle with the 5th or 15th junk debt buyer for 5-10% of the amount owed...

Be also aware of the statute of limitations in your state.

But if you're intent on filing BK in any type of near future, settlement of any kind on unsecured debt makes zero sense in my opinion.

Good luck.

[keepsmiling]

I recently got an offer from Citi to settle at 25%, with a month to think it over, and a payment plan. Of course they have probably done their homework and seen that we are self-employed and have nothing in the bank to take.

I was very pleasantly surprised, but I'd still have 5 other companies to deal with, and can't go that high.

This is after not paying since August btw. I had one other offer early on from Target for about 45%. Haven't heard from Chase, BOA, Amex or Discover yet, although of course their letters and phone messages express how much they want to help me out :P

I did do some reading online - there are some charts out there on what % each cc has been willing to settle for, and to my recollection, it averaged around 40%. But I am sure it varies widely by individual. We need a separate discussion area for this topic.

[HHM]

5% is unheard of for CC debt (even from junk debt buyers).

Although low settlements are possible (think 15-20%) those are the exception, not the rule. If you are planning for settlement and have a multiple credit cards, you should "budget" for 40%, and you will see a range of offers from 25-50%, that when all is said in done, will average out to about 35%. Your mileage may vary. AS was already pointed it, it really just depends.

[csonly]

The reason I ask this is for my daughter who lives with me, I'm her POA, she is disabled from a car accident with a brain injury, she is capable of using credit cards but not capable to taking care of her own finances nor does she have the funds because she is on SSD. She has 15K to 20K in unsecured credit cards only. She owns nothing. If she continued to pay minimum payments, it will take forever and I'd hate to see her carry that burden when I'm no longer around. I'm in process of chapter 7 myself, but had statement of POA issued last week since we are over median. I'm worried about filing for her since she lives here and I can't say she contributes to any expenses here because of our DMI to begin with. That is why I was thinking about settling (if I could) with the cc if they are low enough. I have no problem with her filing 7, but I'm worried about expenses and how that works since she lives at home. Any thoughts?

[HHM]

Her 7 shouldn't be a problem, if she is receiving SSDI, that is exempt from the means test and she has special circumstances to boot. A chap 7 for her should be no problem.

[csonly]

That makes me feel a lot better, so no means is even submitted? My attorney mentioned about finding expenses, so that is what I was worried about. Yes, she gets SSDI and I will definitely talk to my attorney about that. He wanted to wait until after ours was discharged to file her due to the expense situation, but I would prefer to get it done sooner as she has a cc that is 161 days with no payment. Do you think filing for her now would be a problem, especially if we may be forced to convert to a 13 due to being over median. She is 25 years old. The attorney also said he would do her ch 7 for $1300 instead of his usual $1800, do you think that is reasonable?

[HHM]

You still do a means test, and still take allowed expenses. The means test would actually show Zero income, she would be below median, so you would stop.

On schedule I & J, you would explain the circumstances. Yes, there should be some expenses, but this is where "special circumstances" can work in the debtor's favor.