Using your credit report can help you make this decision. Many people focus on their credit score, but your credit report is much more than just a score. It will provide a list of all outstanding debts that you owe, open accounts that you have, and ongoing collection efforts against you. These all factor into your ability to settle a particular account. See Check Your Credit Score for more information. If necessary, you may wish to get a copy of your credit reports from the three major U. S. reporting bureaus, TransUnion, Equifax and Experian. Their websites contain information about obtaining copies of your reports. [2] X Research source [3] X Research source [4] X Research source
Offer less for older debts. The company is likely to believe that older debts are generally less collectible. Therefore, they are more inclined to accept a lower offer. A reasonable offer might be something around 15-to-25 percent of the debt. [6] X Research source
Ask if you should address your letter to a particular individual. In most cases you will just write to the collections office (or something similar), but some companies may refer you to a particular individual.
As an example, your letter might begin by saying, “Due to a recent automobile accident and the medical costs I have incurred, I find that I am unable to make all my outstanding credit card payments. I am writing in the hope of reaching a settlement with you for an amount that I can realistically pay. ” An explanatory letter for a settlement like this may help you with future lenders as well. Keep a copy of the letter, and be prepared to share it. Potential lenders will be concerned when they see a settlement on your credit history, but your explanation will lend context.
An offer of this type could say something like, “I am able to make an immediate payment of $4,000 in full settlement of my outstanding credit card debt. ” Be sure to use the phrase “in full settlement,” so it is clear that you mean this as a full and final payment and not as part of a payment plan. If you intend to begin a payment plan, you could offer something like this: “I would like to start a payment plan, whereby I would pay you $1,000 by the first of each month for the next six months. This $6,000 would constitute full settlement of my outstanding credit card debt. ”
For example, your opening paragraph may say, “I am writing to follow up on our telephone conversation of July 16, 2016. I made an offer to resolve my credit card account with a single payment of $2,000, but you countered by saying that your company would accept $8,000. ”
This latest letter could state, “I appreciate your request for a payment of $8,000. However, I cannot meet your request. I am able to offer a final payment of $3,500 in full settlement of my outstanding debt. ”
Realize that you really have very little leverage for controlling the way the company reports your account to a credit-reporting agency. Even so, it is worth discussing. Ask for the most favorable treatment you can get.
the amount of your agreement the payment deadline. Even if the agreement is for “immediate” payment and you are including a check with the letter, you must say so. periodic payment dates if you are setting up a payment plan the phrase “full and final settlement. ” This binds the company legally to this amount and prevents future collection efforts for any additional amounts. a description of how the company will report this debt to the credit-reporting agencies. It makes a difference whether a debt is reported as “paid,” “settled,” or “paid late. ” Try to negotiate for a reporting of “paid. "
Send the company two copies of the letter with your original signature. In the body of your letter, request that the account representative sign one of the letters and return it to you. Above the signature space, include the words, “Agreement accepted. ” Then provide a line for the company representative to sign and insert the date.
