Question: How Do I Settle With Creditors?

Go over your income and expenses with a fine-tooth comb, figure out what you can afford, and only agree to pay a realistic amount.

Generally, you can negotiate the best settlement on a debt if you can come up with a lump sum amount to resolve the debt.

If you agree to a payment plan, you will likely pay more over time.

How much will creditors settle for?

Aim for 50% or less.

It might take some time to get there, but most unsecured creditors will settle for around 30 to 50% of the debt. Therefore, you should start with a lower offer—around 15%—and negotiate from there.

What percentage of a debt is typically accepted in a settlement?

Start low by offering to pay 30 percent or less of what you owe and negotiate your way to an amount that you and the collector can both agree upon. Make your offer attractive. If you’re going to ask that they settle for 70 percent off of what you owe, you should pay it in a lump sum payment.

Is it bad to settle a debt with a collection agency?

Debt settlement will hurt your credit score more if the credit cards you settle are already in good standing and if you end up settling multiple credit card accounts. Following the debt settlement company’s advice means several months of missed payments, which damage your credit even before you settle the debt.

How can I negotiate credit card settlement myself?

Here’s how each works:

  • Lump-sum settlement. If you have access to a chunk of money, such as from an inheritance, you can try to negotiate a settlement for less than the full amount owed.
  • Workout arrangement.
  • Forbearance program.
  • Debt management program.
  • Debt settlement program.