Wednesday, October 5, 2022

Will Bank Of America Settle Credit Card Debt

Don't Miss

Bank Of America Less Willing To Settle Credit Card Debt

Bank of America sues Hardesty over unpaid credit card debt

Weve been doing blog posts on how willing the banks were to settle credit card accounts for less than owed. Apparently this practice is coming to an end.

Why? The financial situatuion for Bank of America is definitely changing they are now so flush with cash that they are repaying the money they received in the bailout the TARP program.

I was alerted to potential change in debt settlement policies with this email:

Well I finally got up my nerve and talked to the collections dept at B of A. They said the only thing they can offer me is a 5% over 5 years at 480/month payment. They said they are not making any settlements. I asked how long this policy has been in effect and they said for the last two or so months. This didnt sound so good.

I asked if this was in part due to my debt not being very long past due and he said no. they just werent doing any settlements period. My one account for 12,000 is two months past due and my other account for 12,000 is still current, and I wont be paying this month. Does this make sense to you? I thought there were debt settlement companies who are still negotiating with B of A?

I agree, this must be very discouraging, but to the best of my knowledge, Chase and Citibank are still offering settlements. So what do you do if you are struggling with a large Bank of America bill and want to settle?

Here is an online discussion that shows how the willingness to negotiate has degraded from Feb 2009 to now.

Is It Better To Pay Off Debt Or Settle It

Quick Answer

In this article:

It is always better to pay off your debt in full if possible. While settling an account won’t damage your credit as much as not paying at all, a status of “settled” on your credit report is still considered negative.

Settling a debt means you have negotiated with the lender and they have agreed to accept less than the full amount owed as final payment on the account. The account will be reported to the credit bureaus as “settled” or “account paid in full for less than the full balance.”

Here’s what you need to know about the credit impact of settling debt.

How To Determine If You Should Negotiate Your Debt

If you have credit card debt that you are looking to settle with the credit card company, consider a few factors first. First, explore other options like credit counseling or bankruptcy. Either of those may be a better fit for your specific situation.

If you are not already several months behind in your payments, the credit card company may not be willing to enter into debt negotiation, so you might need to consider other options. The credit card company will also want to make sure that you have the financial ability to pay any settlement. This could be a lump sum or enough monthly cash flow to fulfill your settlement obligations.

You May Like: How Much To Open Citizens Bank Account

How To Avoid Having Your Debt Sent To Collections

If you’ve recently lost your job or incurred an unexpected expense such as a medical bill, there are resources to help you juggle debt repayment.

“The best thing to do to avoid having your debt going to collections is contact the creditor to set up a payment plan or ask for reduction on the amount of debt owed,” says Eweka.

Do this as soon as you know you’re going to have trouble paying your bills, and you could benefit from a lower APR, temporary forbearance or deferment, waived late fees or other accommodations depending on your financial situation. Be sure to tell your creditor about any financial hardships you’re experiencing, such as a recent layoff, furlough or reduction in working hours.

“Remember that the amount ofdebt forgiven may be taxable when you file your tax return,” advises Eweka. And before you enroll in any type of financial assistance, consider what’s best for your situation.

Don’t miss: Here’s the ‘most basic rule of thumb’ when it comes to paying off your debt, according to an expert

Tips For Settling Bank Of America Card Debt

How To Settle Credit Card Debt With Bank Of America

We are often asked if you have to hire someone to settle a Bank of America credit card debt or if you can do it on your own. Technically, anyone can settle debt on their own. If you have small amounts of credit card debt, you might want to take a stab at it on your own. If you want real success, then you need to hire an attorney with a proven track record of successfully negotiating debt. Someone who has relationships with the banks and knows the answers to questions, such as:

  • Should you disclose your financials?
  • Is the offer you receive the best youre going to get?
  • What makes this a valid offer?
  • Does it need to be in writing?
  • Is the written offer valid and binding on all parties?

Be aware of debt settlement companies who are often involved in debt relief scams. Debt settlement companies are not held to the same legal and ethical obligations as a debt relief attorney. Plus, if you are sued by Bank of America, then an attorney can defend you in a court of law. A debt settlement company cannot and will refer you to an attorney who might not give your case the special consideration that you deserve.

Settle Credit Card Debt with Bank of America for Less With Legal Help

Any more questions about settling credit card debt with Bank of America? Give me a call for a free consultation at 858-217-5051 and we can go over your debt relief options.

Also Check: Is It Safe To Link Bank Account To Venmo

Getting Your Own Debt Defense Attorney

There is a cottage industry of consumer attorneys who have been having good success in defending people against debt buyer lawsuits. They are succeeding by raising challenges to the claims made by the debt buyer and the collection attorney. It seems their claims cannot be easily substantiated by the excel spread sheet they purchased from the original creditor or another debt buyer. There is a whole lot more to it than that, but thats detail that you can discuss with a creditor defense attorney.

Hiring an attorney to defend you against a credit card lawsuit costs money. You will have to weigh that cost against what it may cost to settle the account. The smaller the balance you are being sued for, under say $2500.00, the less sense it may make to defend the suit from a pure economic basis. Also, many attorneys who are not familiar with debt buyer lawsuits will just tell you pay the bill, or I can settle it, or get payments set up for you. Well, you or I can do that too. Sometimes, what you really need, is an attorney already familiar with defending against debt collection lawsuits, and there just arent that many of them out there.

If your financial situation has deteriorated to a place where you are being sued for unpaid debt, and you have multiple debts that you are unable to pay, it may be time to consider bankruptcy as an option to manage the situation, and even get a fresh start in a chapter 7.

Not sure where to start? Click on the big blue Get Debt Help button.

Settlement Works Best If Your Debts Are Already With Third

Although the average settlement amounts to 48% of what you originally owed, that number is a bit skewed. If your debts are still with the original creditor, settlement amounts tend to be much higher. You can end up paying up to 80% of what you owe if the debt is still with the original creditor.

Settlements tend to be higher with original creditors because they want to recoup as much of their loss as possible. But with a debt collector, they purchased your debt from the original creditor for a small percentage of what you actually owed. So essentially, they can accept a lower settlement amount and still make a profit.

The other reason you want most of your debts to be in collections is to avoid additional credit damage. As we explained above, debt settlement companies will advise you to stop making payments. If your debts are to charge-off status yet, this means youre facing additional credit damage from a fresh round of missed payments.

On the other hand, if your debts are already in collections, the credit damage is already done. You want to get collection debts discharged as quickly as possible, so you can get to recovery and rebuilding your credit faster.

Also Check: Does Citizens Bank Use Zelle

You Wont Have To Pay Any Fees Until Your Debts Are Settled

In 2010, the Federal Trade Commission enacted the advance fee ban on debt settlement companies. The rule prohibits any debt relief company from charging fees before settling or reducing a customers credit card or other unsecured debt.

This means a debt settlement company cant charge you any fees until theyve officially settled at least one of your debts. So, you shouldnt be required to pay any setup or monthly administration fees on a debt settlement program. If you do, then the company must offer a money-back guarantee. If they dont, its a sure sign of a debt settlement scam.

Myth No : I Have To Pay Upfront For Debt Settlement And The Settlement Company Controls My Money

How to Settle Credit Card Debt with Bank of America (BofA)

The truth: Not anymore.

Debt settlement companies that market their services are banned from collecting advance fees from consumers before settling or reducing a consumers credit card or other unsecured debt, according to a Federal Trade Commission rule that took effect in October 2010.

The rule also specifies that the consumers money set aside to pay debts be maintained in an account at an insured financial institution that the consumer owns the funds and any interest accrued that the debt settlement company does not own, control or have any affiliation with the company administering the account and that the provider does not exchange any referral fees with the company administering the account.

Also, consumers can withdraw from the debt relief service at any time without penalty and receive all unearned provider fees and savings within seven business days.

Read Also: How To Change Bank Info On Cash App

Dont Ignore The Summons

When you get a court summons for credit card debt, pay attention to itand make a plan of action. In many cases, youll have 20 to 30 days to respond to your summons, so read it carefully to learn exactly how much time you have to develop your plan.

You might be tempted to ignore your court summons, either because you dont think the debt collectors have the right person or because youre trying to get out of debt without paying, but thats never a good idea. If you ignore your summons, the court is likely to rule in the debt collectors favor and your wages could be garnished until you pay back the amount of money that the court rules you owe.

Debt Settlement Companies Are For

That means they make their money from people like you, who they are purporting to help. Thats not to say they are necessarily dishonest, but the fees they charge and the terms they negotiate can be less than favorable in the long run.

The fees you pay will be worthless if your credit card issuer sends your account to collections.

An example of how debt settlement companies work can be illustrated in this way: You may be advised to stop paying on your credit card debt and to instead send the amount you would be paying to the settlement company. From there, theyll take a portion as their fee and put the rest into an escrow-type account to build your lump sum payment. The fee they charge means less is being put aside than if you were simply saving the money yourself.

In addition, the credit card company may decide at any time to charge off your account and send it to collection in which case, the fees paid to the settlement company are worthless.

Read Also: How To Get Money Off Cash App Without Bank Account

Credit Card Companies Dont Like Debt Settlement Plans

Debt settlement is something credit card companies are hesitant to do mainly because they lose money.

Your credit card company is under no obligation to negotiate or offer you a settlement for less than what you owe. Its up to you to convince them this is in their best interest and to offer a payment that will satisfy their business needs.

Be prepared for a long and often frustrating process of back-and-forth negotiations all while you are withholding any payment from them. This will help them take your threats of zero payment seriously enough to consider settling

Negotiating A Debt Settlement With Bank Of America Credit Card

Bank of America Sample Debt Settlement Letter

A Bank of America credit card debt settlement can be reached even if you have already been sued for debt. When you cant make your credit card payments for 180 days, Bank of America will charge-off your account and your credit card account is considered in default. At this point, you will probably get sued for the credit card debt. Lawsuits are expensive, so the credit card companies want to avoid them. This serves as an advantage to the borrower when negotiating a debt settlement. Another advantage is that Bank of America considers charge-offs as a cost of doing business and they receive tax benefits for the written off debt.

So if you are sued and find yourself defending a Bank of America credit card lawsuit, a debt settlement could be a win-win for you and Bank of America. A debt settlement is a negotiation between the credit card borrower and the credit card lender that you will pay back a reduced amount of the original debt that you owe in one lump sum or over an extended period of time in a payment plan. Bank of America would rather negotiate a debt settlement for your credit card debt than have you declare bankruptcy and receive nothing.

Recommended Reading: How To Wire Money To Td Bank

Negotiating And Settling A Credit Card Debt When Youre Being Sued By A Collection Attorney Representing A Debt Buyer Is Different

Debt buyers buy defaulted accounts in bulk from credit card issuers. They pay different amounts for the legal rights to the debts they buy. The fresher the debt the higher the purchase price. As defaulted credit card debts age, the less it costs to buy them. Credit card debts that get charged off by your original creditor are often bought and resold several times. The cost to purchase debts that have already been sold once or twice will be much less than was paid originally.

Debt buyers invest in unpaid debts and are taking a risk that they can get troubled credit card borrowers to pay up. Debt buyer collection has proven to be profitable. They dont get people to pay on all of the accounts they buy. Not by a long shot. They only need to collect enough money on the portfolio to cover the cost of the purchase, the overhead to collect, and meet projected portfolio profits.

Debt buyers settle credit card debts they own for less than the total you owe on the account. They will either collect debts using in house debt collectors, assign accounts to a subsidiary collection agency, hire another debt collection firm, or place accounts with attorney debt collection law firms they have relationships with.

What Is Debt Settlement

Wecan help debtors even after theyve been sued or had a judgment entered against them. However, you are in a much better position to negotiate your debt and pay less than you owe if you take action before a lawsuit is filed. One of the best options for doing so is debt settlement.

With debt settlement, you can negotiate with your creditors to accept a lump sum payment for less than you owe. Although payment options are sometimes available, you usually have more leverage by paying a lump sum. In some cases, you maybe be able to push the debt collector to dismiss its case, which mean the lawsuit can can go away without paying anything.

You May Like: How To Change Name In Bank Account

How Resolve Can Help

If youre dealing with debt and not sure what to do, were here to help. Become a Resolve member and well contact your creditors to get you the best offers for your financial situation. Our debt experts will answer your questions and guide you along the way. And our platform offers powerful budgeting tools, credit score insights and more. Join today.

Citibank Settlements Are Improving

How to Settle Credit Card Debt with your Original Creditor

When it comes to settling with their card holders, it can be hard to pin Citibank down for predictability, which is such a huge element for developing a successful debt settlement plan. This fact, combined with the other things I will lay out, puts them further down this rank a bank review.

Settlement Savings and predictability: Depending on the account, targeting 40% for settling your Citicard is the most realistic expectation to set. Citibank also services other credit cards like Sears, Best Buy, Macys, Home Depot, Shell gas cards and more. These branded cards can be settled for 40 percent too, but often after they are placed for outside collections. When I put a debt settlement plan together that contains 3 accounts, one with BofA, one with Chase, and one a Citicard, I often target settling the Citibank card with a collection agency after charge off .

Flexibility: Offers to settle with the 94 day payment terms like other banks. Citibank offers longer payment terms on settlements after your balance charges off.

After Charge off: Citibank settlements with collection agencies after charge off can turn out better in a lot of situations. And because they service so many branded cards, including their new deal with Costco, many readers will find you have to settle Citibank accounts after charge off. But I repeat this is often a good thing.

Active page to discuss settling with Citibank or listen to my video about credit card debt and Citi on our YouTube DebtBytes channel.

Don’t Miss: What Banks Do Second Chance Checking Accounts

More articles

Popular Articles