*i remember this being discussed at some point, somewhere on TWW, but i searched and couldn't find anything*

i'm about to pay off several credit cards (mostly wedding debt) and i was wondering if there was a "pay off" amount that a credit card company will accept that is lower than the actual balance on the card?

the reason i ask is that a few years ago, a friend of mine got a bonus from her job and wanted to pay off her credit card. she had about $3,000 cash and her balance was about $4,300 i think. she called the cc people, told them she wanted to pay it off and asked if they'd accept the $3k and they did. they said they'd lower the amount owed if she agreed to pay off right then, which she did. she said it didn't go against her credit at all, and she swore the credit card wasn't in "collections".

so my question is - will this work? i don't need to tell the cc people i have the whole balance. i can front like i've only got so much...do you think they'll take it and lower the amount owed? or was there more to my friend's story then she let on?

thanks!

[Edited on February 4, 2009 at 2:58 PM. Reason : .]

2/4/2009 2:57:43 PM

your friend is confused

2/4/2009 3:03:25 PM

when she first told me, i immediately thought "collections" but she swore to me that wasn't the case. this is the reason i ask....

2/4/2009 3:04:12 PM

i thought the only way this worked at all was they would at times wipe the fees/interest that have been accrued but almost never the principal - it doesn't sound like you've had enough time to build up a large amount of fees/interest though

there is more to your friend's story and i'm sure more factors go into it like other payment history, current open accounts and their balance, and credit score - probably more even - doesn't the fact that you paid a lower agreed amount go onto your credit report as well?

with a known time for an upcoming event it seems quite stupid that you wouldn't acquire a high balance 0% interest card to carry the balance

2/4/2009 3:04:59 PM

worst thing they could tell you is no. as long as you are positive that your credit score won't be impacted by "paying less than previously agreed", i'd say go for it.

just be damn sure before you do.

2/4/2009 3:05:01 PM

CC companies will do this if it's the only way they think they'll get their money. But your credit will suck really bad; so I hope you aren't looking for a house loan anytime soon..

[Edited on February 4, 2009 at 3:06 PM. Reason : ]

2/4/2009 3:05:22 PM

i didn't really anticipate spending as much as i did on the wedding. daddy gave me "X" and i proceded to spend "X times 2" before it was all said and done. i let it get out of hand - all my fault - and my husband hates i let it get to that point. ah well, such is life. it's getting paid off now, that's all that matters.

i've never made a late payment a day in my life - honestly - so i guess you're right. even if the CC company would entertain the notion of letting me pay an amount lower than what is owed, it seems my payment history would tell them that i'm not at risk of filing bankruptcy and/or just not paying the damn thing - and they probably would turn me down.

i guess it's not even worth a phone call. i'd be worried that, no matter what they assured me of, that it would somehow effect my credit if they did allow me to do it. and i've got really good credit - albeit a really high debt-to-income ratio right now

[Edited on February 4, 2009 at 3:10 PM. Reason : .]

2/4/2009 3:09:16 PM

finally, rational thought.

2/4/2009 3:13:02 PM

finally? it's my 3rd post on this topic it's not like you guys have been beating it into my head for hours.

i just wanted to know if this particular scenario was legit or flawed....just checking options, that's all.

[Edited on February 4, 2009 at 3:14 PM. Reason : .]

2/4/2009 3:14:23 PM

hi, we're the credit card company. we make money off of interest and fees. right now you have a balance. we are racking up...interest and fees.

you want to pay us less than you owe. this will cause us to cease getting additional interest in fees. you want us to do this without negatively affecting you in any way like credit hits...

what's that? you have decent credit and have always paid us back in the past. noted.



SURE, WHY NOT!?!?!?!

2/4/2009 3:18:52 PM

clark howard talks about this all of the time...try his website for tips: http://www.clarkhoward.com

basically, he says that it does work...just call the credit card company, tell the how much you owe, and ask them how much it would cost to cancel the debt

2/4/2009 3:20:45 PM

^really?! does it mention anywhere in there that they require you to close the account? or do you get to pay down to a zero balance and leave the daggone thing open? i don't want to close the accounts. open, unused credit is good credit.

2/4/2009 3:24:24 PM

Open, unused credit is not necessarily good credit. It will look bad if you have cards you don't use on a regular basis. I got docked some points on my credit score last year because I had an "open but inactive account."

Also, cc companies can tell you that they'll accept the payment, but your original contract is still enforceable. If they chose to take you to court for not paying in full, they would most likely win. Because you can't modify a contract and have it enforceable without giving something in return yourself (sort of how you have to make it a bargain, this is "consideration").

2/4/2009 3:42:19 PM

It has been discussed before and I don't have much time, but it's something along the lines of....

You can do it, but it will show on your credit report as "Settled for less than owed". Does that impact your score? I don't know, but if someone looks at your actual report and not just the score, it may affect whether they grant credit or not.

You will be 1099'd on the difference between what you paid vs. what you owed come tax time.

2/4/2009 4:54:39 PM

Quote :

"the reason i ask is that a few years ago, a friend of mine got a bonus from her job and wanted to pay off her credit card. she had about $3,000 cash and her balance was about $4,300 i think. she called the cc people, told them she wanted to pay it off and asked if they'd accept the $3k and they did. they said they'd lower the amount owed if she agreed to pay off right then, which she did. she said it didn't go against her credit at all, and she swore the credit card wasn't in "collections"."

This often happens, but the problem is the only way the company will take you seriously is if you are behind on payments (Not in collections yet, but behind a month or so). If you are current they are going to laugh at you more than likely.

Also, If you do this and they accept a smaller amount than the balance... get it in writing and signed that $X,XXX.XX will make this account PAID IN FULL. Another thing that often happens is that you send them $3,000 on a $4,000 account thinking you've settled.... they just send you a bill then next month for $1,000 and say "I have no idea what you're talking about"

[Edited on February 4, 2009 at 5:10 PM. Reason : ]

2/4/2009 5:08:10 PM

Just pay what you freakin owe. You spent the money. You have almost enough to pay it off + the interest you agreed to pay. Quit being a weasel.

2/4/2009 5:11:51 PM

Sounds like you're not the type of customer these offers get extended to. Even if you were able to talk them into it, it's definitely going to affect your credit rating.

You spent the $$, now pay it back.

2/4/2009 5:14:46 PM