Will a Credit Card Company Accept a Payoff of a Certain Percentage?

Usually, when a credit card company sees that a person is close to going bankrupt, they will allow a credit card holder to pay off a percentage of the amount they owe on their balance. This is only due to certain factors that the credit card companies take into consideration. There are certain qualifications and requirements that a card holder must meet before the credit card company will allow them to arrange a settlement.

The criteria that must be met before you can get a credit card to settle for a percentage of your debt will differ from company to company. Each credit card company will evaluate you and your credit situation differently, and may very well give you very different offers. Here are a few of the things that would qualify you for, or sway the creditor’s opinion on whether or not you meet the requirements to arrange a debt settlement.

1. Credit Crisis

The main thing that credit card companies look at when you request to make a percentage payoff is what kind of trouble you are in with your credit. If you owe a bunch of money on your credit card, and you have a credit history that reflects bad payment habits, they will be more likely to accept your request.

This will also determine what percentage they allow you to pay off. This plays a huge role because if you have had an easy time making your payments on time, you havea great payment history, and you have been easily paying your other creditors as well, the credit card company you are requesting a settlement from will assume automatically that you can just as easily continue to make the payments you are currently making.

2. Income and Assets

Credit card companies will take into consideration what kind of money you are making, and what items you have within your possession that are of a descent value. They do this, because, in the worst case, if they were to sue you for not paying your credit card bills, they would want to know how much they would be able to get. They may compare that to the amount you would pay them if they were to allow you to pay just a certain percentage of your debt. It is a morbid thought, yes, but it is still possible.

3. On the Verge of Bankruptcy

What credit card companies often see is that you are at a high risk of going bankrupt. Because credit cards will often choose not to sue, they would like to choose a debt settlement over bankruptcy. This is because, if you pay a percentage of your credit card debt, though it may not be the full amount, it is better than the amount they would get from you if you went bankrupt. If you chose bankruptcy over a debt settlement, they would not end up getting any money from you. So naturally, they would rather that you paid a partial amount of the debt you owe than none at all.

0% APR Student Credit Cards

This can be a complete success or a complete disaster. A lot of this will have to do with how frugal you are with your credit cards and how aware you are of your credit situation. Many students can go through a great deal of trouble because they don’t realize that this amazing interest rate can vanish instantly.

A credit company only has to give you a 15 day notice before they drop the hammer and the interest rate goes from 0% to anywhere between 15% and 30%. You could see a higher interest rate because they considered the grace period a big favor for you, but in reality it is just a pain in the butt because you might have piled up debt that you can only make minimum payments on and then you have no way to pay it off after they bump up the interest rate.

That is why it is important you go over the Terms and Conditions and find out if there are any changes that could happen during the next year or as long as you have the card. Sometimes you can find cards with 6 months or a year of guaranteed no interest. This can be a huge opportunity for you to leverage someone else’s money if you have some good strategies in place.

I personally got into a lot of debt after a failed business experience. It was a lot for a college student anyways. I felt as though I had no way out. I was at square one and I had to find a job and just try to get out of debt. Well I had gotten a cash advance of $10,000 for that year and I had to make some changes. I didn’t realize this until about August when I was down to about nothing and I had until the end of the year to pay off the line of credit. So I started improving my spending and found a good job. My situation improved, but I realized that it wasn’t going to happen by December of that year. So I found another company that gave the exact same opportunity for 12 months with a 0% APR. I took advantage of it and used the cash advance of this company to pay off this other card and it bought me another 12 months. Within the first couple months I was out of the hole and I was able to pay off the second card.

So you see that this can be a great opportunity to buy you some time to find out your financial life as long as you realize the terms of the card. Next you have to make sure you spend wisely and live a well budgeted lifestyle for your income. If you can do this then you will find 0% APR credit cards a blessing and not a curse.