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Ask Dr. Don
By
Don
Taylor,
Ph.D.,
CFA
•
Bankrate.com |
Negotiating a discounted payoff
Dear Dr. Don,
I am getting ready to pay off a credit card, and I am wondering
if it is worth my time to try to negotiate a discounted payoff?
The cards are with Wards (now Wal-Mart), Discover and Sears. Please
let me know what you think.
Thanks,
Karen Credit
Dear Karen,
Negotiating a discounted payoff on a credit card isn't the right
approach for someone who is just looking to save some money when
paying off a debt. Unless you're already in collections on the account,
the creditor doesn't have much of an incentive to deal.
Credit negotiators offer reassurances (not guarantees)
that, along with negotiating a reduced payment, they can get the
creditor to agree to remove the account from your bill or, failing
that, have your credit report show that the balance was "paid
as agreed" under your credit agreement.
Removing the account from your credit report through
negotiation isn't likely. A creditor will sometimes agree as part
of the negotiation process that the account was "paid as agreed"
instead of your credit report reflecting that the account was settled.
Negative information stays on your credit report for
seven years, except for a Chapter 7 bankruptcy filing, which stays
on your credit report for 10 years. If you're able to get your credit
under control on your own, there's no reason to use a credit negotiator.
If your credit is out of control, then it's time to consider credit
counseling or bankruptcy.
The Federal Trade Commission has an online
brochure that's required reading if you're considering credit
counseling. Once you've read the brochure, you can see what advice
the National Foundation for Credit
Counseling offers on debt management.
Read this
earlier Dr. Don column to learn more about the debt negotiation
process.
-- Posted: Nov. 6, 2002
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