In part 1 I discussed negotiating with your credit card company. Once that fails and the account gets significantly behind, they will transfer it to their collection department or an outside collection agency.
Curiously enough, collection departments or agencies, although often more aggressive than the credit card company, will usually negotiate more readily. They’re paid on what they can get, so a dollar in hand is worth a lot more to them than two dollars over a long period of time.
There are a couple of tricks to remember in negotiating with a collection department or agency. First of all, there’s little to be gained in threatening them with bankruptcy. They’ve heard that many many times, and simply won’t believe you.
They’ve also heard the “identity theft” argument: “it wasn’t me; the card was stolen.” That will usually result in them telling you to make a police report or file a statement with the Federal Trade Commission.
Just remember not to be penny wise and pound foolish. Sure you might be able to negotiate a $10,000 credit card and pay it off with $6000 in cash, saving $4000, but that won’t have any better effect on our credit report than a bankruptcy will. In fact, bankruptcy may well be the more prudent and less expensive thing to do. Before you pay anything under these circumstances, check with a good consumer bankruptcy attorney. There may be better options available.
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