Question:
Dear Steve,
I have significant credit card debt having overspent and invested in coaching, personal development programs and starting a new business that I’m very proud and excited about.
One of my cards is TJX Synchrony with a balance of $7900 at 27.49%. I’d like to pay a good amount with my tax refund. What would you recommend if I’m interested in calling to see if they’ll accept a smaller amount for payoff? I’m not behind on payments.
Melissa
Answer:
Dear Melissa,
Congratulations on finding a rewarding path forward. It sounds as if you have only good days ahead.
The key part of your question is the statement you are not behind on payments. Creditors have no incentive to settle a performing account. That’s exactly what they are hoping to get. The sweet spot is a high balance, high interest rate, account that is no delinquent.
Like it or not settling debt is a game of playing the internal process at the creditor. To get to the right department and trigger a settlement offer you will have to go delinquent. This might be 90-120 days past due. Intentionally falling past due is not with risk or cost. When you fall that far behind it will be negatively reported on your credit report, you will be in active collections, you may be charged additional fees and penalty rates, and or course you risk the possibility of being sued. Oh yes, and the forgiveness of debt more than $600 will be reported to the IRS and if you are not insolvent then you will owe income tax on the forgiven debt.
Only you can determine if those consequences are worth the risk of getting a discount and settling the debt.
I would suspect that with brighter days ahead the logical path would be not to invite all of those negative consequences into your life. Why add unnecessary and voluntary angst into a current life of positivity and healthy personal development?
But that’s just my opinion.
If you would like to look at settling this debt, then read this, this, and this. At the very least, get some independent advice on how to handle this and don’t go it alone.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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Great information! My only other thought was if the internal ‘credit counseling’ was denied by Synchrony, you might want to reach out to your local credit counseling agency. They cannot negotiate the debt that you owe but may be able to negotiate a lower interest rate on a debt management plan.
Steve, I, too have a account with Syncrony (a WalMart credit card), and I, too, was facing huge interest payments and barely making the minimum payment. So, I called them up and said I could barely pay on in and was thinking of defaulting or bankrupting, as I had no option (slight decrease in my income would’ve done it for me). I also pointed to huge bills of recent for my roof repairs. They told me that they could put me on a plan and lower my interest dramatically (was like a hundred dollars per month, but is now like 10 or twelve dollars: Of the 120.oo payment, about 111 or so goes to the bill, so maybe their fee is less than 10 dollars per month- it’s seems to be a set fee). They had no obligation to do so, but apparently, once they did so, they were bound by the agreement, so long as I made the minimum 120 dollar/month payment we’d agreed upon. Probably, they saw this as a better option than default, and no guarantee existed for them to do this, but it’s worth a try. When they see there are no other options, they might cut a deal. They keys (for me, anyhow) were my huge emergency repair payments, which I could document, and the resulting catastrophe that faced them if they let me default, which would be ruined credit for me, and no monies for them. Hope this helps.
Gordon W. Watts in Lakeland (between Tampa & Orlando), Fla., USA, earth.///
Good feedback. Have you looked at how it is beting reported on your credit report. It should show Paid as Agreed. It sounds as if they enrolled you into their internal “credit counseling” plan. Any idea if the plan has a time limit or is this until it’s paid off?
I haven’t looked at my Credit Report in ages, and don’t know, but when I looked in the past, it seemed accurate. So, I’m guessing they aren’t ripping me this time. (I do know there’s a way to get a free credit report like once a year, but I forget the details, and it was a real headache last time.) Yes, I think you’re right, Steve: I think it was some “credit counseling” plan. In fact, they wouldn’t let me do this alone, but insisted I get a “credit counseling” company to sponsor me (I guess to keep an eye on me?). I told them that they’d make more money if they didn’t have to pay a middle-man, but they didn’t buy it. My company was Clear Point, but they just merged with Money management International (MMI), and their fee of like $8.02 ($120.oo paid less $111.98 credited) is about 2.88% Interest ($8.02 fee for 30 day cycle = $97.57667/year interest, which is, compared to the $3,387.22 balance subject to interest, about 2.88%). So far as I know, the plan says that I must keep paying until my balance is paid off, and that’s the only time-limit ever mentioned.
Gordon Wayne Watts in Lakeland (between Tampa & Orlando), Fla., USA, earth.///
Go to http://annualcreditreport.com to keep both eyes on your major credit reports or you can use a free service like http://creditkarma.com to keep one eye on your credit reports.
Question asked.
Answered.