questions about 45% credit card settlement with Barclay's
Date: Wed, 02/09/2011 - 02:50
I am currently seeking employment and cannot afford the minimum payments on a Barclay's Bank credit card balance of $10,185. I reached a settlement agreement with Barclay's bank for 45% of the original balance, which ends up being $4,580. The account is 92 days past due. Family will help me secure a loan. Should I wait longer to get a better settlement deal and is this even possible at this point given that I've already agreed to the 45% settlement (provided I don't pay anything to bring the account current)?
If I do pay on the 45% settlement, if after paying off the full balance, will my credit rating be more detrimentally affected if the credit report says "settled for less than the original amount" versus if it said "debt settled for the original amount"? Is there any difference in outcome with respect to my credit rating or to anything else? In what situations will this occur and how can I avoid this after I pay off the settlement amount regardless of the amount?
Help with this will go a long way for me...Thank you in advance.
Any debt settlement will affect your credit rating. How badly?
Any debt settlement will affect your credit rating. How badly? How many accounts are behind? Have you been late with other accounts?
You might be able to do better than 45% when you get closer to charge off. I would call Barclays and tell them that your circumstances have changed and that you cannot afford the 45%. Start out by offering 25% - you might get them to offer 30% - or even take your offer.
Stress that you are trying to get back on track. If they don't counter-offer, then wait until next month and call them again - or keep offering the 25% when they call you.
"settled for less than original amount"--what effects
Hi Aubrey,
Thank you for the advice--From your feedback and from others on this and other forums, It sounds like there is a strong likelihood that Barclay's will offer a percentage lower than 45% to settle as I get closer (e.g., 120 days) to charge-off . Financial hardship and that I'm trying to get back on track has consistently been the theme of the rationale I have been providing them for why I have not been able to pay the minimum payments until now. So, I will follow your suggestions, try for a lower % right away, and if they don't accept, wait it out a little longer and then try again.
It sounds like regardless of how much the final settlement is for, it will affect my credit rating detrimentally. In fact, I am currently late on 4 other credit cards for which the net total of the balances of them is $10,500. So, if I settle for a smaller percentage of the total with these other cards as well, is the effect on my credit rating proportional to the number of credit card companies I've settled with for lower than the original amount? After I settle with all the credit card companies, and after my credit rating takes the hits it will take from "settling for lower than original amount", how long will it take to have my credit rating climb again (After all, the fact that I will no longer be late on these accounts and that they're closed and payed off must have a positive affect on the rating as time goes on, right?).
Lastly, is any of the damage caused by the repeated "settling for lower than original amount" entry permanent? In other words, will my rating never go above a certain value, or will some other prohibition on receiving credit in the future occur even if my credit rating climbs back up to 800 following settlement?
Thank you for help in advance!
I have no experience on how settlement affects credit scores bec
I have no experience on how settlement affects credit scores because I haven't looked at mine. Before I settled I was in a debt management program - that certainly affected my score. I dropped out of that and my payments became delinquent, then on to settlement.
I do know the combination of late payments and settlement will adversely affect your score as well as chargeoffs.
You might want to go to one of those websites that will give you your credit scores for free (if you sign up for something, but you can cancel afterwards) and get your scores now and compare them after settlement. I don't believe it matters how much your settlements are - it's the fact that you settled. Just google "free credit scores" and carefully read the fine print.