Negotiating a settlement to 10% of debt owed

First of all if it is a secured debt with collateral such as a car and etc., banks generally will not settle with you, but will repossess your car and then come back to you for the loss after they sell it. Sometimes then they will settle for less.

In regard to 10 cents on the dollar for an unsecured loan, that sounds too good to be true and rarely happens. Generally, if you are truly insolvent and could file bankruptcy, a credit card company, unsecured loan with a bank, medical bill and etc. will negotiate and settle for less. Usually at 25 to 50% of what you owe.

After they settle, if you are not insolvent, you may be liable to pay tax on the forgiven debt. Otherwise, if you have assets totalling $10,000 and your debts are $10,000 at the time of settlement and you were forgiven $4000 - you must count the $4000 as income for the year in which you settled and the creditor will send you a 1099C. However, if you owed $14,000 and you only had $10,000 in assets, you would pay no tax since you owe more than you have in assets.

Hello Byaffiliate,

10 cents on the dollar is quite a deal if it truly exists, I personally have not witnessed it. I have settled some accounts at 20%, but have yet to see 10% and 20% is rare. It depends on the creditor, your individual situation, etc..

Usually, the bank will get to a certain point where they are willing to negotiate 20-70%. They would rather settle with you than turn you over to collections or attorneys. Not all creditors will offer the same settlements. They all differ according to their terms and contracts.

If you find that you need expertise in this area, we can help you. We help hundreds of families just like you every day. We have solid relationships with creditors and offer them payoffs in lump sums because we work with so many people at one time. Would you perform open heart surgery on yourself or let an expert do it for you? I prefer the expert. However, I respect your decision if you do it yourself.

Good Luck and God Bless!

You can settle debts yourself, but I haven't seen 10%, I did get 20% on one of my credit cards. The others want 35% - 50%. You should have the funds ready before you make your offer, once you have the funds call them up or send them a letter, let them know your situation and that you would like to try and settle your account. I would wait to hear their offer first and if it's to high, make your offer. If they do accept this, make sure you get your offer in writing before making any payments.

Goodluck with this, but I am thinking like everyone else usually it is a heck of a lot higher than 10% of the debt, you can always try though, that may be a good starting point for you. Let us know how it works out I would be curious to know.