Time To Settle This

Faye hasn't paid on her credit cards in a long time, and her husband's condition makes her think about a settlement.

QUESTION: Faye wonders how you go about figuring a settlement offer with the credit card companies. They haven’t paid in 6 to 8 months. She owes $27,000 to the 3 of them and they have $36,000 in savings, but her husband isn’t working because of an injury. Dave tells her where to start, and also addresses a small business question.

ANSWER: When you are that far behind, they will probably settle in the 50 cents to 1 dollar range. You can easily settle for 70 cents. If they say $8,000, then I’d offer them $4,000. But it takes some haggling, because they will argue with you. If they tell you to come up with a number to offer them, then do it. Offer $3,000 on an $8,000 bill and go from there. Get it in writing and don’t give them any money until you have it. Never give them electronic access to your checking account, and never give them post-dated checks. Keep the letter the rest of your life, because it will come back around to you.