You can. Your credit card companies do negotiate the amount of debt that you owe them. However, with that said, you may want to consider filing for bankruptcy. the reason why is because regardless if you decide to go under a repayment or lump sum amount for the credit card debt, in a bankruptcy you don't have to pay back a single cent. Not only that, all your other debts that you may have can be discharged as well. Discharged meaning your liabilities on the debts disappear so that your creditors cannot come after you any more.
While your credit score may take a hit from filing bankruptcy, every time you miss a payment or have a law suit on you, etc., your credit score would have taken a hit. Generally, a person who contemplates bankruptcy already has very bad credit score to the extent that filing for bankruptcy has minimal affect on their score. Rather, once they are done, their credit score can be rebuilt without worrying about creditors taking a hit on their score.
Consult a local bankruptcy attorney to assist you. Also, contact your local legal clinics and/or legal organization where attorneys volunteer their time and service for free and/or reduced rate.
Good luck and wish you success.
Min Gyu Kim (Peter)
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I absolutely agree with the previous answer in terms of a possible bankruptcy filing. Settlement on this particular account will not help your overall standing if there are many other debts outstanding and delinquent. However, it is not a bad idea to try and simply settle this matter if this is the only debt you have. The problem with debt settlement is that it will still reflect on your credit report as settled for less than the amount owed. Furthermore, there may be possible tax ramifications with 1099 statements being issued. If you are going to attempt to settle, I would suggest a counter offer as low as possible. Most collection agencies are authorized to go as low as 70% of the total amount and can frequently settle for less. In addition, you may be able to work out payment arrangements, over time, if you are not able to offer a lump sum settlement.
First, you should ask, 'What are my options in handling debt?' Answer: There are 5 options people use in hanlding their debts. Opt#1.Put your head in in sand and ignore the problem. Opt#2: Rob Peter to pay Paul. (the most popular option) or using one credit card to pay on the other credit card, personal loans, home equity lines of credit, etc. As a pratcial matter the balloon only expands so far. OPt #3: the bulldozer strategy. Work all the OT possible and obtain another full time job. You simply plow yourself into ground. The problem is you get tired, run-down and sick. Informal staregies are 'Money Management'-paying back 100% through IMM (International Money Management f/k/a Consumer Credit Counseling) , Debt Settlement-paying back 50% or less on the dollar. Then there's the formal option of goind to Court with a Chapter 7 or Chapter 13. Most practictioners cannot give you the pluses and minuses of each opition, plus what would be the monthly payments and total costs for each option. If someone cannot tell you exactly what your monthly payment in a Money Management Program would be and the total cost, they really can't analyze debt. And the same goes for Debt Settlement. and you should be able to receive a print-out comparison of all options based on a dollar amount. But it's not just the dollar figures which is important. There are other factors to consider such as being sued, a poor credit score while doing debt settlement, etc. Your counselor needs to be be able to demonstrates all the pluses and minuses. You need to review your overall debts and have a review and analysis where you will know with precision the following: 1) What will be my monthly payment in Money Management and the total payemtns, 2) what will be my monthly payments in Debt Settlement and the total cost, 3)what will be my cost to file a Chapter 7 and 4) What will be my costs to file a Chapter 13 if I don't pass the means test.(You been unemployed so there probably isn't an issue here.) You need an overview of your options and the consequences of those options. Usually the cancellation of debt is not 'phantom income' or 'imputed income' and you should know that there's IRS Form 982 'Reduction of Tax Attributes Due to Discharge of Indebtedness) and you can use this form if you receive a 1099. Most of America is insolvent when they have any debt cancelled and if you are insolvent at the time the debt was cancelled, then you don't have 'imputed' or 'phantom income'. But always check with a CPA or an EG (Enrolled Agent) regarding this issue before you settle on a debt. Usually, Chapter 7 bankruptcy is the best option in dealing with your debts but you have to check with a thorough consultation with an experienced bankruptcy attorney. You should be warned that most Debt Settlement Companies are total scams and are found in the 'sand States' of California, Texas and Florida. Most states require that they be licensed and bonded by the State Banking Commission. Check to see if they are licensed and bonded in your state and that they have a local office so that if they 'screw you', you will be able to go into their office and point your finger in their face and tell them that 'they screwed you' by putting all their fees in the initial payments and then when you collapse your debt settlement plan after 6 months, you paid them a tidy fortune for nothing. File complaints with the FTC, your banking department, the US Post Office, and they are lawyers, with the Bar Grievance Committee of their state.