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If I have around $4000 in credit card debt, what's a typical settlement?

San Francisco, CA |

I'm currently trying to settle/negotiate my credit card debt (no thanks to my spending ways during college). The debt is around $4000, but the absolute maximum I'd be able to pay might be around $1000 (annnd I'm willing to pay it off in one lump sum). BoA is the original creditor, and they're going to sell the debt off to a third-party after today, so they tell me. So I'm just wondering what's the typical "going rate" for a settlement in this situation? BoA says that 35% of my debt is the absolute best they can do, but what about once it's sold to a third party? I just want some statistics to help me during negotiating, or any tips at all.

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Attorney answers 2


This is a difficult question to answer because so much is dependent on the particular facts and circumstances of your case.

How old is the debt?
Are you employed?
If unemployed, how long have you been unemployed?
What is your monthly discretionary income?
What is your "collectability" if they were to obtain a judgment?

35% of the debt is not a bad settlement. The longer you wait, more interest and fees will accrue. So even if you get the purchaser of the debt down to 25-28%, it may still be more than the current offer of $1,400.

I wish you the best of luck in finding a resolution to this matter.

Disclaimer: The materials provided herein are for informational purposes and neither constitute legal advice nor should they be relied upon as legal advice. Every situation is fact sensitive, and it is impossible to evaluate a legal problem without a comprehensive consultation and a review of all facts and documents at issue. This answer does not create an attorney-client relationship.


There is no norm. I've had credit card companies open with 70% of the debt and not budge, open with 70% and settle for 20%. Same with debt collectors. It has to do with the institution, the personality of the party you are dealing with, and other important factors such as your credit and employment where they can "look" at your ability to pay when they run your credit report. BofA will likely eventually sell off the debt to a third-party or attorney. Just beware that it can result in a lawsuit.

Also be aware that any settlement with a credit card company in excess of $600 means that the credit card company is required to issue you a 1099C for the amount forgiven. In other words, if you owe $4K, and settle for $1K, expect a 1099C for $3K. You will be required to pay taxes on that $3K because it is considered income under treasury regulations.

This information is not, nor is it intended to be, legal advice. This does not constitute the formation of an attorney-client relationship. You should consult an attorney for individual advice regarding the specifics of your situation.