I have 2 charged-off accounts, and I want to call and try to pay towards debt but can only afford about 100 per month.
Will they work with me.. Capital One and Discover
Will, the creditors work with me.
The answer is not what you would expect. Here is the dead honest answer – Yes and No.
Both Capital One and Discover regularly settle debt, but rather than thinking about them as individuals; you need to think about them as someone with multiple personalities.
Banks Have Multiple Policy Disorder Syndrome
A bank is made up of many different departments with many different policies.
An accurate way to think about your debt in the bank process would be to imagine a canal lock system where water flows from one lock into another to move the boat ahead on its journey.
Once an account misses a payment date and goes past due, it enters the first lock. If the account is brought current and the delinquent payment is made, the account will turn back and exit the canal to continue its previous travels.
However, if the account remains delinquent and enough time passes that the account is ready to flow into the next lock (think a payment cycle), it goes into lock two, then three, then four, and out the door to be sold, sued, or stored.
Each collection lock has different policies and procedures. While the first stage of collections won’t offer to settle the debt, the third stage, or lock, is more likely to encourage settling the debt or refer an account for outside collections or legal action. And then even if you are sued, that doesn’t mean there isn’t still a way to settle the debt.
Early stages of collection want to guide you back to bring your account current again and not encourage payment for less than you owe. They want to keep you earning them money.
But as your account moves through the system, the policies and procedures will change. And that change is the secret sauce the creditors individually craft and that experienced people that help settle debt are aware of.
There are many reasons why a creditor might discuss settling your debt after 60 days delinquent. Those might include:
- Concern about the economy.
- Collecting what they can today versus what they predict what they will collect in the future on your account.
- Internal bank policy.
- External banking policy.
- Your past account history.
- The amount of the balance due on your account.
- Your credit score.
- Other accounts you have on your credit report and your payment history with those accounts.
Even if the bank doesn’t talk to you about settling the debt on a collection call, you may wind up with a settlement offer in your mailbox.
I’ve known people told by their bank that they never settle debt only to arrive home and have a fantastic settlement offer in their mailbox. It is truly a Multiple Policy Disorder situation.
The Secret is Not if a Bank May Settle – They Probably Do
The complicated part of settling your accounts is understanding how to operate in the individual creditor system.
It’s really not a matter of “gaming” the bank or tricking them. In fact, it is quite the opposite.
A talented person that settles debt needs to be more of a scientist than a magician. They need to have observed how the bank is dealing with delinquent debt, have had experience with the offers they are extending, and know what is a good, reasonable, or bad settlement offer.
While you can certainly attempt to settle your debt yourself but you lack the knowledge of what they will accept and you are emotionally wrapped up in the situation. It’s like trying to be your own divorce attorney in a difficult relationship.
It Can Get Very Frustrating
If you just read what other people were able to achieve by reading some online forum, that would give you an inaccurate expectation of the best offer you can get.
Not only do we have the individual account differences between customers that might change the offer you can realistically expect, but creditor internal policies change as business needs change. They can be fluid instead of permanently fixed.
I spoke to my debt coach friend, Damon Day about this. He said, “People are in a terrible spot when they think about debt settlement. I spend a lot of time helping my clients understand what is a reasonable expectation and a good offer so they are confident the settlement is a smart thing to do and they understand what their other options are as well.”
In addition to the fluid nature of the creditor policies, you also have the turbulent waters of who to get debt relief help from.
On one hand, you have debt relief companies that will treat your account as another widget moving through their system. They won’t treat you as an individual or consider your unique situation. They might even structure the program they sell to collect fees in advance before they even settle your debt. That will take you longer to make your debt go away.
On the far opposite side of the spectrum, you have a few people like Damon Day who is more of a debt concierge that crafts a custom financial solution to deal with all of your debt in a way that helps you achieve your goals as you move forward from today.
Settling Your Debt is Like Navigating a Mine Field
So you asked, “will they work with me.” And hopefully, now you can understand while they may work with you, you need to know when to make the right request to get the best settlement offer for you. And you also have to understand if debt settlement is even the right strategy for your overall situation.
If you ask Capital One or Discover to settle a debt and they say no. That doesn’t mean they won’t, or does it? How will you know without experience and with a strong emotional attachment to the situation?
Please post a comment below and let me know what you decide to do.