According to an article in the New York Times, in exchange for a hit to their credit score, borrowers may be able to negotiate significant discounts on their outstanding balances with increasingly desperate card companies: After helping to foster the explosive growth of consumer debt in recent years, credit card companies are realizing that some hard-pressed Americans will not be able to pay their bills as the economy deteriorates.
So lenders and their collectors are rushing to round up what money they can before things get worse, even if that means forgiving part of some borrowers’ debts. Every major credit card lender is giving its collection agents more leeway to make adjustments for consumers in financial distress…
Debt collectors, who are typically paid based on the amount of money they recover, report that the number of troubled borrowers getting payment extensions has at least doubled in the last six months. In other cases, borrowers who appear to be pushed to the brink are being offered deals that forgive 20 to 70 % of credit card debt…
With credit card companies tightening their lending polices, Fox News Channels Shepard Smith spoke with credit expert and author Jordan Goodman about how consumers can cope. Among the solutions discussed Cambridge Credit Counseling Corp.
Just as mortgage lenders competed for years to be the first card to be taken out of the wallet, they are now competing to be the first ones paid back. Credit card industry data indicate the average debt discharged in Chapter 7 bankruptcy has nearly tripled since 2004. And in Chapter 13 bankruptcies, secured lenders like auto finance companies routinely elbow out unsecured lenders like card companies, trends that have contributed to the card lenders’ willingness to settle.
If you are presently delinquent on your credit card balances, now may be a good time to pay down that debt. Card companies will offer loan modifications only to people who meet certain criteria. Most customers must be delinquent for 90 days or longer. Other considerations include the borrower’s income, existing bank relationships and a credit record that suggests missing a payment is an exception rather than the rule. Read complete debt article>
