I have a question regarding the way to settle credit card debt for
less than the balance due.
We have been helping a friend in financial difficulty.  She has earned
a lot in the past, but has enormous credit card debt, that she now
cannot pay. We are now seeing that the credit card companies are
willing to settle for a lot less- 80% less in the case of one company.
 And they promise not to hurt her credit. Which got my wife and I
thinking.  We have $110,000 in credit card debt.  We would be willing
to pay $20,000, now and in cash, for it to go away.  We also own an
apaprtment building with about $300,000 in equity, and a home with
about the same equity.  Aside from that, we don't have much- except
three kids that need to go to college soon, and not much in savings to
do it.
So our question is- how can we pay this off for a lot less and not
affect our credit?  Can we ever get credit cards again if we do this? 
And  do you think we can really reduce the debt by 80%?
Expect a lot of follow up questions.

---

Request for Question Clarification by darrel-ga on 06 Feb 2004 19:25 PST

Hello JHC--

You'll be hard pressed to find a credit card company or any creditor
willing to settle for 80 percent less than the amount owed without it
hitting your credit report. I know many creditors are willing to
reduce the amount you pay if you agree to a voluntary settlement. But
this will go on your credit report.

One point of clarification: have you heard of this kind of balance
reduction without this information appearing on your credit report?

darrel-ga

I have never heard of any CC company agreeing to settle for 80% LESS
than the outstandings, except in a voluntary settlement (agreed by all
creditors) where there is obviously nothing else available. (I'm in
the UK.)

In your case, because you have got great asset backing, I think that
you can forget it.

However, it's atill a great strategy to eliminate your CC debt because
of its high cost.

I suggest that you explore taking a loan now, while rates are low.