Negotiating credit card debt happens all the time. In the 14 years of settling debts for my clients, I've only had 6 accounts that either the creditors refused to settle, or offered a payment plan. And I've settled over 2,500 accounts.

Why such an extremely high ratio of settled accounts? Am I that good?! The answer is...no.

Credit card companies are just like any other "for profit" business. They want to maximize profits. And by not settling with struggling debtors, they are not maximizing profits. Also, by not negotiating credit card debt, distressed debtors are also losing.

By not agreeing to negotiate credit card debt, the creditors have three main options. All three alternatives are not promising:

1. Do nothing by walking away from the account and hope someday the debtor pays the debt.
2. Resell the delinquent account to a debt collector for a much lower price
3. Sue the debtor.

Creditors Would Be Foolish Not To Negotiate Your Credit Card Debt

First of all, if the creditors do nothing, chances are slim that they will ever get repaid. Since consumers are not legally responsible to pay old, defaulted accounts, most people don't see the point in paying off the account. They reason to themselves "why should I pay it when I'm not legally responsible for that debt anymore?

Next, if a creditor sells the account to a debt collector, the creditor will only receive about 5-25 cents on the dollar. Not very attractive. On the other hand, if your creditors decide upon negotiating credit card debt with you, the average settlement is about 45%. That means that the creditor collects an average of about 45 cents on the dollar-much more profitable than selling your account the account to a debt collector and only receiving 5-25 cents on the dollar, right?

Last, if a creditor sues a debtor that doesn't have a lot of assets, the courts may or may not require the consumer to repay the defaulted (unpaid) debt. The courts use income and expense guidelines to determine if the debtor may qualify for chapter 7 bankruptcy, which is "debt forgiveness" . If the court allows the debtor to file chapter 7, then the debt collector will get nothing. In fact, the creditor actually incurs a loss because of lawyer fees, court costs, etc.

The vast majority of creditors would much rather settle than sue. It's much too risky to sue. Besides, even if the creditor wins a judgment from the courts against a debtor, there's no guarantee that the creditor will ever get paid. In that event, creditor will be in a worse situation than before-having spent $1,000's in attorney, court and administrative fees, and still not able to collect from the debtor.

However, negotiating credit card debt is not for everyone. As a rule of thumb, if you have a substantial amount of assets, you should find alternative strategies to eliminate debt.

For these reasons alone, negotiating credit card debt simply makes dollars and sense!