Collectors are more flexible as time passes, particularly as debt collection nears its statute of limitations.
For anything older than two years from delinquency, you should find the creditor very agreeable.
oThe lowest ranges are often obtainable for: (a) medical bills, (b) credit card debt approaching charge-off and after charge-off, (c) debts nearing the statute of limitations for collection, (d) debts owed to tax-exempt credit unions, and (e) when payoff of the agreed-upon amount is performed within 30 days.
oSome creditors will permit a lower payoff on real estate upon a bona fide sale to a third party.
This is known as a "short sale.
" If the debtor can find a buyer (with third-party financing) before foreclosure action, then creditors have been known to reduce a debt by 10 percent or so.
If the property goes through foreclosure and fails to sell at the sheriff's auction, then a creditor will take even less, often agreeing to a 20 percent or greater reduction.
Creditors are very unlikely to remove any derogatory credit reference in the event of a short sale, however.
You can always ask.
oDebts that are old or charged off are often sold to third parties (mostly collection agencies) as part of a portfolio (with thousands of other accounts) for 10 cents on the dollar.
Moreover, the buyers of such debts cannot get a tax deduction (write-off) as the original creditor can.
As such, these debts can often be bargained at the lowest ranges.
So the next question is, when will a creditor generally agree to reduce a person's debt and remove derogatory entries from a credit report? I've found that creditors won't agree to do anything unless people are late-usually 60 days.
When a debt is approaching 90 days and beyond, they become even more flexible.
Often, people ask if they should stop paying their creditors in order to gain leverage in getting their payments/balances reduced.
The answer is always the same: that's your decision.