It is possible to settle credit card debts, at least once they are "charged off" or "written off." These terms don't mean that you don't owe the money anymore. They mean that the creditor considers your debt to them to be a bad debt, and accounting rules require that they no longer consider it an asset on their financial statements. Creditors must charge off credit card debt when it becomes 180 days or more delinquent.

To settle credit card debts, at least to get the best discount to the actual amount owed, you must pay a lump sum of money, not monthly payments. If you don't have a lump sum, they will likely accept monthly payments, but they will want you to pay on the full amount of the debt, or a very high percentage.

Example: Assume you owe $10,000 on a delinquent credit card debt that has been charged off. A debt collector may accept for example, $3,000 in a lump sum to settle the debt. But if you don't have the $3000 to pay, they may in the alternative accept what you can afford to pay per month, say $150 per month, but they will likely expect you to repay a much larger total amount, say $8,000, with the other $2,000 forgiven.

And don't forget that the amount that is forgiven can be taxable income to you, with certain exceptions. In the example where you settle for the $3,000 lump sum, you would receive an IRS Form 1099 from the creditor for $7000, and you may have to pay income tax on that amount. This is not true if you file bankruptcy.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization