How to Make a Payoff Offer to Credit

Making an offer to pay off a credit obligation can allow you to pay the debt for less than the full balance. The process is known as debt settlement, and is particularly useful for paying off delinquent delinquent credit card balances and other unsecured debts. Creditors and debt collectors sometimes will accept payoff offers ranging from 20 to 70 percent of the balance on delinquent accounts, according to the "Wall Street Journal's" SmartMoney.com. Some people who are battling excessive debt choose debt settlement as an alternative to bankruptcy.

Instructions

1

Review billing statements or correspondence from debt collectors to determine the status of your accounts. Payoff offers aren't typically accepted on accounts that are up to date. Creditors and debt collectors simply have no reason to negotiate on debts that the debtor is paying as agreed. Payoffs are usually possible after accounts fall about three months behind.

2

Call the debt collector or bill collector if the account is at least three months past due. Tell the representative that you cannot afford regular monthly payments but would like to make an offer to pay off the account. Offer to pay 20 percent of the balance to settle the account. Once you choose to make a payoff offer your goal should be to pay as little as possible to resolve the account. Starting low gives you room to negotiate.

3

Increase your offer by 10 percent if the creditor or debt collector turns down the initial offer.

4

Follow up with a letter if the debt collector continues to balk at your offer. Increase your payoff offer to 35 percent in your letter and inform the debt collector it's your final offer. Show patience by contacting the debt collector once a month until you have a deal. The debt collector's goal is to collect as much of the balance as possible, but you should stand your ground and pay only what you can afford -- even if the negotiations last for months.