Making a lump sum offer to finalise your debt

If you can get the credit card company / debt collection company to agree, they can change the terms of the credit card contract.
This means that they can waive your credit card debt or, more commonly, accept one final lump sum payment and waive the rest.

You might ask, why would a credit card company / debt collector be willing to accept less than the full amount owing?

There are a few reasons, such as:

• If the credit card debt has been sold (assigned) to a debt collector, the debt collector will have paid significantly less than the amount owing, for the rights to collect the full debt. This usually means you can offer less and they will be willing to accept;
• If there is a risk that you will become unable or unwilling to pay, then the credit card provider might have no choice but to use the Court’s processes to compel you to pay. This can be costly and risky for the credit card provider. In these circumstances, the credit card provider / debt collector may want to accept a lump sum now rather than risk losing more money on costly legal proceedings.
• If you have a potential legal claim against the credit card provider, for example that they breached the responsible lending laws, then the credit card company / debt collector may want to accept a lesser amount to close your account now rather than waste money on a long drawn out legal dispute with you;

Understanding what motivates a credit card company / debt collector is key to understanding how much you can offer to finalise your debt. Using the Credit Card Debt Assistance Tool can take you through some of the relevant questions.