Credit card companies take what they can
Posted 9 January 2009, 12:50 in Personal Finance 1 Comment
The New York Times reports that credit card companies are more than willing to negotiate debt with customers. Thanks to the recession, collectors know that Americans are strap for cash. Therefore credit card companies are willing to settle for a lot less than what is owed to them. In fact, the NY Times article states that some credit card companies are forgiving up to 70 percent of credit card debt.
Banks and card companies are bracing for a wave of defaults on credit card debt in early 2009, and they are vying with each other to get paid first. —Eric Dash, NY Times.
Of course, there is no such thing as free lunch. Consumers with forgiven debt will see their FICO scores drop as a result of this. The average consumer score will drop 70 to 130 points for someone with a strong FICO score of above 700 points. In addition, there will be a negative mark on your credit report that will last for 7 years, almost as bad as declaring bankruptcy.
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Christine Erice
— Christine Erice · 22 May 2009, 06:44 · #