Settling with your card issuer

At first, your card issuer does. The original creditor (CFPB, opens in a new tab) is the company that gave you the credit, and it may collect a past-due account itself, hire a debt collector, or sell the account to someone else.

Who holds the account matters, because only the owner, or a collector it authorizes, can agree to settle it. It also changes which federal rules apply.

Banks follow a federal policy that generally has them charge off card accounts (OCC, opens in a new tab) at 180 days past due. A charge-off is an accounting step. It does not cancel the debt, and you still owe it.

After charge-off, the issuer decides what happens next. It may keep the account with its own recovery team, place it with a collection agency, or sell it.

Selling is common. In an FTC study of the largest debt buyers, most of the debt they bought, by dollar amount, was credit card debt, and buyers paid about 4 cents on the dollar (FTC, opens in a new tab) on average. What a buyer paid does not set what it will accept from you.

If a debt buyer now owns your account, our guides to specific collectors can help.

With the issuer, your card agreement and state law set most of the rules. The federal debt collection law generally does not cover (CFPB, opens in a new tab) an original creditor collecting its own debt.

Once a collector or a debt buyer is involved, the FDCPA and Regulation F apply. You then get a validation notice (CFPB, opens in a new tab), and 30 days to dispute the debt in writing.

Settling means the owner of the account agrees to take less than the full balance as payment in full. Each issuer has its own practices, and each account is decided on its own facts. Nothing is certain, and we do not publish settlement rates for any issuer.

Whatever you agree, get it in writing before you pay.

We are writing guides to settling with specific card issuers. Coming soon: Capital One, Chase, Discover, American Express, Citi and Synchrony. We are not affiliated with any card issuer.

If you have $10,000 or more of unsecured debt in total, your cards can be enrolled together, whether the issuer still holds them or a collector does. We negotiate each account separately, and you approve every settlement before a dollar is paid1.

While you save, your credit score will drop and issuers can keep collecting or sue. Settlement is not the right fit for everyone.