Original Creditors

• Original debtors, such as the credit card company itself, are unlikely to want to settle immediately for a small percentage. After 90 days of not receiving payments, they may be willing to waive late fees and interest depending on a debtor's ability to pay.
  
  

Age of Debt

• Older debt that has been purchased by collection agencies for pennies on the dollar may be easier to settle for a smaller percentage. Some agencies will solicit a settlement and a debtor can mail unsolicited letters to collection agencies, offering to settle for a percentage or a debtor can hire a representative to negotiate for him.
  
  

Tip

• It is better to deal with collection agencies in writing with return receipt requested than over the phone.
  
  

Fair Debt Collection Protections Act

• Congress has passed the FDCPA, which prohibits collection agencies from engaging in certain practices.
  
  

Warning

• Failure to pay bills, settling debts for less and bankruptcy have a negative impact on credit score. Forgiven debt can be treated as income by the Internal Revenue Service (IRS).