• DYE CULIK PC | Consumer Protection Division

Advantages to Settling Credit Cards & Debt for Less Than the Full Amount During the Coronavirus

Updated: Jan 22

If you have credit card debt, debts in collections, and/or are facing debt collection lawsuits, the Coronavirus crisis may present an opportunity to use shutdowns to your advantage and settle debts for pennies on the dollar. Though your inclination may be to simply do nothing until the pandemic ends, the current situation may present a once-in-a-lifetime opportunity to settle your credit card debt (and other debts handled by debt collectors) for much less then you owe.

Why could you settle credit card debt for less right now? The short answer is that the credit card companies’ rules may have changed to accommodate for the coronavirus. The long answer is that, in our office’s experience settling debts, there are guidelines each credit card company uses in determining whether, and for how much, to settle accounts for. These tend to be static. But with the economic upheaval associated with the coronavirus, credit card companies are concerned – justifiably – that they may not get anything.

If you are one of those who are fortunate enough to have funds safely set aside safely, you might be doing your later self a favor by settling for less now.

There are other ways to get leverage against credit card companies and debt collectors, too. For example under federal law, the Fair Debt Collection Practices Act (FDCPA) applies to debt collectors and prohibits them from engaging in unfair and deceptive practices. There are even certain notices they must send which, if not sent correctly, could entitle you to as much as $1,000 in statutory damages. Under North Carolina law, the Unfair and Deceptive Business Practices Act, G.S. § 75-1.1, prohibits shady debt collection practices, too. There is even a special North Carolina law that addresses other debt collection practices, the North Carolina Debt Collection Act, G.S. § 75-50.

All these laws give you a powerful tool to try to bring credit card companies and debt collectors to the table to settle some of your debts. Our office frequently sends demands for information such as debt validation requests to seek information about the accounts and the validity of the alleged debts.

All sorts of problems come up when we send these debt validation requests. Sometimes the collector misrepresents the amount due or the terms of the agreement. Sometimes they don’t send you information within the time required. And sometimes they don’t even have documentation to prove, under the rules of evidence, that they own your account. Really.

The combination of financial pressure from the coronavirus shutdowns and legal pressure from potential violations may be enough to get you a settlement for significantly less than you owe. In certain cases, if the violations of debt collection laws are severe enough you could even be entitled to compensation for damages.

Hopefully, the coronavirus pandemic is over soon. But in the meantime, while you are sheltering in place and practicing social distancing, there just might be a silver lining that puts more money in your pocket and clears away your outstanding debt. Using this opportunity to settle credit card debts or other accounts with debt collectors may be a way to release some pressure and set you up for a better financial future.

DYE CULIK PC is a consumer protection law firm. Our attorneys represent consumers in North Carolina and Massachusetts and help with credit, debt, and mortgage issues. If you are having financial troubles or would like assistance with resolving debt being collected by a credit card company or debt collector, contact us to see if we can help.