A contract is usually discharged by performance of the terms of the agreement. However, the parties may agree to a different performance. This is called an accord. When the accord is performed, this is called an accord and satisfaction. The original obligation is discharged.
In order for there to be an accord and satisfaction, there must be
(1) a bona fide dispute;
(2) an agreement to settle the dispute; and
(3) the performance of the agreement.
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Depending on the situation, debt settlement offers might range from 10% to 50% of what you owe.
Ing to Michigan law, creditors have up to 6 years to collect debt, including obtaining a judgment on the debt. However, by getting a judgment, your creditor can pursue collections indefinitely as long as they renew the judgment every 10 years.
Some want 75%?80% of what you owe. Others will take 50%, while others might settle for one-third or less. If you can afford it, proposing a lump-sum settlement is generally the best option?and the one most collectors will readily agree to.
Ing to Michigan law, your creditor has up to 6 years (from the date of your last payment) to collect on a debt, including obtaining a judgment on the debt. By getting a judgment, your creditor can pursue collections (likely a garnishment) almost indefinitely as long as they renew the judgment every 10 years.
Although the average settlement amounts to 48% of what you originally owed, that number is a bit skewed. If your debts are still with the original creditor, settlement amounts tend to be much higher. You can end up paying up to 80% of what you owe if the debt is still with the original creditor.
?Negotiating with a collection agency can be challenging, but it is vital to reach a fair settlement,? Raymond Quisumbing, a registered financial planner at Bizreport, said. ?Offering 25%-50% of the total debt as a lump sum payment may be acceptable.
While one agency may accept one-third of what you owe, another one may require 75% of your full debt amount. Before you suggest a lump-sum amount, determine the maximum amount you can afford and don't budge. Start with a low offer, such as 25% of the debt you owe, and work toward a middle ground.
Michigan Resident Debt Relief. InCharge provides free, nonprofit credit counseling and debt management programs to Michigan residents. If you live in Michigan and need help paying off your credit card debt, InCharge can help you.
