Creditors Motivated To Settle Credit Card Debt

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With Billions in Default, Vital Automated Communications System Brings Parties Together to Strike a Deal

There’s no question that consumers who have thousands of dollars in unsecured credit card debt want nothing more than to get out from under and stop the harassing phone calls, letters, and emails from their creditors. However, these consumers may be surprised to learn that their creditors are usually equally motivated – perhaps even more so – to settle their accounts. A sampling of recent reports clearly demonstrates some of the reasons why.

The New York Times: “…revolving credit debt totaled $939.6 billion.”
Federal Reserve: “6.5 percent of current credit card debt was at least 30 days past due.”
Yahoo Finance: “4 out of 6 credit card issuers reported increases in the amounts they wrote off as uncollectable.
Inside ARM: “The largest credit card issuer in the U.S., Bank of America, reported the highest annualized charge-off rate for August 2010 at 11.73 percent, up from 11.39 percent in July.”

As the creditor can only obtain payments from consumers who have disposable income to put toward debt settlement in the first place, it is in the creditor’s best interest to negotiate a deal whenever possible. In addition, the cost of collection – from professional staff time and telecommunications costs to postage and other operational expenses – often offsets the amount ultimately collected, if any. If the creditor fails to work with the customer effectively, the result may force the consumer into bankruptcy. If that happens, the creditor will end up with virtually nothing.

“It's a little-known fact that when you fall further and further behind on your payments, creditors would much rather agree to settle your debts than have you file bankrupcy and not get paid at all”, says debt expert Gerri Detweiler, author of The Ultimate Credit Handbook.

The fact of the matter is the creditor has room to maneuver. Often these accounts have been inflated by late fees and higher interest rates, adding thousands to the original borrowed amount. Since these fees have been imposed by the creditor, the creditor has the power to discharge and subtract these fees as part of the settlement. Further, the creditor is usually able to take a tax deduction for a percentage of the amount they write off. Of course, as soon as the creditor settles the debt, the cost of continuing to pursue the debtor is eliminated and the risk of the customer filing bankruptcy disappears. In addition, there is the potential of doing business with this same customer in the future once his/her credit is repaired.

However, the biggest stumbling block to a successful negotiation is often basic communication – getting the two sides together. Research has shown that direct contact between the two parties is often difficult, if it occurs at all. Don Goldberg of the Consumer Credit Rights Campaign says, “Debt Settlement companies act as a valuable intermediary between borrowers and lenders.”

Fortunately, a Web Solution developed by Vital Financial Assistance Software, ( automates the entire debt settlement process – from initial communication to settlement of the debt. “We are most impressed and encouraged by the large number and cooperative nature of the creditors with whom the program deals,” said Vital’s Compliance Officer Rich Rudner. “To date, over 2,900 creditors have logged into our system to settle their customers’ accounts. This confirms the creditors’ willingness to settle as well as the communicative power of the Vital software to help make that happen as easily as possible for both sides.”
The software is fully compliant with the Credit Card Debt Settlement Act of 2010 and related FTC Rules. Vital offers free enrollment and no upfront fees to access this transparent, user-friendly, web based program that assists the debtor and creditor in the debt settlement process. The company collects no fees until each debt is settled and the creditor is paid.

The Vital Financial Software program offers huge advantages for both parties. Initially, the program brings the parties together, often for the very first time. They both have 24/7 online access and share some of the same debt settlement tools. For example, the Settlement Proposal Tracker shows the status of settlement proposals sent, including counter offers and acceptance. Creditors can see how many accounts are in a debtor’s program and their total enrolled unsecured debt. This knowledge may influence the creditor’s decision-making process regarding settlement offer acceptance or counter offer.

In addition, at any time creditors may view and submit offers on any subscriber’s account. Another mutually beneficial aspect of the Vital Financial Software program is the ability of the creditor to offer Bulk Settlements, “It’s one of the industry’s newest capabilities,” according to All When a large number of subscribers have enrolled the same creditor, the program will advise the creditor. Thus providing the creditor with the opportunity to review all these accounts and offer to settle this group of accounts for a lower percentage (less on the dollar) than the creditor might be able to do for a single account. The creditor is also frequently motivated to offer a Bulk Settlement because it usually represents a substantial combined payment amount from multiple subscribers; eliminating the cost of collection for these accounts while establishing a time frame for payment of the settlement (usually no more than 30 days).

The ease in which the Vital Financial Software functions, coupled with the substantial reduction of the enormous expense and risks associated with collecting the huge amount of unsecured credit card debt carried by Americans in today’s tough economy, motivates creditors to utilize this no cost Web Solution to communicate and successfully negotiate settlements with their accounts.


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Charo Hidalgo-Gato
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