Q: I have 716 and 732 credit scores, pulled from myFICO. I have 4 small credit card balances and one very large one with Bank of America for $23,300. I am really hoping to get some debt relief from BoA and must try to settle. If I can settle, I would be able to quickly pay off the remaining credit cards. Can I request a debt relief if I have never been late with credit card payments? I do not want to stop paying to preserve my scores. Right now, I am only able to pay the minimum monthly payments, but at this rate I will never get it paid off. At the start of 2010, my salary dropped by $18,000 and I have lived from paycheck to paycheck. So here are three questions,
– what are my chances of getting debt relief with Bank of America?
– should I write a letter, go to the branch, call?
– should I tell them I am considering filing for bankruptcy?

A: I know of a few people settling with Bank of America for less 25% of the outstanding balances, but most of them were late on payments. So chances of settling and getting debt relief are quite decent. You don’t want to be late, but as soon as you enter into a debt settlement agreement, it will be recorded on your credit record and the scores will drop and quite a bit. Still, may not drop as bad as if you miss a few payments before hand.

You need to call FIA Credit Cards Services which serves as collection / recovery outfit for Bank of America. Use this number – 888.800.5160. Have your credit card ready. The system wants you to put the last 4 digits of the credit card account. Or you can just stay on the line. Once the rep answers the phone, give the account and explain the situation with salary drop, etc. Basically, take it from there. If you are offered a debt settlement while you are still paying on time, great. If not, miss a couple payments within next 4 to 5 months to convince them to extend a meaningful debt relief offer. As far as mentioning Chapter 7 bankruptcy, you sure can do that.

Most likely, Bank of America will settle and quick. Any debt relief / settlement offer must be sent in writing and state something like this,

This letter is regarding a proposal to settle the above-referenced account. We will accept $XXX as a settlement on this account. To accept this offer, you must agree to send the installment payment of $XX by MM/DD/YYYY.

By completing this payment plan, your account will be considered settled and you will not be obligated to pay the remaining balance, provided no additional charges appears on this account after the date of this letter.

As far as the amount you should aim for, anything less than $6,000 would be great. Then again, you can always try to push back and work on even lower amount. Once you get an offer, it is much easier. You will have to likely make 6 to 12 monthly installment payments under any debt settlement agreement, but the details you can work out with BoA / FIA.

Useful posts,
Settling credit card debt with Bank of America
Debt settlement with Capital One and Bank of America
Free FICO score

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