Is There an Advantage to Settling Credit Cards and Other Debts During the Coronavirus Lockdown?

Is there anything you can do to settle your credit card balances or other debts in collection during the novel coronavirus (COVID-19) pandemic and is there advantage to doing it now versus later? This post answers that question and provides a suggestion.

The natural inclination for many people is to do nothing while businesses are shutdown and they are working remotely or have been laid off. However, this situation may be presenting you with a unique advantage to settle credit card debt and other debt in collection for much less than the balance. In fact, we’ve had debt collectors contacting us to see if clients want to settle.

Debt Settlement During Coronavirus

Debts might be able to be settled right now because the guidelines used by credit card companies and debt collectors sometimes change. Right now, with the economic problems caused by the coronavirus, many credit card companies and debt collectors are not getting paid at all and are concerned that they might not get anything in the future, either.

Depending on your financial circumstances, if you have a bit of money set aside you could settle now for much less than you would have to pay later.

Our office tries to get the upper hand against collectors, banks, and credit card companies. The federal Fair Debt Collection Practices Act (FDCPA) applies to debt collectors and prohibits shady debt-collection practices. Some written notices debt collectors are required to send will, if incorrect, entitle you to statutory damages of up to $1000.

Massachusetts state law also prohibits unfair debt collection practices. There is a law called the Consumer Protection Act, sometimes called Chapter 93A, G.L. c. 93A, which prohibits any “unfair or deceptive acts or practices.” The Division of Banks has additional regulations for debt collectors and mortgage servicers. And, the Attorney General has regulations affecting collection of any debts.

The combination of state and federal debt-collection laws gives you a way to bring collectors and credit card companies to the bargaining table. They are often willing to settle debts when there are potential claims that could be brough under those laws.

Our office sends debt-validation requests under the FDCPA to get more information about the accounts. There are a variety of common problems and violations. If the collector misrepresents the account balance, that’s a violation. If the documents requested are not provided in compliance with the law, that’s a violation. Sometimes, the debt collector doesn’t even have the documents required to prove it owns the account, which is definitely a violation of the rules of evidence.

The combination of all these issues may be sufficient to get you a settlement that saves you money. You might even be entitled to damages if the debt-collection laws are violated.

We all hope that the coronavirus pandemic is over quickly, but you may be able to use the crisis as an opportunity for settling debts like credit cards or other accounts in collection.

Culik Law PC is a consumer protection law firm located in Boston, Massachusetts and Charlotte, North Carolina. Our attorneys have represented consumers and small businesses in settlements, lawsuits, and other negotiations with most every major bank and debt collector. If you would like to discuss how we can help, give us a call.

Joe Culik

Joe Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.