Negotiating With Your Creditors When You’re Past Due


We had two questions from readers who wondered if it was better to go past due with your creditors so that you can negotiate with them.

This is a valid strategy, but it does have some problems. Let’s take a look at the individual situations.

Preston asked us:

I was doing pretty well with real estate until the slowdown hit, then I got stuck with some large payments that made it impossible to keep up. Selling the real estate was impossible and for the past couple of years I used credit cards and robbed Peter to pay Paul.

Rather than go through foreclosure I gave my property to the bank via deed in lieu of foreclosure. My credit scores have already nosedived to 546. My credit card balance is around 60k and all of them are current. The rates range from 9.9% to 28.49%.

Your blog has been very informative and based on what I have read it looks like I should be negotiating hard with my credit card companies. And if I understand some of your advice, I should even consider not making payments to make the negotiation easier. And since my credit scores have already dropped I wouldn’t be hurting myself by doing this. Am I correct in my observations? Thanks.

Thanks for your question Preston. Yes you definitely want to be negotiating with your credit card companies. Normally I would suggest that you try to balance transfer your high interest credit cards to cards with a better rate. But since your credit score has dropped, you may not be able to get approved. That means that you are going to have to go in swinging with your credit card companies, and negotiate some of these interest rates and fee removals.

In your specific situation, you do not want to go past due on your bills – yet. Start by calling your credit card companies and asking them to lower your interest rates instead. Usually, it is easier to get your interest rates reduced if you are not delinquent. You will definitely have to speak with a manager, or possibly even two. The general customer service people you will reach are probably not going to be able to help you.

Just be firm with them. Keep reiterating what a great customer you’ve been, how much you like their services, but that you cannot accept the current interest rates on your card. I would go ahead and tell them you intend to balance transfer (even if you can’t). They won’t know the difference, and it’s a good bargaining point.

Make sure you ask to have any and all fees removed or waived from the card. Do not threaten to close the account, just keep repeating that you need them to help you change the terms.

This is the best case scenario. If you are polite, and persistent, you should be able to get your interest rates reduced. If you call and the rep on the other end is rude, or unwilling to help you, just hang up and call back. Someone there will be able to help you.

Now, worst case scenario here, let’s look at the other part of your question.

And if I understand some of your advice, I should even consider not making payments to make the negotiation easier. And since my credit scores have already dropped I wouldn’t be hurting myself by doing this. Am I correct in my observations?

Going past due at any point will lower your credit score. BUT it will be easier to negotiate things like lump sum settlements, and fee removals. In my experience, it is harder to get interest rates lowered with a record of late payments.

Now, if you do choose to go past due on a couple of your cards so that you can work with the collections department (who have a lot more leeway to help you than customer service does) make sure you do one thing:

You will want to negotiate for them not to report you as late, or to change the information on your credit report. Some companies will do this, some will not. But you can certainly go past due, negotiate to have fees removed, and then negotiate for them to remove the “late” mark on your credit report. Get it in writing though, or its as good as fiction.

Jenna just reviewed an excellent book on this topic – The Guerrilla Guide To Credit Repair. It explains these procedures in a lot of detail. If you do plan to go past due to negotiate, it would be worth it to pick that book up and use the negotiation tactics and sample letters in it.

You can also go past due, get your fees removed, and then challenge the late payment if it shows up on your credit report. So you have a lot of options at this point.

Try negotiating with your credit card companies before you pay late though, there’s no point in putting additional black marks on your credit report if you don’t absolutely have to.

Another reader, Jessica, had this question about past due payments and negotiation:

Filed bankruptcy chapter 7 and it has been discharged. I have a credit account that existed before the filing but was not included because it had a zero balance. Since then, I incurred a balance on it that I have not been able to pay it off. Would it be better to call the creditor and make small payments on it or let it go to collection and work out a partial lump sum payment with the collection agency? If I let it go to collection will my credit suffer even more?


It will always be better to deal with the credit card company rather than a collections company. There are several reasons for this:

  1. You can negotiate with the credit card company to change what they have already reported and clean up the past due marks on your credit report. A collections company will not be able to do that.
  2. If the credit card company sells your debt it will show up on your credit report as “charged off” which looks really bad. Charged off after a bankruptcy looks worse.
  3. When the credit card company sells your debt to a collection agency, it will open up a new past due account on your credit report, so it’s like getting burned twice for the same account.

Definitely call and make payment arrangements with your credit card company. You can even offer to make a lump sum settlement with them – you don’t have to wait for the debt to be sold. Check out the articles below – they’ll give you more information on how to negotiate with your credit card company.

Thanks for your question!

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6 Responses to “Negotiating With Your Creditors When You’re Past Due”

  1. jackie Says:

    I have about $15,000 in credit card deb. I have been paying the min payment requuired for the past couple of year. I pay interest rates of 9% to 20% on multiple cards. I just came into some money (enough that will allow me to pay off all of these balances) Should I just write a check for the balance or should I call and try to widdle the balance down? is this even possible? i dont want to just write a check for the balance if I can negotiate some how with them Thanks for your time

  2. Elizabeth Says:

    I file chapter 7 bk in 2003 which has been discharged. I’ve manage to get myself into debt again and I just cant seem to make the minum payments anymore. Till now I’ve been on time with my payments and still makeing my payment. How can I negoatiate with the credit card company? to allow me to pay a certain amount a month that I can afford. Please advice? Thanks

  3. Don Parsley Says:

    My son and his wife allowed themselves to get behind on Credit Card debt because he was laid off. Their total CC debt is around $20000. Of course, their credit rating has been damaged, but what happens if they cannot pay the minimums. Already they are being called (a lot) by collection agencies. We can help a little, but are on a fixed income. Can they consolidate this debt and if so, are the credit counseling companies reliable.

    Thanks for any information.

  4. Ana clara Says:

    Can my credor take me tyo court and put me on jail?my credit card is past due.I am sik and in divroce processes my husband take all the money form me,and i am paying rent after hi soldede ours house..If i pay my card i has no money to pay my rent and food.What i can do?

  5. michelle Says:

    I would like to know if I let my car be repoed but I have another car that I own.. Can they take the car I own to be used for payment on the repoed one? We are having some financial problems and I do not want to let me financed car go but this seems like the only solution.

  6. Sharon Says:

    My husband are divorcing, we have a business, that we are selling off assets to pay ccards, but i may be late on one, I was able to pay off the other. I cannot afford to pay this as i have my personal debt also,and jerk wont give a red cent. When i tried negotiating int rates, they flat out said no go figure Chase. Anyway i negotiated one personal card to zero percent but they froze the account, and closed as grantor, i also have 58M in student parent plus loans in which i deferred,I have never been late on any bills, yet did this hurt me by deferring and having cc negotiated and frozen? Im trying to sell eequipment to pay the debt but im getting denied as a co-signer on student loans, score 686. What can i do to increase this fast I want to keep my son in school. How many points can i increase immediately my score was in the 800 prior

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