Lump Sum Offers

You took a chance and accepted a travel rewards card with a very high APR. Now the balance is up to $8,000. This is not necessarily a bad situation because you can pay it off. Some may say the interest rate is so high it will take a long time to pay off. Not necessarily; there is a way out of this situation known as a lump sum settlement offer.

As the name would infer, a lump sum settlement offer involves a large upfront payment of a percentage of balance. This upfront payment will cancel the debt. For example, offering to pay $5,000 in cash to wipe out the $8,000 debt. This brings about a question. Why would a credit card company be willing to accept a lump some payment of only a percentage? Basically, a lump sum payment is better than nothing. If you are only able to pay the minimum each month and are in danger of defaulting on the card, a lump sum offer might be attractive to the lender.

Some may wonder how someone in financial arrears could acquire the $5,000 to make a lump sum offer. Well, honestly, the answer is irrelevant. The $5,000 could come from a loan, a 401K withdrawal and other sources. So, do not fret any questions about where the money came from. As long as the offer is on the table, the company will take the offer seriously. Yes, they may try and negotiate but it is doubtful they will be dismissive.

You can negotiate with the travel card company directly regarding a lump sum payment or you can hire a financial services company to do it for you. It would be best to try on your own first so as to avoid paying the financial advisor any fees. If things don’t work out, you can hire an adviser later. Yes, it really is that easy.