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How to Settle Credit Card Debt with Discover - YouTube
Channel: Michael Bovee
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Hi there, I'm Michael Bovee with
Consumer Recovery Network and
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welcome to our YouTube channel.
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Today it's been brought
to my attention anyway,
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that I should discuss
more creditors specifics.
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I talk a lot of generalities,
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debt settlement in general,
debt consolidation in general,
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dealing with debt buyers and
credit reports.
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But let's narrow down our
focus to specific entities.
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And I want to start with
Discover Bank and dealing with
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them when you can't afford
your credit card payments,
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because they're pretty unique.
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In fact, currently, at
the time we're recording this,
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they're probably the most unique
in how they deal with you,
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their customer when you're
unable to keep current.
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First of all, it's pretty
standard for all banks to offer
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some form of hardship plan or
reduced interest rate plan
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through a non-profit
credit counseling agency.
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If you're struggling with more
than just Discover, I would
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highly recommend that you call
the hotline and press one.
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And get connected to the largest
national non-profit credit
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counseling agency.
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And find out how you can you can
consolidate more than just one
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bill and
get your payments lowered.
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Or at least potentially find out
what they can be lowered to.
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It's a free call, so
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it's worth the effort
to get an exact quote.
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But if you're just dealing with
Discover and you want to get in
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touch with them about, hey I
can't pay this month's bill or
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I wasn't able to pay two
weeks ago when it was due.
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If you're not quite, or
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too far along in delinquency,
calling them can yield a result.
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And the result could be
exactly what you need.
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In other words,
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let's say your minimum payment
to Discover due is 400.
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You didn't pay it two weeks ago,
you're already late.
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Calling them and discussing your
options to lower your monthly
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payment could yield
something like this.
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Let's say your interest
rate's 18% and
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they're willing to
drop it down to 0.9%.
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Yeah, they do it, right?
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It's specific, you can't say
that they do it with everybody.
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You might qualify for it though.
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And having that discussion
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with them is a worthwhile
thing to do.
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Let's say that you can't
amortize your repayment,
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your balance to
Discover is 10,000.
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Amortize that over sixty months
and that's still too much for
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you and you can't afford it.
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Discover does some things very
unique than any other credit
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card issuer currently.
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They offer what's
known as a 60/60 plan.
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You have to qualify for it,
it's not for everybody.
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They're not going to extend
that offer to everybody.
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You have to be actually months
sometimes behind with payments
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before they can qualify you for
it.
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So obviously this starts with
a phone call to Discover.
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Can't do, can't qualify for
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a full repayment of your
debt over 60 months or
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a temporary hardship plan,
it's still too high for you.
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What if you took your balance,
your $10,000 balance and
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suddenly now it was
reduced to 6,000.
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So only 60% of what you owe and
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then you amortize
that over 60 months.
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Now your payment's even lower
than it was amortized over
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a $10,000 balance for 60 months.
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You've reduced it
close to half or 60%.
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So they call it the 60/60 plan.
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A bunch of creditors
tried to test this out,
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didn't really last long.
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And Discover's the only one
that really stuck with it, or
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at least publicly
that I know of.
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So there's another option.
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Now after that, if you've
fallen behind with Discover to
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the point where they're
charging your account off.
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You haven't paid in six,
seven months, they're gonna
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subject your account to many
different types of collection.
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They are one of the more
litigious banks in the nation.
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So while I favor them in how
they work with their customers
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early on in your delinquency,
they're one of
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the more aggressive ones after
you pass a certain point.
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And that point is typically
around the seventh
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month that you
haven't paid them.
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Your risk of being assigned
to a collection attorney,
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somebody who specializes
in your state and
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collecting through your courts.
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That's an escalation that
sometimes leads people to
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having to file bankruptcy, or
having to focus their attention
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on dealing with Discover and
settling with them early.
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Because getting sued and having
the risk of your wages exposed
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or your bank account levied,
even property liens.
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It's something you want
to prevent when you can.
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And you can,
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actually you can negotiate with
Discover directly before they
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ever place that account with
a collection attorney or
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a normal contingency debt
collector, the most common type.
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Who just calls you and
writes you letters to try and
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get you to pay.
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And if can't over
a certain number of months,
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Discover will just
yank it back and
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send it out to another
collector or to the attorney.
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Prior to any of that,
around month six of nonpayment,
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you can reach out to
Discover directly.
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And discuss with them what you
might be able to do in offer of
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a settlement in full, but
for less than what you owe.
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My data,
what I keep track of and
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what the consumers that I work
with or talk with or interact
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with on our other YouTube
videos or on our website.
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I do have a dedicated
page up on the CRN site
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dedicated to just Discover and
settling with that.
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That data suggests that
your targets are usually
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gonna bottom out at 40% of what
you owe as a settlement target.
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There are times where they're
going to want more and
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you may be one of
those profiles.
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Some of the reasons that
a bank might want to try and
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collect more from you
in a settlement for
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less than what you owe,
than say someone else.
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Is it's consistent across all
debt collectors really in banks
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is, is that you might just
look more collectible to them.
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You look like somebody who
can afford to pay more.
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So they have actually
a kind of scoring model,
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they'll draw a line at
a certain percentage for you,
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your neighbor might get better.
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So if you're prepared to go as
high as 50% in negotiating with
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Discover, that's a very
realistic target for
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a lot of folks out there.
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So keep that in mind, when
you're reaching out to them,
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all of these things that I've
discussed with you are something
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that you can directly
discuss with Discover.
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And by the way you
can directly discuss
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how to resolve that with one of
the debt collection agencies or
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attorneys working with Discover
to try and get money from you.
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So you are empowered to
do a lot of things and
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work within your means.
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But never, and this is
the last thing I'll end with.
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Never agree to do something to
resolve a debt with Discover
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that you are not confident 100%
that you can follow through on.
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Because you are wasting money
towards either some repayment
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plan long term or even a monthly
payment towards a settlement
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a couple months worth.
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If you can't confidently
commit to it, don't do it,
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wait until you can commit to it.
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And then put yourself in
a good position to resolve and
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put the Discover
account behind you.
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I look forward to seeing you
on some of our other videos.
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But you're more than welcome
to comment below if you have
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questions or concerns about
your Discover account.
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