What Happens if a Creditor Refuses to Accept Your Offer?

Credit card debt negotiation is not always an available option.

Credit card debt negotiation is not always an available option.

If your debt gets out of control and you can no longer afford your payments, it's usually in your best interest to try to negotiate a settlement with your creditor. If a creditor doesn't accept your settlement, your options may be limited. If you can't find a way to pay off your debt, you may face lawsuits and other legal consequences.

Creditor Negotiation

Typically, a creditor won't negotiate a settlement on your debt unless you have demonstrated an inability to pay. If you have been making timely payments every month, your creditor will believe that you can pay off your debt, so negotiation is not in the creditor's best interest. If you have missed a few payments, your creditor might be willing to entertain a settlement offer, since receiving some type of payment is better than receiving none at all. The decision on whether or not to accept your offer is in the hands of the creditor. If your creditor decides for whatever reason not to accept your offer, you will have to find an alternative payment option quickly or else a lawsuit is likely to follow.

Balance Transfer

If you don't have the cash to pay off your creditor, you might be able to transfer that balance to another credit card. Many cards offer low-interest rates on balance transfers, sometimes as low as zero percent, although there may be additional fees involved. While balance transfer will not solve your problem of having too much debt, lowering the interest rate on your debt might be enough to help you manage your debt payments. If not, you might have better luck negotiating a settlement offer with a different creditor.

Judgments, Garnishments, Liens and Levys

A common follow-up to a rejected settlement offer is a lawsuit. Since your creditor knows you are in financial distress, filing a lawsuit is a way for the creditor to protect its legal rights and extract payment from you. Assuming your debt is legitimate, your creditor will usually end up with a judgment against you, which paves the way for more aggressive collection actions. After winning a judgment, a creditor can garnish up to 25 percent of your wages in most states. A creditor might also be able to place a lien against your real estate, preventing you from selling property until you pay your debts. In some cases, a creditor with a judgment can also levy your bank accounts.


Once you have reached the point of wage garnishments and liens, the only way out besides repayment of your debt may be bankruptcy. A bankruptcy discharge eliminates your debt, but the bankruptcy remains on your credit report for up to 10 years. One of the advantages of bankruptcy is that discharged debt is not taxable to you, as forgiven debt is in a settlement plan.


About the Author

After receiving a Bachelor of Arts in English from UCLA, John Csiszar earned a Certified Financial Planner designation and served 18 years as an investment adviser. Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.

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