When I finished my lengthy series on what does the Bible say about … I was wondering what topics I should cover for my Wednesday post. Fortunately for me, when I was reflecting on that question, an relevant email arrived into my inbox. It was a comment on Debt Free in One Year: A True Story. The commenter said:
“They made the charges so were fully liable for the payments and did (at some point during the year) have the $4000 to pay them off. Lucky for them the collectors caved. But that is why credit card companies have fees and high interest rates, because some people end up not paying the whole bill.”
Though the statement didn’t say anything about Christians, I thought it would be interesting if we explored the topic of Christians and credit card settlements. I’ve already shared my thoughts on Christians and bankruptcy, but a credit card settlement is different than a bankruptcy.
First, here’s a little financial foundation that will help us answer the question.
What is a Credit Card Settlement?
A credit card settlement is when a company agrees to take less than your total payment to settle your balance with the company.
For example, if you owed $15,000 to Craig’s Credit Company and Craig’s Credit Company agreed to take $10,000 to close the account, that would be a debt settlement.
As a note, you should always get any settlement offers in writing. If it is not in writing, there is not a legitimate offer.
Credit Card companies do not settle in situations where they expect the individual(s) can pay.
The only reasons why Craig’s Credit Company would offer a settlement is they are afraid that you might not give them anything (if you go bankrupt). They would rather have the $10,000 than nothing.
Credit Card companies do not settle unless they choose to.
Since the credit card is owed the money, the consumer does not have any rights. You cannot threaten to sue the credit card company because they want their money. However, the credit card company can sue you.
When a credit card settlement happens, the credit card company is at least minimally satisfied to have some form a payment – otherwise they would not accept it.
Credit card companies typically sell old accounts to debt collectors for less than you owe.
Craig’s Credit Card can sell your debt at any point. So, perhaps Craig’s CC company had trouble collecting my money, so they sell the $15,000 debt to Joe’s Credit Collecting Agency for $10,000. The credit card company takes the $10,000, clears their books, and (theoretically) never has another interaction with this customer’s account.*
As a result, it is entirely possible to settle the debt for $10,000 and Joe’s Credit Collecting Agency gets all their money. To pay the full $15,000, it would not go to the original lender either way.
* As a side note, it is important to know that many credit card companies actually also own the collection agencies they use, so it might not be a completely separate organization.
Should A Christian Negotiate A Credit Card Settlement?
If a Christian is able to repay a loan I believe she should. She should try and follow all the steps for getting out of credit card debt. Furthermore, I don’t agree with repayment strategies where you stop paying just so you will be offered a credit card settlement. This does not agree with the principle of honor in the Bible.
Simply let your ‘Yes’ be ‘Yes,’ and your ‘No,’ ‘No’; anything beyond this comes from the evil one. (Matthew 5:37 NIV)
If, on the other hand, a Christian consumer cannot repay a loan according to the terms and conditions and the credit card company offers a settlement, I do not see anything biblically or morally wrong with a Christian accepting a credit card settlement.
It is not like the person is saying, “I’m only going to give you $10,000 and that is all you’ll get.” Instead, a credit card company has basically said, “Under these circumstances we would rather have the $10,000 than continue to pursue this matter.”
Furthermore, I think a Christian could even initiate the settlement by introducing their true financial situation. The only caveat, rule, or guidelines is that Christians must be completely honest and provide accurate information. If, with that information, the company wants to settle, then good for them. If, on the other hand, they do not, you must oblige to their conditions.
In the OT, it was common to accept a lesser, delayed, or no payment based on financial hardship.
“If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest. If you take your neighbor’s cloak as a pledge, return it to him by sunset, because his cloak is the only covering he has for his body. What else will he sleep in? When he cries out to me, I will hear, for I am compassionate. (Exodus 22:25-27 NIV)
Therefore, I do not believe it is a sin to accept an offer that a credit card company extends.
What are your thoughts?