Once a debt is in default—meaning you stopped paying it—one option is to attempt to negotiate a settlement with the creditor. (You can try this before you go into default, but creditors are rarely willing to play ball until you prove your poverty—and before they rack up some more fees.)
You could just pay the full amount of the debt, but that probably means paying a bunch of fees that bear little relation to your debt. And hey, it never hurts to ask.
When you make the call to negotiate a settlement, consider the following.
Never ask for a “payment plan”
Just like when buying a car, you should negotiate the total price, not based on the monthly payment. If you ask for a payment plan—say, $100 per month—the debt will continue to accrue interest, probably at something like 30% if it is a credit card. You may never pay off the debt, at that rate.
Instead, first work towards a lump sum settlement amount. After you get that resolved, discuss payment options. My advice is to not to stretch out the payments longer than 6 months. Both you and your creditor want to move on. And make those payments subtantial. If you settle for $6,000, stretch, if you have to, and get that debt paid off in two or three months.
Record the phone call(s) and get the agreement in writing
This is key. You must record all negotiation phone calls. Depending on your state’s laws, you may have to notify the debt collector you are doing so. That is fine; just tell them you want to get a record of the agreement so there is no dispute as to the terms. If they object, say goodbye. If you do not record the agreement, do not expect the creditor to honor it.
Similarly, insist on getting a written confirmation of the agreement. And when you get it, make sure the terms are the same as you remember. Hopefully you can compare them to the terms in your recording.
If you are resolved to negotiate a settlement, you must be persistent. You may end up dealing with rude collectors (another reason to record your calls). Keep trying. Propose a settlement and, if they refuse, ask for a counteroffer. Negotiating a settlement is a back-and-forth process. You name a number, then they name a number. You name a bigger number, and they name a smaller number. It may take multiple phone calls and some persuasive skill.
And if at any point you get served with a summons and complaint, focus on dealing with the lawsuit first. Continue negotiations only once you have taken care of the next steps in the lawsuit.