Bank of America settles charged-off credit card debt in the 25 to 40 percent range. The deepest discounts open up once the account passes 180 days late and is charged off. For pre-charge-off help, call the hardship desk at 855-891-3401. That number is on Bank of America's Credit Card Debt Assistance page. Hardship and settlement solve different problems. Hardship keeps the account open. Settlement closes it for less than the balance.
Settlement percentages by account stage
Discounts grow as the account ages. Once the debt is charged off and set up for sale or a lawsuit, the bank's recovery value drops.
- Current to 90 days past due: settlement is rare. Expect hardship terms, not a balance cut.
- 90 to 179 days past due: sometimes 60 to 80 percent settlements as the account nears charge-off.
- Post-charge-off (180+ DPD): 25 to 40 percent of balance is the typical landing zone. The Consumer Financial Protection Bureau notes that creditors often take less than the full amount on charged-off debt.
- Placed with outside counsel (Mandarich, Suttell & Hammer): 40 to 60 percent is more common once a lawsuit is filed. The legal cost is already spent.
Bank of America's hardship program — what it does
The "Customer Assistance" path at 855-891-3401 routes you to one of three options. You can get a short-term reduced APR, a set payment plan, or short-term relief on the minimum payment. The program aims to keep the account current and protect your credit. See Bank of America's Assistance With Making Credit Card Payments page.
What hardship does not do: it does not cut your principal balance. It also does not stop interest from piling up on most plans. If the math fails even at a lower rate, settlement is the more honest tool.
Settlement playbook
- Pull the current balance and DPD count. The percentage you can negotiate depends on how late the account is.
- Decide hardship vs. settlement before you call. If you call the hardship line and ask for a balance cut, you will fail. Those teams are scripted for retention.
- Wait for the right window if settlement is the goal. Pre-charge-off offers from Bank of America are weak. The 25 to 40 percent band opens after 180 DPD.
- Open with a lump-sum offer at 20 to 25 percent. Bank of America's recovery teams will counter. Leave room.
- Get the deal in writing before you pay. The CFPB tells consumers to demand a written settlement letter. It must list the settled amount, state that the balance is paid in full, and explain how the bank will report it.
- Pay by the deadline in the letter. Settlements expire. A missed date resets the talks.
Lawsuit risk
Bank of America often sends Pacific-coast collections to outside counsel. In Washington and Oregon, Suttell & Hammer files most Bank of America credit card cases. The firm is a creditors-rights shop. It represents Bank of America in WA, OR, ID, CA, AK, and UT. In California, Mandarich Law Group also handles Bank of America paper, often through debt buyers. If you get a summons, the FTC's guide on a debt collection lawsuit applies. File an answer within the deadline (often 20 to 30 days) or risk a default judgment.
Tax implications
Forgiven debt of $600 or more brings a 1099-C from Bank of America. The IRS treats canceled debt as taxable income. The insolvency exception lets you exclude canceled debt up to the amount your debts exceeded your assets just before the cancellation. You file Form 982 to claim it.