I have a considerable amount of CC debt spread over three CCs. As my home refinance is in the process, it looks like I will soon have the cash to pay them all off.
However, I have been receiving phone calls from companies offering a credit card settlement at about 50% of my balance and they say it involves stopping payments and then offering the CC company a lump sum payoff of the reduced balance in exchange for writing off the rest. So I am wondering if it is smart (not ethical, let's keep the ethics out of the equation) to pay it off if I can get away with paying only a half after a few months of non-payment. Of course, my credit score would suffer but the refinance deal looks so sweet (cash) that it doesn't look like I'm gonna be needing credit any time soon. So sacrificing my credit score temporarily would not be so bad.
I would like to avoid using the settlement agency and do it myself for obvious reasons of not paying them the fee. So I was just going to stop making payments to show them I mean business and then call them a few months later to offer cash for 50% of the balance. If they don't accept, I continue non-payments. The settlement agency's strategy, in short.
I was wondering if this approach can be dangerous or illegal and whether they can sue me. If not, are there usual step one can take to conduct this process alone without a fee-charging settlement agency?