Negotiate Credit Card Debt Settlement
More and more people are overwhelmed by credit card debt these days and if you are one of them (chances are you are if you are reading this), you are undoubtedly looking at the numerous advices out there on ways to get out of debt. While there are many counselling and debt negotiation programs available, including the Consumer Credit Counselling Service, I will explore options for negotiating credit card debt yourself. Doing negotiations yourself can be intimidating and frustrating, but you can usually strike a better deal.
First, you need to know if the debt has gone into collection or not. You can easily find out by calling your credit card company and if it has, that means all your debt has been moved to a collection agency and they will be responsible for collecting the debt. Otherwise, you would still correspond with your original credit card company.
If you are dealing with your original credit card company, you have a couple options: settlement and workout arrangement (ie. Better interest and payment plan). You can try to settle the balance by paying a lump sum of some percentage of the amount owed (around 60%). In addition, you can negotiate the payment plan to be 3 years at as little as 0% interest. It can also be just a temporary reduction in interest for you to workout your finances. How much you can settle depends a lot on individual creditors. Settling with your creditor is not without faults, as your credit rating will be damaged. Once your debt goes to collection agency however, you will get two negatives on your credit report; therefore avoid going into collection at all cost.
What if my account has already gone to collection? No worries, there are still solutions. In fact, you can usually settle for less on your balance because most collection agencies buy your debt at only 5 cents to the dollar (the credit card company sold the debt and obtain tax benefits). They would still make a profit on low settlements and the possibility of you declare bankruptcy would mean they receive nothing. Use that as leverage in your negotiation. Look to settle at somewhere between 20%-40%. However, your credit rating will become even more of a mess if you settle with the collection agency.
For sure there will be failures along the way and most credit card debt negotiation can last for months. Stay persistent and be prepared for a marathon. You can find more comprehensive information on how to negotiate credit card debt.
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