6 Steps to Negotiate for Credit Card Debt Settlement

By | August 8, 2013

Credit card debt is like a deep drain for many Americans. In order to dig yourself out of the predicament, you must put in hard effort in eliminating your outstanding balances. If you want to get rid of your debt without filing for bankruptcy, the best way for you to become debt free is through debt negotiation. You are required to negotiate with your banks or card providers to reduce your debt obligations.

During economy crisis, many credit card companies are more than willing to negotiate with their debtors to collect partial of their total debts rather than getting debt collection agencies to collect the debts on their behalf.

If your credit card debt has become overwhelming and you know that you are unable to pay it off, you should get ready to communicate with your creditors.

Here is the step by step approach for your kind reference:

Step 1: Assess your current financial position carefully

Find out how much cash you have on hand. By knowing the amount of cash available, you will be able to work out the settlement amount accurately based on your financial ability.

Step 2: Decide what settlement plan you prefer

The main purpose of debt negotiation is to reduce your total amount of debt. You need to decide whether you prefer to settle your debt one time off or through a monthly payment plan with lower interest rate. You can also send a request to get your late fees waived. Some credit card companies are not willing to accept the offer of paying off the debt by installments.

They prefer their debtors to make a lump sum payment with partial of the debt amount forgiven. Hence, before you start negotiating with your creditors, work out your proposal carefully with some options given to the creditors.

Step 3: Contact your creditor

When you are ready, you can call up your credit card company to speak with the supervisor or manager from the credit department. You need to make sure that the person you talk to has authority to make decision. The best time for you to call is when you have missed payments for more than 3 months but lesser than 6 months.

Inform the person about your current financial difficulties honestly and ask for assistance. You are required to state your settlement proposal clearly. At the same time, tell the person in charge politely that you may have to file bankruptcy if your proposal is rejected.

Step 4: Set the conditions

Before you move on to the payment schedule, you are reminded to get the consent from your creditor to give a more favorable report to the credit bureau. If you are a co-operative and responsible debtor, basically the creditor is willing to report your account as “paid” rather than “settled”.

Step 5: Get the agreement

After you have completed the negotiation process with your creditor, you are reminded to get a black and white agreement from your credit card company. It is very important for you to get all the new agreed terms written on the agreement so that you are well protected when there is any dispute.

Step 6: Make payment

Make your payment according to the agreed terms and become debt free.

Don’t underestimate this debt negotiation process. If you have a large sum of outstanding balance on your credit card bills, you will be able to save a few thousands through successful bargain.

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