Photo Credit: acilo/istock

Text Size:

You’re deeply in credit card debt and you see no way out. Creditors are hounding you at all hours of the day and night. Your life has become a living nightmare. You hate getting up in the morning. All you want is for the phone calls at home to stop and the embarrassing harassment at work to end…in short, you want your life back! Fear not. Help is on the way. It’s called debt settlement. What is debt settlement? Debt settlement is where you reach an agreement with your creditors to lower the amount that you owe, reduce or eliminate interest and penalties, and set up a payment plan that you can live with.

Don’t Wait For Your Account to Go to a Collection Agency

Talk to your creditors before your account goes to collection. Once your account goes to collection your original creditors will no longer talk to you about your account. American Express sends accounts to collection after 90 days, most other credit card companies wait 120 days. Call your credit card company if you are unsure whether or not your account has already been sent to collection.

How to Negotiate

You can hire a debt settlement firm to do your negotiating for you. If you have a lot of credit card debt this may be a good solution since a company experienced in credit card debt negotiation may be able to get you deals that you would be unable to negotiate for yourself. Debt settlement companies are not free, however. Most charge a percentage of what they save you and most also charge a flat fee as well.

Credit card companies are not going to negotiate with you until you are at least 60 days behind in your payments. They are also not going to be inclined to cut much of a deal with you if they see (from looking at your credit report) that you are paying all of your other bills on time but have simply chosen not to pay them. They need to see that your financial woes are legitimate and that you are in deep financial pain.

Make Them An Offer They Can’t Refuse

Make it clear what your situation is. If you are on the verge of bankruptcy, tell them so. Then offer to pay 20 percent of your outstanding debt. In other words, ask them to forgive 80 percent of your debt. Will they do that? You never know until you ask. If they don’t accept your first offer they should counter offer. The worst they should counter with is a 50 percent reduction in the amount you owe them.  You can accept this or make yet another proposal. You should be able to negotiate a 60 percent to 70 percent reduction in the amount you owe them – although even a 50 percent reduction should be a tremendous help to you.

Most credit card companies will demand a payment of some kind as soon as a settlement is reached. Some will ask for the entire amount to be paid at once, others will allow payments to be stretched over two or three months.

One Final Piece of The Negotiation

Don’t fail to come to terms on how this is going to be reported to the credit bureaus. Most credit card companies have become very hard-nosed about reporting settled debts. Most now refuse to report the debt as “Paid in full,” which would be the best outcome you could possibly hope for. The best most will do is to report your debt as “Settled.”  Whatever term they are going to use, make certain that you have discussed and agreed to it.

TSC Sources & Recommended Resources

• How to Negotiate Your Own Debt Settlement
• Get Out of Debt Without Filing For Bankruptcy
• How to Negotiate With Creditors

%TEMPLATE_VARIABLE_COMMENTTITLE%%TEMPLATE_VARIABLE_TIMESTAMP%

%TEMPLATE_VARIABLE_DATESTAMP%

Posted by: %TEMPLATE_VARIABLE_USERNAME% Report Abuse

%TEMPLATE_VARIABLE_COMMENTTEXT%

You must be registered on thesurvivorsclub.org to post comments. If you don't have an account, Join now for free.

Username or email: Password:

Sign In

OR click here if you forgot your username or password.