Credit cards are easy to come by but things get worrisome when the issue of settling credit card debt arises. Read on for simple ideas on how to settle credit card debt.

How To Settle Credit Card Debt

When a credit card company knows that you are running low on money, they immediately go on guard. So, settling a credit card account needs a great amount of convincing power, negotiation skills and sufficient credible documents to back you up. You might wonder how people land up in situations like that – it’s mostly poor financial management that leads you to this slippery credit road. There can be other, rather genuine, reasons as well but irrespective of the reasons, your credit situation is dealt with a heavy hand by the credit company. What you must understand is that the company is at a crossroad too because you either repay the debt partially or not pay at all, either ways it loses money and hence, the heavy hand. It is up to the company to either pursue the case further or let you pay as much as you can. If you want a debt settlement, then take your best face to the creditor and get all the essentials ready. Read on to know how!

Credit Card Debt Settlement Tips

You need:
  • Documents – A copy of a recent bill and a letter from the creditor who is offering you the settlement.
  • The money – either in lump sum or the monthly payment.
  • Negotiation skills and courage.
  • The company will know you have a problem only if you stop making transactions from that particular account. Then only would they consider making a settlement.
  • It is a psychological effect that you use on the company. They’re scared that they won’t get any money and you have none anyways!
  • The collection agency will call you after a while threatening to take away your car and house; ignore these threats. No company will actually go through the effort to do this or file a lawsuit.
  • Call the creditor after about 4-6 months. They will verify your address, phone number and other details. Make it clear to them that you are interested in making a settlement with them.
  • There are two things that can happen – either the creditor/collector (whoever is in charge at that point of time) will terminate the call telling you that it’s not possible or you will be put through a supervisor in charge.
  • If the former happens, then politely cut the call (they are generally recorded!). If the latter happens, explain your position with the officer in charge.
  • Write a letter to the company describing in detail what you want to do about the pending payments. In the same letter, specify the exact amount that you can cough up. Usually an opening offer is about 25% of the total amount. Be careful that you don’t make an offer you can’t afford. Hold your ground with your offer!
  • At the back of mind, keep expecting the company to refuse the offer. But be patient. A credit card settlement is always in your favour because as soon as you declare bankruptcy, the agency will not get a penny.
  • Several negotiations regarding the amount will arise. Make a good decision regarding this. Companies will try to make a deal as soon as possible, because older the debt, harder it becomes to collect the money.
  • If the creditor cannot settle with a 30%- 40% range, then decline the arrangement altogether. He will come around to calling you back in a few days!
  • Before finalizing how much you have to pay, get all the details in writing. Make sure the person, who you made the settlement with, signs on those papers.
  • Send the money and check to see if this is what you bargained for.

How to Cite

More from