Could I Negotiate a Settlement With My Credit Cards?

Credit card debt settlement is an enticing term many companies use to persuade you to hire them. While you can hire someone to try to settle your credit card debt with your creditors, there is no reason you can't obtain a settlement yourself. You should consider talking to a credit counselor or financial adviser before you pursue debt settlement.

Settlement Basics

When you try to settle a credit card debt, you try to convince your credit card company to accept terms that are different from those to which you agreed when accepting the credit card. Usually, you do this by proposing to pay the creditor a portion of the current debt in exchange for the creditor considering the entire debt paid. For example, you might be able to settle a $7,000 debt by paying $3,500 in a single payment.

Negotiations

If you want to settle a credit card debt, you have to convince the credit card company to accept settlement terms. When you signed up for your credit card, you and your company negotiated the terms of the loan and agreed to abide by them. Typically, this happens when the card company makes you a credit card offer, which you accept. While you may not have changed any of the offer's terms, you and the company entered into that agreement voluntarily.

Agreements

Much like the initial credit card agreement, you and the credit card company have the right to come to new terms regarding your card contract. However, the credit card company is under no obligation to agree to a settlement, just as you were under no obligation to agree to take the credit card originally. Your ability to successfully negotiate new terms with the credit card company depends both on you and the company's willingness to enter into a new agreement.

Strategy

If you want to settle your debts, you must be able to offer the credit card company terms it will accept, such as offering a new repayment plan or lump-sum payment. The credit card company may or may not accept your offer, but if you are behind in payments and can show you've suffered a financial hardship that makes it unlikely you can make payments in the future, such as medical problems or unemployment, you are more likely to obtain a settlement. Credit card companies rarely agree to settlements if you are not delinquent on payments.