How to Negotiate Credit Card Debt Settlement

You can negotiate a credit card debt settlement if you're behind in your credit card debt and know that you won't be able to pay it off. Credit card companies realize that they can often get more money by negotiating directly with a customer rather than paying a collection agency to try to get their money or waiting until a customer declares bankruptcy.

Instructions

1

Before you call to negotiate, decide what debt settlement you'd prefer. Credit card companies may be willing to accept a lump sum payment of 25 percent to 50 percent of the total amount owed. If you have or can borrow that amount at a lower interest rate or with more favorable payments from another source, you might want to offer that when negotiating a settlement. If you can pay off the credit card with lower monthly payments, you can offer a payment plan with monthly payments you can afford, and ask for late fees to be waived or for a lower interest rate.

2

Call the credit card company and ask to speak to an account specialist. You'll probably have the best chance to negotiate a settlement if you call after you've missed three or more payments, but before your account has been sent to collections. You can write instead of call, but a call allows for easier negotiations.

3

Be polite, business-like and honest. The credit card company would rather negotiate with a cooperative debtor than pay the high cost of a collection agency or risk not recovering any money in case of bankruptcy. Explain your financial situation and the reason that you can't pay, such as the recent loss of a job, a disability or unexpected high medical bills.

4

Make sure you're talking to a person who is authorized to negotiate a settlement and then state what you can offer. If you want to pay a lump sum, remind the credit card company that you may have to file bankruptcy if they're not willing to negotiate with you now and offer a lump sum payment for a portion of the debt, such as 25 percent. Or you can explain the amount you can pay each month and offer to have your card closed and arrange a payment schedule.

5

If you need to compromise during negotiations, see if the credit card company is willing to give something in exchange. It may be willing to give a more favorable report to the credit bureaus by reporting the account paid rather than settled or see if they'll waive late fees or other charges.

6

If the first person you talked to isn't cooperative, politely end the conversation, hang up and call again later. Chances are you'll speak to another one of the many representatives who may be more helpful.

7

If you come to an agreement, write down the name of the person you spoke to and the time and date of the call, make note of the details of the conversation and ask that the agreement be sent to you in writing.

8

When the written details arrive, look over them to make sure they're the same as you negotiated with the credit card company on the phone. Take advantage of the credit card debt settlement, fulfill your obligations to resolve the situation and learn from the experience to avoid similar problems in the future.