How to Get a Credit Card Settlement

If you are swimming in credit card debt and are considering bankruptcy, you may want to try for a credit card settlement first. A credit card settlement is an agreement you make with the creditor for a lesser amount than the total debt you owe. When paid in full, your debt is then cleared. While a credit card settlement will appear on your credit report, it is nowhere near as bad as a write-off or bankruptcy.

Instructions

1

Obtain and organize your financial documents. You will need a copy of your most recent credit card statement and the total amount of debt you currently owe to the creditor. If the creditor has previously sent you a letter offering a settlement on your credit card debt, you will also need a copy of this, as well.

2

Calculate how much money you will be able to pay toward a credit card settlement. Most settlements are paid in one lump sum, although some creditors will extend a short monthly payment plan to debtors, generally between two and six months. Be prepared to pay the entire settlement in one or two payments. Make sure that what you are able to pay toward your credit card settlement is at least 40 percent to 60 percent of the entire debt; creditors will generally not settle a debt for less than 70 percent, but they will try to settle for as much money as they can to keep their losses at a minimum.

3

Have a method to make the payments for your credit card settlement. Plan this prior to contacting the creditor. If you do not have a checking account, you will need to find another way to make the payment, such as with another credit card, using someone else's checking account, with a money order or cashier's check or using a money-transfer service like Western Union.

4

Contact the creditor to negotiate a credit card settlement. The easiest way to do this is by telephone; however, sending a letter via certified mail would give you a hard copy of the negotiations between you and the creditor, which can prevent any miscommunication or reneging of any settlement offers an agent made verbally.

5

Inquire about the possibility of getting a credit card settlement. If you have already received a settlement offer, bring this up immediately when you call. If you have not, there is a chance that your account may not qualify for such action or you may be past the date where a credit card settlement is possible. If your debt has already been written off, you will not be able to settle it.

6

Start your offer for a credit card settlement low if you are eligible. Starting at around 70 percent to 80 percent gives you room to increase your offer while still keeping your potential credit card settlement low. Remember, if you are not happy with the amount the agent offers you, you can always cease negotiations with that particular agent and try again with another agent.