How to Negotiate Paying Defaulted Credit Cards

Negotiating payment of defaulted credit cards requires patience. You and the debt collectors will have opposing goals: Debt collectors want to collect as much of the debt as possible, and you should pay as little as possible. Experienced debt collectors are unlikely to accept a rock-bottom offer during the first round of negotiations. That means reaching an agreement could take some time, even months. You must decide how much you can afford to pay on a specific account and not budge past that point.

Instructions

1

Call the credit card company to determine who is managing the account since the default. An internal collections team may have the account, or may have transferred or sold it to a debt collections agency. Get a contact number for the debt collector, if applicable.

2

Tell the card company or debt collector that you want to resolve your defaulted debt. Ask for the current balance. Don't open negotiations at this point. Simply obtain the balance and ask if you qualify for a settlement offer. The card company or debt collector may immediately make an offer. If so, ask about the terms, such as whether you must pay in a lump sum or over several installments. Take notes.

3

End the discussion by telling the representative you need some time to review your budget and determine if you can come up with the money. The representative may claim that the offer will expire shortly or may otherwise pressure you into making an immediate payment over the telephone. Ignore that and politely end the discussion.

4

Make calls on all your other defaulted credit cards, if applicable, and get the same information.

5

Make a list of all your defaulted credit cards, ranking them by initial settlement offers from the telephone discussions. If one debt collector is offering to settle for 20 percent of the balance, rank that account No. 1. If the next best offer is 30 percent, rank it No. 2, and so on. Make a second list ranking the defaulted cards by the amount of the respective settlement. For example, if your lowest settlement in terms of dollars is $500, rank that card No. 1, followed by all the others.

6

Review your budget to determine how much money you can allocate to a debt settlement strategy. Ideally, you should first settle accounts offering the largest discounts. However, your budget may require you to focus on accounts within a certain dollar amount. Choose a strategy and make a final ranking.

7

Start negotiating. "The New York Times" reports credit card companies or debt collectors usually settle for 20 to 70 percent of the balance. Call the first debt collector on your list. Tell the debt collector you are ready to settle the debt. Offer 20 percent --- regardless of any higher initial offer. Increase your offer if the representative balks, but don't exceed 50 percent.

8

Keep calling through your list of defaulted accounts, if necessary, until you have a deal. Keep detailed records of your conversations. If you can't strike a deal with the first round of conversations try again 30 days later. Stay with the strategy until you are successful.