Can I Negotiate a Debt With a Credit Card Company?

Credit card debt comes in the form of loans that people have drawn against lines of credit taken out through credit card accounts with finance companies. Sometimes, a person will find that he has taken on too much debt and is unable to pay it back in the time allotted him by the credit card company. Unless this debt is addressed, the person may end up paying steep late fees or interest rates. Sometimes, debtors can deal with debt by negotiating down with the companies.

Credit Card Debt

Credit card debt must be repaid according to contract terms the account holder agreed to when he opened the account. Generally, a person is required to make a minimum monthly payment on the debt. If the person fails to pay the minimum, the card company may charge him penalty fees and, as an additional penalty, may raise the amount of interest he pays on the loan.

Negotiation

Many credit card companies are willing to negotiate with debtors who are unable to pay the money owed. The circumstances under which a credit card company will be willing to receive a reduced amount are kept confidential. In some cases, the company will merely be willing to give the debtors additional time to make their payments, but not reduce the total amount of the debt.

Effects

The short-term effects of a debt settlement are financially beneficial for an individual: He is required to pay less money to the credit company than he did previously. However, if the company reports this settlement to a credit reporting bureau, this may lead to a lower credit score for the individual, as credit reporting bureaus ding people's credit scores when they settle a debt with a lender for less than they originally agreed to pay the lender.

Motives

According to the New York Times, credit card companies may have several motives for reducing the amount of money that a debtor is required to pay on a debt. For one, the cost of pursuing full payment may be too expensive compared to the amount of money that the company can realistically expect to receive on the debt. In addition, if a debtor goes into bankruptcy, his credit card debt may be dismissed, so some companies choose to settle for what payment they can when they can.