More than 1.5 million personal bankruptcies were filed in the United States in 2010, which is an increase of 6.5 percent from 2009, according to the United States Courts. Bankruptcy is a last resort, and several other options exist for those who have more debt than they can handle. One way to attempt to eliminate credit card debt is negotiating a payoff balance with your credit card companies.
Direct Negotiation
You can negotiate directly with your credit card company, with no intermediary. Begin the process by calling the customer service number found on the back of your credit card. It may help if you have had the card for some time and have made regular, on-time payments. Inform the customer service representative you want to pay off your card in a timely manner. The Motley Fool website suggests you might claim a competitor's card is offering a lower interest rate and that you will switch to that credit card if the company will not negotiate a new payoff balance. Offering a lump sum payment may help too, because paying off the outstanding balance immediately is attractive to the credit card company.
Debt Negotiation Services
If negotiating directly fails, you can consult professionals. There are companies, including nonprofit companies, that can help advise you on how to pay off your debts. These companies attempt to negotiate a settlement with the credit card company on your behalf. You still will have monthly payments to make, but the payments may be lower.
Debt Negotiation Service Problems
Debt negotiation services are not without their pitfalls, and the Federal Trade Commission advises caution in dealing with such services. Even reputable agencies typically charge a monthly fee as well as an upfront fee based on a percentage of the forgiven debt. Unscrupulous agencies may not deliver on services promised, and this may force you to pay off the original debt amount as well as late fees and other charges even though you thought the debt had been satisfied.
Other Considerations
If you have a number of credit cards with high balances, you may want to consider debt consolidation. You can try to arrange debt consolidation on your own, but there also are consolidation services that can help lower your payments and interest rates. Do research before signing with a consolidation service. Also, consolidation and negotiated payoffs may have a negative impact on your credit rating. Even dealing with the reputable services has potential drawbacks.
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