If you find yourself with large amounts of credit card debt that you do not believe you can reasonably repay, you may attempt to negotiate a deal with your credit card company to reduce your monthly payments and ease your financial strain.
Facts
You can negotiate with a credit card company to lower the interest rate on an account, lower the account balance or eliminate fees. This may, in turn, reduce your monthly payments.
Time Frame
If 180 days pass without a credit card company receiving a payment from you, the company is likely to charge off the debt for tax purposes. Once this occurs you can no longer attempt to negotiate with the credit card company because it cannot accept payment from you for a debt that has already been considered a tax loss by the IRS.
Considerations
If you opt to work out a deal with your credit card provider, you should get all agreements in writing before you submit a payment. This prevents a mistake being made in which the company honors the agreement now, but does not acknowledge it later.
Misconceptions
Many individuals believe that they must hire a company to negotiate with a creditor on their behalf. This is not necessary. Consumers can work out payment plans and debt settlements with creditors on their own without having to pay a third party (See References 1).
Warning
Negotiating for a lower balance will adversely affect your credit rating. Once the account is paid off, your credit report will reflect that the balance was "settled" rather than "paid in full." Having a settled account on your credit report will make you a higher risk for lenders in the future and may result in your being forced to pay higher interest rates (See References 2).
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