How to Settle Debt with Credit Card Companies

With the recession and rising unemployment, it comes as no surprise that many people are in trouble with their finances. If you are having trouble making your credit card payments each month, you may want to consider settling your debt with the credit card companies. It is really not hard to negotiate debt settlement with your credit card companies, but it can be nerve wracking. Here are some tips to get you started.

Instructions

1

First, you need to have money to negotiate your credit card debt settlement with. Perhaps you are expecting a tax refund this year or maybe you have a 401K that you can withdraw or borrow funds from. Maybe you could sell something on Craigslist.org or eBay. Whatever you do, don't borrow more money from another credit card to pay off your current debt.

2

Now that you have the funds to start your negotiation, you need to call your credit card company. Ask to speak to a supervisor and tell that person that you would like to settle your credit card debt. They will want to know why. There is no reason to make up a grand story, just tell the truth about your current financial situation and how you plan to pay off your settled debt.

3




Your first offer will more than likely be counter-offered by your credit card company, so make sure to give a low offer. Start with 25%. So, if you owe $10,000, offer them $2,500. More than likely you are going to end up somewhere around $5,000, or half, but every case is different.

4

Once you have come to an agreement with your credit card company on a debt settlement amount, you will want to request that agreement in writing. Do not pay off your credit card until you receive this agreement in the mail.

5

Once you receive the agreement in writing, pay off your credit card as soon as possible. You can pay with a check or money order, but I would suggest using a cashier's check from a bank. Make sure to keep a record of your payment.

6

You will receive a 1099-C tax form at the end of the year that you will need to include with your tax filings. The forgiven amount of the debt will need to be recorded as income.

7

This debt settlement with the credit card company will remain on your credit report for 7 years. So, only use debt settlement as a last resort.