How to Settle Your Credit Card Debt for Pennies on the Dollar on Your Own

When you owe a large debt on a credit card but cannot pay the entire balance, settlement may be an option to consider. Settlement occurs by getting the creditor to accept a payoff of a portion of the balance and closing the account as paid in full. Negotiating the balance to the point that you only pay pennies on the dollar is possible through a series of phone calls with the creditor. Keep in mind that debt settlement affects your credit score negatively and you need to have the money available to make the payment you have negotiated. Also note that most credit card companies will not speak to you about debt negotiation until you have already missed several payments in a row.

Instructions

1

Call your creditor to negotiate the debt and suggest a settlement. If you have missed some payments, the creditor has likely already reached out to you by phone to discuss your situation and try to collect. The company will suggest payment options and may even offer a settlement. This initial settlement offer is usually close to the amount of your debt.

2

Explain why you cannot pay your credit card bill. If you have had job loss, illness or other circumstances that prevent you from paying, share this with the creditor. Don't share too much information, though. The creditor does not need to know how much money you have in the bank, if you are receiving unemployment or if your spouse is working. This may work against your cause. End the phone call if the settlement the creditor offers is not low enough.

3

Continue to negotiate your settlement on subsequent phone calls. Refuse each offer, then make a counteroffer that equals paying pennies of each dollar you owe. Offer to make a lump sum payment that may be enticing for the creditor. Creditors would rather receive some payment than none.

4

Ask for the negotiated settlement agreement in writing and wait to pay until you have received this documentation. After making the final payment, get a letter from the creditor that states you have "paid as agreed" and the balance of your credit card is zero.