How to Negotiate a Payoff Deal With a Credit Card

Credit card companies have a high incentive to negotiate payoff deals for credit cards before they charge them off for collection. In most cases, credit card companies must sell credit card accounts that are 90 days delinquent or more to collection agencies for less than 20 percent of the outstanding balance. Most companies will attempt to come to some sort of settlement with their customers once the account becomes 60 days late.

Instructions

1

Wait for your account to become 60 days late or longer. This will have severely negative effects on your credit rating, but will open up the possibility of negotiating a payoff for your account. The credit card company will likely send you a rate or balance reduction offer in the mail along with a payment plan. They may also offer to freeze your interest payments in return for an agreement to a payment plan.

2

Contact your credit card company if they do not send you settlement offers in the mail. Just because they haven't contacted you about a settlement doesn't mean that they won't be amenable to one. Tell a customer service representative that you are having difficulties making your payments on time, and request an interest and balance reduction. If you require it, ask for an interest payment freeze in return for setting up a payment plan.

3

Wait for the credit card to be charged off to collection if you would like to negotiate a much lower settlement payment than you would otherwise. Credit card charge-offs remain on your credit report for up to seven years. Once your credit card company sells your account to collection, the new agency will contact you regarding your debt. Keep records of any communications with the collections agency on file.

4

Contact the collections agency and ask them about settling the debt. They will be initially resistant to any sort of settlement below the full amount, but in reality, they are authorized to settle credit card debts for well under 50 percent of the total amount owed. Ask to be transferred to someone with authority to settle accounts if you are communicating with them on the phone. Initially offer to settle the debt for 10 percent of the total amount and gradually increase the amount if they refuse.

5

Send in your payment for the delinquent credit card debt once you receive a copy of your settlement agreement with the collections agency in the mail. Monitor your credit report to ensure that the creditor updates the entry on your credit report in an accurate and timely manner.