Unsecured Credit Card Debt Settlement Strategies

Credit card debt is a problem for many people. It is usually unsecured debt, which is particularly difficult to deal with. It creates a burden that can seem overwhelming and cause stress and frustration. But you can change your debt situation using one or a combination of strategies.

Direct Settlement

Call the credit card company before it sends your debt to a collection agency. Make arrangements to pay off a certain portion of the debt so the credit card company will list the debt as "settled" rather than "in default." This method is preferable to the alternative of dealing with collection agencies and ruining your credit. If you are hesitant about dealing with your creditors, contact a nonprofit organization, such as Consumer Credit Counseling Service (CCCS), and set up a consultation. If you enter into a debt-management program, a credit counselor will contact the credit card companies on your behalf.

"Pay for Delete" Settlement

Settle your debt through the "pay for delete" method if the creditor has already sent it to a collection agency. This method avoids any legal involvement between you and the collection agency, according to CreditInfoCenter.com, which might involve hiring a lawyer and appearing in court. It may be used only for debts of $500 or less. Call the collection agency and find out its mailing address, direct phone number and fax number. Mail a letter stating that you will pay the debt in full or as much as you can, naming the figure you can pay. Emphasize the fact that you would rather pay the debt off than litigate and tell the company that it stands to make a huge profit. Wait until you receive a signed letter of acceptance from the company. Mail the agreed-upon amount. This way, the debt should be removed completely from your credit history.

Statute of Limitations

Check to find out whether or not the debt has gone past the period of the statute of limitations. Many types of debt, including unsecured credit card debt, may be governed by your state's statute of limitations for debt collection. A list of the statutes of limitations by state can be found at CreditInfoCenter.com. If the time period has passed, tell the debt collector that the company cannot legally collect the debt. Keep a record of the conversation and the name of the person with whom you spoke.

Debt Validation

Find out if the debt collection agency is legally authorized to collect your debt. The Fair Debt Collection Practices Act (FDCPA) regulates debt collectors and is your best avenue to find out who is authorized to collect your debt. Ask the collector to provide you with a statement of proof that they own your debt. This can be a signed letter from the creditors, account statements of your payments or a copy of the original signed credit card application. If the debt collection agency cannot produce such a document, then it may not be legally authorized to collect the debt.