How to Negotiate Debt With Credit Card Companies

Sitting with a pile of unpayable bills rattles the nerves of us all. Don't give up. Look at the available options, take a deep breath and plunge in. Take back your life. Take control of your credit card bills and other debt. Sometimes it is difficult to admit you are in over your head. It is important to step in and take control of the situation before it is beyond repair. Negotiating debt with credit card companies is a viable option.

Instructions

1

Loss of a job, injury, healthcare expenses or out of control spending can land families in a difficult financial position. Avoiding your debt is not the best solution. It will not disappear. In fact it will only continue to grow. Avoiding your credit card responsibilities may seem like the simplest answer, but it is not.

2

Your embarrassment, shame, pride, fear all need to be put to the side. Instead of avoiding bills, step up and contact the credit card company to understand all options available. Debt consolidation companies are not the only way to reach these settlements. Individual credit card owners can represent themselves to negotiate their own credit card debt settlement.

3

Understand the implications of a debt settlement. Debt settlement is when an individual contacts a credit card company or other lender to discuss options for decreasing the amount of funds owed. A reduction in the total amount owed, a change in payment plans, waiving of late fees and penalties are all possible outcomes. Credit card companies are willing to listen and discuss these options.

4

Think about what this might do to your credit history. Discuss with the credit card company if and how they report a debt settlement in your credit report before you agree to anything. Some companies will just close your account to new activity and allow you to pay down the negotiated balance without any negative notation on your credit report. Others may record this as a loss in capital to their company. When a company reports any negative activity on your current creditworthiness, it will impact your future ability to obtain loans. Creditors may not be willing to extend credit to an individual who has undergone a debt negotiation. Or a creditor will charge a higher interest rate to loan funds in this situation, considering the loan a higher risk.

5

Negotiating a debt settlement is attractive to credit card companies. It does indicate that an individual is nearing foreclosure or bankruptcy proceedings. Credit card companies do not negotiate debt out of the kindness of their own hearts. They want to receive some of the funds owed to them before the situation becomes any more difficult. In bankruptcy proceedings, credit cards are one of the last debtors to be paid. Negotiating a debt settlement is a better alternative for the credit card company. At least they get something.

6

Make the call. Contact the credit card company and ask to speak with a supervisor. Explain the difficulties in paying the bill. Ask what options are available. Write down all alternatives as they are explained and make sure you understand everything. If debt negotiation is not discussed, bring it up as an option. Do not expect to resolve everything in the first call. Credit card companies are not going to give up collecting money due just because you made the call. Get the name and number of who to contact to finalize your options. It is OK to wait a day to understand your options and make a clear headed final decision.

7

Make it work. Once your final decision is made, call the credit card company again. Discuss the alternative you need to take. If you decide to negotiate your debt, try starting with around a third of the debt you own. For example, if you owe $12,000 say that you are willing to pay $4,000. The credit card company will negotiate up from this point. Focus on the number you are willing to pay, not the number that you actually owe.