If you are experiencing real financial hardship and simply cannot repay all of your debts, you may be able to achieve credit card debt settlement simply by speaking to your creditors. You are most likely to be successful if you have a history of making payments on time and have had the account for a number of years. It would also help if you have been paying down the balance in recent years and not making any new charges to the credit card.
So how do you start the negotiations?
The first thing you need to do, after completing your income and expenditure, is to make a list of your debts showing the balance outstanding, the current interest rate and the minimum monthly payment. You need to be sure you can afford to pay a lump sum in settlement of your debts while continuing to meet your contractual obligations. If you have a large lump sum in comparison to your debts, you need to work out how much you are going to offer each creditor. Remember not all of them will accept your first offer, in fact most won't. So you should always offer less than you are prepared to pay.
How do you justify the amount you are willing to pay?
You can use the argument that you have already paid back a considerable sum and that the offer you are making now is fair given your current circumstances. Do everything in writing and insist that they write back to you. Phone negotiations never work as you rarely speak to the person who has the ability to make decisions on debt settlements. Always remember that the credit card providers want to make a profit. If you make a reasonable offer in full and final settlement of a debt that they know they will struggle to enforce without spending a lot of money, they may just say yes.
Don't get personal!
Keep your negotiations formal and businesslike. Don't become angry or dramatic or make any threats such as "if you don't accept I will just declare Chapter 7". Claiming bankruptcy may be your next course of action but you should never forewarn your creditors or they may start legal action against you.
Assuming the debt settlement negotiation isn't successful and your creditors end up taking you to court, you may just find that the Judge becomes annoyed at the credit card company for wasting court time when the correspondence proves you acted reasonably and were trying to repay the monies due. Remember to ask the creditors to remove any adverse information from your file as a condition of the settlement. They won't all agree but it doesn't hurt to try to improve your credit score.
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