Can I Negotiate Credit Card Debt Reduction? |
By Laura Gutmann on August 4, 2010
.jpg.aspx?width=75&height=75) The simple answer is yes – absolutely. Being well informed about your financial history and previous spending can help you negotiate with credit card companies that ultimately want your business. A debt counselor can also help you navigate this process and explain your options. However, keep in mind that a poor credit record will limit your choices, and a credit card company is not going to forgive or reduce your debt simply because you beg and plead with them.
Debt is rarely completely eliminated, unless you take drastic steps like declaring personal bankruptcy. Even then, you may have to turn over some of your possessions, like your car or your home, to make up for your inability to repay what you owe. In addition, declaring bankruptcy or defaulting on loans will have serious consequences, especially when it comes to making future purchases.
But don’t give up hope - the National Foundation for Credit Counseling can connect you to professional help in your local area. If you have severe repayment issues, they may enroll you in a Debt Management Plan, which is a, “systematic way to pay down your outstanding debt through monthly deposits to your credit counseling agency,” which handles making payments to your creditors over the course of 3-5 years. This can reduce your personal pressures, especially because credit card companies will stop harassing you and will often reduce your finance charges. The counseling agency can also help you recover afterwards.
It is also possible to negotiate your own debt settlements, but this is not generally recommended. Sometimes, credit card companies will agree to ‘charge off” a forgiven amount, but they will report that amount as unpaid debt, which will damage your credit history and future lending options. In addition, beware of companies that say they will help you reduce debt but actually, “charge high fees or collect a percentage of the amount they get your creditors to forgive”. It’s always best to go with a reputable nonprofit agency, like the ones listed at www.nfcc.org.
Note: Be sure to check out these related articles on credit card debt negotiation and how to negotiate debt settlement offers as well. |
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