By Wendy Clay on November 4, 2011
.jpg.aspx?width=75&height=75) Contacting creditors to negotiate credit card debt can be a daunting task especially if you feel like you are drowning in debt, but if done successfully credit card debt negotiations can greatly decrease the amount you are expected to pay back to your creditors. If you find that you are unable to pay your monthly credit card bills it is advantageous to attempt to negotiate with your creditors before they turn your accounts over to a collection agency. Before doing so, there are a few steps you can take to prepare for the negotiation process.
First, go over your finances to determine which bills you will be capable of paying and the amount you can afford to pay on these debts while continuing to pay for housing, food, utilities, and other necessaries. As you are doing this, remember to decide on realistic amounts to pay towards each debt based on your current financial situation and write down everything you decide on.
After reviewing your finances and determining the amount you will be able to contribute to debt elimination, decide what payment option you would like to negotiate with your creditors. There are two different types of repayment plans: the lump sum plan in which a portion of the debt is forgiven and the remainder is repaid in one payment and the monthly payment plan which also forgives a portion of the debt and often comes with lower interest rates. If you have fallen behind on payments, you can also request to have late fees subtracted from your debt amount.
After deciding which plan will work best for you, write out the specific amounts you would be capable of paying in each scenario. (Just as a warning, creditors prefer the lump sum plan, so be prepared for tough negotiations regarding repayment plans). Next, it is helpful to research your creditors’ settlement track record to estimate the amount you can expect to settle for as well as the scare tactics they frequently use during negotiations (i.e. lawsuit threats) and how often they actually act upon their threats. If you find it difficult to estimate the amounts you will be capable of repaying to your creditors or are absolutely petrified by the idea of having to negotiate with your creditors, there are organizations out there specifically geared toward helping people in such situations. The best aid often comes from experts working through non-profit groups such a Consumer Credit Counseling Service.
Once you have taken the actions above you are prepared to contact your creditors by either phone or letter. As you are negotiating the items discussed above, also attempt to have your creditors expunge your credit record of negative entries such as charge-offs and debt collections or to at least have such entries be reported as paid in full rather than settled. Doing so will help lessen the negative impact on your credit score. Also, if negotiating by phone be sure to write down and mail the terms of the agreement decided over the phone to your creditor with a cover letter requesting a confirmation of the terms set forth in the agreement.
Negotiating credit card debt may not be an easy process, but it is worthwhile in many cases. Don’t get discouraged when creditors don’t say yes right away or when your negotiation strategies don’t work with every creditor, just persevere and you will come out on top in the long run.
Sources:
6 Steps to Negotiate for Credit Card Debt Settlement. Credit Card Debt Solver, 2008-2011. Web. 5 Oct.
2011 <http://creditcarddebtsolver.com/6-steps-to-negotiate-for-credit-card-debt-settlement/>.
Brinker, Mark Hoffman, Brinker & Roberts. Hoffman, Brinker & Roberts, 2011. Web. 5 Oct. 2011
Irby, LaToya About.com Credit/Debt Management. 2011. 5 Oct. 2011
<http://credit.about.com/od/creditreportscoring/tp/badcrentries.htm>.
Leamy, Elisabeth Negotiating away Credit Card Debt. ABC News, 15 Dec. 2008. Web. 5 Oct. 2011
<http://abcnews.go.com/Business/ConsumerFinance/story?id=6451889&page=1>.
McNaughton, Deborah. All About Credit : Questions (And Answers) About the Most Common Credit
Problems. Kaplan Publishing, 1999. eBook Collection (EBSCOhost). EBSCO. Web. 5 Oct. 2011.
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