How to Negotiate with Credit Card Companies |
By Ashley Russell on October 10, 2011
.jpg.aspx?width=75&height=75) Once you are in credit card debt over your head, you are not left with many options. For most, bankruptcy is an option that should only be used in the direst of situations. Instead, you should attempt to negotiate directly with your credit card company to see if you can come to some sort of agreement about your repayment. Although this process can be long and grueling, it can save you from filing bankruptcy and ruining what is left of your credit score.
There are three main steps that should be used when attempting to negotiate with your credit card company. First, you need to decide what the best plan for your situation is. Second, you need to determine what you debt and your income amount to. Third, once you have decided your best plan of attack and your debt/income ratio, you should contact your company to see what options they will consider.
The first step to finding a solution is to consider the four main options available: lump-sum settlement, workout arrangement, debt management program and forbearance program. Each of these options has its benefits and its costs. A lump-sum settlement is where you try to negotiate to pay a lesser amount than owed in an increment of three payments. This will clear your entire debt if you make all three payments and will satisfy your entire bill. The workout arrangement is where you can negotiate with the company to have your interest rates lowered or eliminated as well as your late fees in order to allow you to catch up on your payments. The debt management program is where you meet with a counselor who will make arrangements with your company for you. These counselors cost fees, but the costs can be worth it if they can negotiate a lower overall bill and lower interest rates for you. The final option is a forbearance program, which will allow you to stop paying on your bills for while in order to give you time to recover from your debts. This program does not lessen the overall cost that you owe, it just pauses your payments for a while.
After you have determined which option is best for you, be sure to compare the costs and benefits for each program, you should then make yourself a budget. Determine exactly how much money you have each month to put toward your debt total. Be sure to include a bit for unexpected costs when you create this budget so that you will not continue the cycle of debt. Knowing how much you can pay each month can help in the negotiations with your credit card company.
Lastly, talk to your credit card company. Although every company is different, they can all relate to one thing: they all want to make money. Because they want to make money, most would rather get back some of the money they are owed rather than not getting any of it back. Therefore, credit card companies will typically make some sort of deal with you so that they can get whatever money you have available and cut their losses. Be sure to read the fine print on any deals you make to ensure that you know all of the consequences associated with the deal.
Credit card companies are in business to make money. Before you decide to file bankruptcy check all of your options. Credit card companies will negotiate generally with you if there is any way that they can get back some of their money. Be sure to follow the steps carefully in order to have the best outcome. |
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