Settling Credit Card Debt: DIY Guide |
By Kari Johnson on November 17, 2011
.jpg.aspx) The most common type of debt in America is credit card debt. That being said, it’s no surprise that many people are looking for ways to settle this debt. While companies or nonprofit organizations may help you, you can settle credit card debt on your own.
When you settle the credit card debt, you end up paying less than what you owe, sometimes thousands less. Despite the stress of negotiating, these thousands of dollars can make settlement seem like a very good idea.
That being said, you should decide if settlement is the best option for you before you begin negotiations. Settling debt will go on your credit report and can make future credit hard to obtain. Also, most credit companies won’t settle with you unless your payments are about three months past due, but if you wait that long, that will also go on your credit report. This option is considered better than bankruptcy, though, so you may decide it is worth the risk.
If you do decide settling is for you, you are going to want to decide, before you begin negotiating, how much you can afford to pay and what method you want to use. Depending on how much you owe, you can usually pay in either installments, like your current credit plan, or in one lump sum, if you have recently come into some money. Paying in one lumps sum tends to eliminate future interest as well as let you put that particular debt behind you for good.
Whichever way you decide, you should not agree to pay for more than you can afford. This is especially important if you are paying monthly. You should consider your income and your living costs, as well as keeping some savings to fall back on, before determining what amount you can handle paying.
The most important factor is that you should not pay anything until you have gotten the agreement in writing. Every time you make a payment, you should keep records of it. This will save you a lot of trouble if the company ever tries to take you to court for the amount you originally owed them.
There are companies and nonprofit organizations in the world that can help you settle your credit card debt, but entrusting your accounts to them can end up losing you a lot of money if you choose the wrong company, but negotiating the debt yourself can eliminate your chances of being scammed and save you money in the long run.
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