Essential Steps to Negotiating Credit Card Debt

If you owe money from your creditor, there are several ways by which you may be able to settle your debt. If you act fast, you may not have to pay a devastating amount. Be aware that the longer you ignore your debt, the higher the fees will be. There are debt negotiation companies that you can contact. They can help settle your credit card debt and even lower the amount that you are obliged to pay. If you want to do it on your own, you can follow the steps given below.
Step by Step Solution to Credit Card Debt Negotiation
Step 1
If you are still paying your credit card bills, stop right away. This will certainly affect your credit rating but this is important if you want debt settlement. Your credit card company will not be willing to negotiate with you if you are currently paying on time. If they feel that you will stop paying, you have a bigger chance in the negotiation.
Step 2
Wait at least three months before you negotiate. In most cases, avoid negotiating after the sixth month starting from the time you stopped paying. This is because the company might have already sold your account to a collection agency. If this is what happened, you can no longer negotiate with your bank.
Step 3
Send the company a proposal regarding debt settlement. This can be through phone or you can write it down. Oftentimes, the latter is more effective. Make sure that you state the amount that you are prepared to pay. The amount should be in lump sum since most creditors will be more eager to agree with you with such type of payment. Typically, the lump sum settlement could go from 30 to 60% of the total amount you owe.
Step 4
Before you pay the amount, you should have the agreement for the negotiation in writing. The written contract should have the amount that you should pay. It should also be clear that this is a settlement for your full debt.
Step 5
Start paying the agreed amount. It is best if you send the payment in the form of money order or a check. You should not give the company access to your bank account. This may be easier if you are very busy that you cannot keep track of your payments. However, you are giving your creditor too much access, which is not advisable.
Important Things to Remember
If you choose to call your bank or creditor, make sure that you are talking to the supervisor. Oftentimes, they are the only ones that are authorized to negotiate debt. Note that once you start negotiating, this will affect your credit score in a bad way.
There are debt management programs that help you negotiate with the creditor. The agency you choose should be affiliated with the Association of Independent Consumer Credit Counseling or the National Foundation for Credit Counseling. The tricky part here is that you will be compelled to close all your credit card accounts involved in the program. This will hurt your rating, but it is a better choice than declaring bankruptcy if you are worried about your score.