card credit debt negotiation settlement

Can You Settle Credit Card Debt On Your Own?

by Vincent Polisi on June 20, 2010


Yes!  While many people prefer to hire a credit card debt settlement company to deal with the sticky aspects of consumer debt settlement, it is certainly possible to settle your own debts.  In fact, thanks to the new bankruptcy laws limiting who can file, this is the only option for many people.  You will need to have the ability to stay calm through negotiations and the willingness to not give up.  Many people have been very successful in debt settlement negotiations and you can be too!  Let’s look at what you need to know about settling your own debts!

What Debts Can You Settle?

Typically, the only debts that you will be able to settle are unsecured debts.  Examples of these are credit cards, store cards, medical bills, bounced checks and personal loans.  Student loans are also unsecured but can be much more difficult to settle. Unsecured credit card debt is by far the easiest to settle.

Keys to Negotiating

  • Be Prepared!  Before you pick up the phone, you should already have an idea of what you can afford to pay.  It doesn’t do you any good to arrange for a settlement in an amount that you cannot afford.  You should have in hand your most recent account statement as well as any other communication you have received from the creditor.  Specifically, if they have previously sent you a letter offering a settlement, this will be very helpful to have.
  • In negotiating, the person who mentions price first typically looses.  For this reason, it is smart to let the creditor bring up price first.  This gives you a starting point to negotiate down from and gives you a good idea of where they are at.  Just remember – you don’t want to accept their first offer.  A card credit debt negotiation settlement can take time!
  • When you call, make it clear from the beginning that you would like to settle the debt.  Collectors are not typically friendly, so don’t be surprised if you are treated rudely.  You MUST have thick skin.  Keep in mind that chances are the person on the other end of the phone is a very lowly paid individual who may not have perfect credit themselves!  If they flatly refuse the idea of a settlement, ask to speak to their supervisor.
  • Make sure that you are professional.  Calls are typically recording and getting aggressive is not going to serve you well.  Avoid using any profane language or making insults.  It will not help with settlement credit card debt.
  • If speaking to a supervisor doesn’t work, don’t give up.  Send a credit card debt settlement letter to the head of collections and the president of the company.  Unlike when you were trying to talk with someone, this time you need to be very specific up front about what you are prepared to pay.  The indivudals who are actually answering for the companies bottom line may be much more willing to listen to what you have to say!

What Should You Expect to Settle For?

Ideally, you want to negotiate credit card debt so that your balance  is reduced by 35% to 60% of what you owe.  At a minimum, you want all of the late fees, over limit fees and finance charges removed from your account.  Ususally, this will add up to between 35% and 40% of your balance.  If the creditor is not willing to do this, you probably don’t want to settle at all.  It just isn’t worth the damage to your credit if you are only going to save 20%!  The creditor may come back to you at a later take and offer you a better settlement.

Keys to a Successful Settlement

When you start working on your card credit debt settlement, you shouldn’t expect to reach a settlement over night.  While it would be nice if things happened that way, the reality is that most financial institutions don’t move quickly!  Don’t get discouraged as you are going through the process!

You will want to keep good records every time you speak to someone.  Get the persons name, (If they won’t give you their last name ask for an employee number) and record the date and time you spoke with them.  Prior to making any payment, get a letter from them stating that they agree to settle for the specific amount.  NEVER rely on a verbal agreement – verbal agreements are not valid in most states and it is very likely that the creditor will not live up to their end of the bargain if you don’t have everything in writing.

Remember – debt settlement will hurt your credit but it is a far better alternative than filing for bankruptcy.

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Credit Card Debt Settlement – What You Need to Know

by Vincent Polisi on October 21, 2009

Credit Card Debt Settlement, sometimes called a debt workout plan, can be a great solution if you are overwhelmed by credit card debt.

Many people think they need to hire one of the many credit card debt settlement companies out there. These companies advertise credit card debt settlement services heavily and sometimes call themselves debt reduction , debt management, debt workout, debt relief or debt settlement firms.

While hiring an outside firm is certainly one option, you can initiate credit card debt settlement negotiation on your own.

One thing to keep in mind is that credit card companies will only settle if they believe that it is in their best interests. This means that if you lack assets that they can go after they are much more likely to work with you. If you are a legitimate candidate for a Chapter 7 Bankruptcy, they will likely be much more willing to write off a large portion of your debt than if your stable relatively high income will require you to file a Chapter 13.

How will they determine this? They will look at how you have been managing your account and they will also look at your credit report.  If you are behind on all of your bills, that is a good indication that you are headed for trouble. On the other hand, if you have a fairly average credit score they may be less likely to deal. Some lenders will also require a complete financial statement so they can get a complete picture of your financial hardship.

If you decide to contact a credit card company for a debt negotiation settlement, you need to first come up with some numbers. What can you afford to pay them? Most creditors will require a lump sum, but some may agree to a short term monthly payment over a three to six month period.

If the creditor has previously sent you a written offer of settlement, you will want to have this handy. Tell them that you received their offer and would love to settle, but right now you can only afford X (some lesser amount.) You may be able to save a great deal of money just by negotiating their figure down.

Just remember – collectors aren’t your friends! (Even if you do get the rare one who is actually polite.) Don’t get rattled if they try to intimidate you or make you feel bad. Their only job is to get as much cash out of you as they can. Let them know you are prepared to make a payment today…but only if you get a settlement. Be polite and professional. Never make threats, never use profane language, and never yell. It just won’t get you anywhere.
If the person you initially speak with says they can’t offer a settlement, ask to speak with the collections supervisor. Keep in mind that many collectors are paid little more than minimum wage and they truly may not have the authority to write off thousands of dollars.

How much you can settle for largely depends on the internal policy of each company. If you don’t have any idea what you should be asking for, a good rule of thumb is to ask for all late fees, over the limit charges and interest charges to be taken from the account. This should remove between 30-45% of your balance. If the creditor isn’t willing to do this, then a settlement isn’t to your advantage. Chances are, over time they will come to their sense. After all, something is better than nothing.

If you are attempting credit card debt settlement on you own, be sure to keep detailed records. You want the date and time you called, who you spoke with and a log of the conversation. Remember, most calls are recorded but if you don’t have this information and there is a dispute later, supervisors may not be able to determine what was actually promised.

Prior to making payment, you want to make sure that you get a letter from the creditor stating that the account will be paid in full under the agreed upon terms. Too often, and unscrupulous outside collection companies will verbally say that they are settling an account for a specific amount. The client makes the payment, thinking they have heard the last of it. Then, a few months later, another collection company attempts to collect the remaining balance that the consumer thought had been settled. Unless you have something in writing, in most cases there is little that you can do.

As always, when dealing with credit, the best thing you can do is know the law! Companies are banking on you being ignorant – don’t fall into their trap!

By the way, if you have credit card debt but don’t think your situation is bad enough to consider debt settlement, why not consider debt consolidation? Or, you can work with a Christian debt reduction firm.

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