Negotiating Credit Card Debt – The Do-it-Yourself Method of Debt Negotiation For Credit Cards

If your consumer debt has become too much to handle and you are starting to wrack up late charges, you may have considered negotiating credit card debt through a debt settlement firm. Although working with a settlement firm gives you third party expertise and stops calls from creditors and collection agencies, it can be costly. Instead, you may want to consider negotiating debt yourself.

With debt negotiation, the idea is to try and get your creditor to agree to accept a lower payment amount for the balance due. The agreed upon amount is paid in one lump some – payment plans are not part of debt negotiation. Creditors are willing to do this when they fear that they may lose the entire loan amount if a consumer files for bankruptcy. Because of this, they are generally not willing to negotiate unless you have fallen behind on your payments, usually by at least three months. If this is the case, then you can begin your negotiations by simply picking up the phone and calling your creditors’ customer service departments.

Before you make the call, you should do some preparation. Create a detailed budget so that you are aware of your financial situation – this will help you better explain it to someone else. Decide on the amount you can afford to offer the creditor. Never ask the creditor for the amount they are willing to accept, as this may not be an amount that you can afford.

When you speak with someone, try to remain calm and polite. Yelling or getting worked up with not help your cause. Explain your current financial situation with enough detail to get your point across, but not so much that you become long-winded. Inform the creditor of your goals to pay off your debt and avoid bankruptcy. Make it clear that by accepting your offer, the creditor will come out better off than if they leave it to chance.

Finally, as part of your negotiation, try to get your creditor to agree to report the account status as “Paid in full” or “Pay to delete”. With the latter option, the creditor agrees to delete your account history when you pay. Otherwise, you may get a “settled” or “paid as agreed” status, both of which can damage your credit score. In general, collection agencies are usually more willing to agree to lower payoff amounts and to alter their credit reporting than are other creditors.

With the right attitude and preparation, do-it-yourself debt negotiations can not only be successful at reducing your debt, they can save you the costly fees charged by debt negotiation services.