Money Management

Settling Credit Card Debt
Is This an Option for You?

Are you thinking of settling credit card debt?

Are you overwhelmed by your current debt situation?

Are you paying minimum payments on high interest rate credit cards and seeing your balances barely go down?

If so, this situation may seem heartbreaking and stressful to you. That is why it may be best to opt for settling credit card debt.

What is settling credit card debt?

It is the process negotiating your debt with your credit card lender. Your ultimate goal is to pay less than you owe and then close the account. For example, if you owe $8,000 on a credit card, you could attempt to negotiate a settlement of $4,000 and close out the account.

Why would a lender agree to this?

Basically, they may fear that you will file for bankruptcy. They want to get as much of what you owe from you as they can. If you file bankruptcy, they would get pennies on the dollar.

This is why you must understand how to settle your debt before you attempt to. Yes, you could hire one of the many debt settlement companies to handle it for you, but either way it is important you know how the process works.

Whats your first step?

The first step is to call the credit card company and to notify them of your intent to settle. Make sure you have your current bill with you when you call so you can quote accurate amounts.

Chances are the person you talk to won't be "customer friendly." However, it's best to be nice and courteous. Don't be confronting or disruptive. Inform them of your inability to pay the full amount and let them know your only other option may be to fall into default. Next make a settlement offer.

If the lender is agreeable, they will most likely make a counter-settlement. Once you have reached a settlement amount, make sure you agree on the terms, amounts and the time frame that you will pay the amount back. You may be settling credit card debt with one lump sum payment or with monthly payments at specified amount. Whatever you negotiate, the end result will be to close the account.

What if they don't accept my offer?

If the credit card company's representative does not accept your offer, ask to speak to their supervisor. If the supervisor can't or won't help you, hang up and take the matter up in writing at the executive level of the company.

Do not try and argue over the phone. This will certainly not help your results. If all else fails, you can hand over the task to and of the many debt settlement companies around. These company's experience may just get the job done.

Do I fit the criteria to settle my credit card debt?

You may fit the criteria if your credit cards are maxed out and you are unable to make minimum payments. To be honest, I would let the experts decide if you qualify. You may be eligible for settling credit card debt, especially if you are three months or more behind on your payments.

Regardless, if you are having a hard time meeting your debt repayments then you must take action now. Call up a credit counselor or find one on line. You aren't obligated once you contact them, but chances are they can give you some direction. Don't leave it as you will won't get better, and it won't go away, that I can promise you.