Negotiating Credit Card Debt
Tips To Negotiate Credit Card Debt Like A Pro!
Negotiating credit card debt settlements. Get the best debt settlement offers from your creditors possible using proven debt settlement letters.
The entire world is in the middle of one of the worst recessions in history. A huge factor in creating this worldwide economic crisis was the relaxation of lending standards over the past decade which allowed many consumers to plunge themselves into more debt than at any time in history.
In 2005, new laws made it more difficult to file bankruptcy and get rid of credit card debts. The subsequent boom in credit card defaults is a natural result of those changes. If you are reading this article, there is a substantial chance you are in trouble with your credit card debt. Negotiating credit debt might be the answer to your problems.
Negotiating Credit Card Debt Settlements A Step By Step Guide!
Negotiating debt settlements is usually only an option if you have a substantial amount of debt you have not been making payments on for some time. This is one area where fighting to keep your payments on time produces no reward. If your credit card payments are current, creditors will rarely discuss settling the debt for less than you owe.
In fact, if it has been a very long time since you have made any payments, creditors and collection agencies will often approach you with offers for negotiating debt settlements. In exchange for an immediate payment, they will offer to accept a discounted percentage of the total debt showing due.
As a general rule these offers will be more likely if the creditor or debt collector knows the deadline for filing suit against you on the debt is approaching, or they believe for some other reason, such as bankruptcy, they may never receive any of the money due. The creditor would rather receive part of the money sometimes than none at all.
The factors which are important to your decision on whether to accept the creditor's debt settlement offer will vary greatly according to your individual situation.
First, you should always assume that the first offer you receive is not the best. A large part of the balance showing due on a defaulted credit card will consist of outrageous fees and penalties which have been compounded many times over.
An offer from the credit card company to accept 50% of that highly inflated balance may add up to more than the principal amount you borrowed plus reasonable interest fees!
Top Credit Card Debt Settlement Strategies!
Always propose paying a smaller amount. When you do, however, you can expect to receive threats of lawsuits and wage garnishments in an effort to push you into accepting the original offer.
Lawsuits and wage garnishments are real possibilities but they are very unlikely or you would not be receiving the debt settlement offers in the first place. If you do reach an agreement for a lower settlement amount, do not pay it until you have received the revised offer in writing stating your payment will be considered a complete satisfaction of the debt. When negotiating credit card debt, any verbal promises on this issue are worthless.
The second factor which can make a huge difference in negotiating credit card debt, is your present ability to actually pay the full settlement amount.
If you cannot pay a single payment settlement amount, you are often as well off paying nothing at all, and calling the creditor's bluff on filing a lawsuit. If you do have the ability to pay only a lesser amount, this can be very useful when conducting negotiations on the settlement terms.
A third important factor when negotiating credit card debt is your individual credit situation. Sometimes, although rarely, the debt you are attempting to settle no longer shows on your credit report.
If you have reestablished credit since that time, you may have a decent credit score. If this is the case, settling the debt may actually hurt your credit rating. Chances are greater that you already have other defaults and settling will do your credit no harm.
Fourth, if the amount being written off by the creditor is extremely large, expect to receive a form telling you that you now owe taxes on the amount written off. Speak with your tax preparer to make sure this will not cause a tax liability you cannot pay. Given a choice, having a creditor come after you for money is much preferable than having a tax collector chasing you.
Once your settlement is complete, expect to spend considerable time following up and getting the collection cleared from your credit record. Getting cooperation from the creditor will be nearly impossible once the credit card debt settlement is finalized.
After negotiating credit card debt you will need to keep any documentation of the transaction forever. You can count on it reappearing on your credit at some point. If you have the documentation, the problem can be resolved easily.
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