Credit card bills can be a big stone around your neck unless you can manage them in time. If you have sky high credit card bills which you are not being able to pay off, then it is time to do some serious thinking. Before you lose hope, remember that bankruptcy is not the only option.

In fact, debt settlement is becoming an increasingly viable option for borrowers who are trapped in debt. Also, it is not mandatory to have to go through a debt settlement company, in case you are wary about a third party scamming you of your money. There are ways in which you can find out how to negotiate credit card debt settlement yourself. Admittedly, the steps aren’t easy; it can be done with some skillful negotiation, however.

Step 1: Which is the best plan?

Even if you are planning to negotiate with your creditors about settling a portion of your debts, the first thing you need to look at is which kind of arrangement would suit you best. These choices include:

  • Paying a lump sum. If you have a sum of money saved up, then you could use it to negotiate a settlement where the company decides to write off a major portion of your debt in return for a full and final settlement.
  • A workout. Through this process, the creditor will take off the costs like late fees and lower your rate of interest temporarily. Once you are financially stable, the settlement goes back to normal. It could also be a permanent settlement until you have paid the entire balance.

Of course you always have the third option of using a debt settlement company in case you don’t want the hassle of having to directly deal with your creditors. Then, there are organisations which can offer you credit counselling and structure your debt for you so that it becomes more manageable.

Step 2: Check your income and credit

The first thing here is to take a good look at your credit card debt. Ask the company to break down the bill for you. Find out how much you actually owe them and separate it from all the extra fees and charges that you pay. One way on how to negotiate credit card debt settlement yourself is by approaching your creditors and asking them to reduce the principal amount by offering to pay off all the extra charges and fees in full. Of course, it will all depend on the leniency of your creditor.

Also, scrutinize your income before going into negotiate your credit card loans with the creditors. Even if they offer you a lump sum settlement, or a plan with reduced monthly payments, what will you be realistically able to afford? Once you know how much you can afford to pay every month, you can start negotiations knowing that you won’t stretch your own limits or make unrealistic settlement promises to your creditors.

Step 3: Contact the company

This is the hardest part. Get ready for some hardcore negotiations with the creditor. Start with a phone call, not a letter or an e-mail. On the phone, always ask to speak to someone with higher authority. Customer care executives won’t have the clout to make this deal with you. You will have to make repeated phone calls and meet different people. Be prepared to show documents that state your inability to pay off the debt. This could take several months to actually culminate into something concrete. Remember to start early and not wait for the debt collectors to start knocking.

How to Settle Your Credit Card Debts Yourself
Tagged on:                         

Jenny Richards

Jenny is a credit counsellor working with a debt management company. For the last decade she has been advising consumers on how to negotiate credit card debt settlement yourself. Jenny loves hiking in her free time. To know more click here.

One thought on “How to Settle Your Credit Card Debts Yourself

Leave a Reply

Your email address will not be published. Required fields are marked *