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how to negotiate with credit card companies to settle debt

how to negotiate with credit card companies to settle debt

You have done it all to pay off your debt, but you are still drowning financially. Besides bankruptcy there is still an option. Inform your creditors about your situation and ask for a revised payment plan or a lower interest rate. You will have to appeal to their desire of getting paid, but when faced with the prospect of total loss if you declare bankruptcy, they will try to help as much as possible. This sounds like solid good news, but it is not a bed of roses – it is painstaking hard work. You will have to make long frequent calls to the bank for them to understand your position. You will need to be consistent and determined with your efforts if you want your bank to make a settlement. Negotiation isn’t easy, but if you follow these steps on how to negotiate with credit card companies to settle debt you will finally get the settlement that you wanted.

  1. The first step is to decide what type of settlement you want. There are four main types of settlement plans, and you can decide which one suits you best depending on your needs.



    They are described briefly here for your convenience:

    a) Lump sum settlement: In this plan you can negotiate to pay some amount of the money owed. Usually the payment can be divided into three installments.

    b) Workout arrangement: The bank in this plan lowers the interest rate or waves off the penalties on late fees, etc. This can be temporary to help you get back on your feet or could be permanent until you pay off the entire amount.

    c) Forbearance program: This gives you some relief time to get your affairs back in order, and then you can pay off the total amount.

    d) Debt management program: If you are unable to negotiate with the bank yourself you can opt to go to a debt management program that will take care of your matters with the company and help with your credit cards.

  2. Now you need to examine your debt – how much money you owed originally, how much is interest and how much is because of late fees and penalties. Now decide how much you can pay off. Make a budget and set an amount that you can afford. You might be able to pay some of the debt and get a settlement on the rest.

  3. Now this is the hardest step and requires perseverance and determination. Call the bank, and call frequently until you get yourself heard. Every bank has a different set up. Usually the first person you talk to doesn’t even have enough authority to give you what you want, so ask for someone higher up. Keep on calling until you talk to a relevant person.

  4. You should be clear and sum up the situation you are in exactly. Tell them honestly that you are unable to pay them off but you still want to honor your commitment. Ask them for a plan that would help you both out. Keep on negotiating until you get something near what you wanted. Mention bankruptcy in case of no settlement.

  5. Finally when you get a settlement plan, put everything in a written agreement. The situation is changing everyday in today’s market. The person you talked to might change or the bank might merge with some other bank. The point is, you need proof from the bank in case any problem arises.

When you are going for a settlement from a bank, it is presumable the last resort and is in no way easy. These steps on how to negotiate with credit card companies to settle debt will be a little help in your hard times.

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