How to settle credit card debt


Credit card debt piles up quickly. One day you're enjoying your shiny new piece of plastic, the next day, the card is covered with battle scars from swipe machines and ATM terminals. Your card is maxed out, you can't afford the payment, and you're getting dunning letters in the mail. What do you do? If you're totally underwater, and you can't see any way out, it might be time to consider settling your credit card debt.


Gather Up Your Card Balances


First things first. You need to get your card balances in order and organize all of your credit card information before you do anything else. Walking into a negotiation prepared is the best way to secure a deal that's beneficial not just for the credit card company but for you as well. Sort your credit card statements from lowest to highest or highest to lowest. It doesn't matter, as long as you have them organized in some fashion. Organization will help you when you're on the phone with your card company. Instead of fishing around for the information, you can get to the point and talk shop. Write down the phone numbers for each card company and start making phone calls.


Start Making Calls


When you get a representative on the line, tell him your proposal. By the time you get around to calling your card companies, you might be already receiving phone calls and letters about your debt. That's fine, as long as you're committed to keeping the lines of communication open. Your creditor isn't going to be mad at your for calling and offering to negotiate.

Explain your situation. You can't repay your debts in full, but you do want to pay something. Credit card companies don't always settle. A lot of people are out of work, can't pay their bills, and are calling credit card companies. You're no different, in that sense, than a lot of folks. Debt relief is something reserved for hardship cases. You have to show the credit card company that you can't pay your bills and that this situation is made worse by your credit cards. Finally, you have to demonstrate to the card issuer that pursuing you in court will not only prevent you from paying your regular bills, but that it will result in the creditor getting no money.

The situation has to be pretty bleak - so bleak that the only real solution is to settle the debt right now or get a forbearance on your debt (meaning that all payment requirements are suspended until further notice).

You should negotiate for more than $0.20 on the dollar. This is because the credit card company can sell the debt for at least this much and make money on the deal by selling it to a third-party debt collector. You don't want that to happen. You must make the offer good enough that the card company's best interest would be served by collecting the debt straight from you.


Consider Hiring Professionals

If you are unsuccessful negotiating your debts yourself, consider hiring a professional debt negotiation company. Debt settlement or negotiation companies can settle your debts quite successfully for pennies on the dollar. They will likely take the same or similar approach as you could on your own. The difference is that they have much more experience and connections in the industry than you do. They have established relationships with thousands of creditors, which gives them leverage that you lack.

A Few Considerations

Sometimes, the best offer you'll get on your own is an altered payment arrangement that will still require you to repay everything, albeit with different terms. You might not initially get the settlement you want - even working with a settlement company. Never give up. If your goal is to become debt free, and debt settlement is the only practical solution, then fight for it until your credit card companies are willing to compromise with you. Fight until you get a mutually beneficial deal.