How To Settle Credit Card Debt

how to settle credit card debt

Settle Your Debt Now

Debt is a notoriously tricky part of our economy these days. While going into debt can enable you to do things like buy a car or a home or get an education, it can also be all too easy to get in over your head. Nowhere is this more true than with credit cards. Swiping that little plastic card at the cash register is easy. Sure, you tell yourself that you’re going to pay off the balance at the end of every month, but then you have an emergency, or you decide to make a large purchase with your card, and suddenly you find yourself carrying a balance to the next month. Then it gets a little easier to let that balance build.

Before you know it you’re looking at a mountain of credit card debt and wondering how you’ll ever manage to pay it off. The unfortunate reality is that sometimes life gets in the way, and then you find yourself in a position where you can’t pay what you owe. That’s when you need to start thinking about settlement. The purpose of this article is to help you learn how to settle credit card debt.

Stop Making Payments

Before you can begin to think about settling, you have to stop paying. A credit card company will have no incentive to talk to you about settling your debt as long as you’re making your payment on time. You may need to stop making payments on your other debts for awhile, too. If the company pulls your credit report and sees that you’re paying everyone but them on time, they are going to be less inclined to deal.

Make Them An Offer They’ll Probably Refuse

The next step in figuring out how to settle credit card debt is knowing how much to offer. Most credit card debts can be settled for pennies on the dollar, so you should never make an offer that’s above about a quarter of what you owe.  Even more importantly, never offer more than you can actually pay. If you can’t write a check to back the offer you’re making, you shouldn’t be making it. Whatever your initial offer is, they will reject it. The initial offer only opens what will likely be a lengthy dialogue.  Your debt can be managed!

Don’t Sweat the Threats

Credit card companies don’t like to settle. When someone settles their credit card debt, the company gets back only a fraction – sometimes a very small fraction – of the money they are owed. As such, these companies will do their best to make sure that the amount of money they’re going to get is as high as they can make it. At some point your debt will be turned over to a collections agency who will threaten to sue or garnish your wages. While they could do either, they almost certainly won’t so long as you continue negotiating in good faith.

Get Everything In Writing

Once you’ve gone delinquent on your account, never, ever, ever send them so much as a dime without a written settlement agreement in place. If you send them money based solely on a verbal agreement, then you may suddenly discover that the person you talked to on the phone that day wasn’t authorized to make that agreement, or is no longer with the company, or something similar, and suddenly your account is no longer delinquent and you’re back to square one.

As Americans rely more and more on credit cards and other debt-based products in their everyday finances, knowing things like how to settle credit card debt becomes increasingly important. Settling credit card debts is never easy or fun, but if you stay firm and continue to make relatively reasonable offers, you should be fine.