If you’re struggling with credit card debt and you have to split your payments among multiple creditors, you need not fret as there are lots to accompany you. According to recent reports, the total credit card debt in the US is approaching $1 trillion and, therefore; it is about time to take steps to reduce your debt burden.
Most banks and credit card companies are eager to cut deals with the card holders who are on the brink of filing bankruptcy. In case you’re someone who is desperately looking for ways to settle your credit card debt, you should know that opting for credit card consolidation and debt settlement on your own will help you save money in the long run. Have a look at the following do-it-yourself debt reduction negotiation steps that you can take on your own.
Know How Much You Owe
The first step that you should take is to make a sum total of the debt amount that you owe. The principal amount and the interest rates that you pay are what you need to take into account when you opt for debt settlement on your own. Unless you know the amount that you have to pay, you won’t be able to move further with your debt repayment.
Check Your Savings Account
You should check your savings account so that you know the how much you’ve saved throughout the years. If you don’t have enough as you thought, this is perhaps not the right time for a debt reduction negotiation. Although the creditors will waive off some of your debt, you are still liable for the remaining amount either through a lump sum or through equal monthly payments throughout the specified term. So, saving is a must.
Write a Debt Settlement Letter
As you’re negotiating yourself, you have to draft a debt negotiation letter so as to formally let the creditors know about the financial hardship that you’re going through. Be humble while drafting the letter so that the creditors are impressed and they agree to forgive certain portion from your outstanding debt balance. Also mention the exact debt that you owe and the amount that you would prefer paying them back.
Negotiate with your Creditors
This is the biggest step that you require taking when you wish to negotiate with your creditors on your own. Tell them the amount that you’re ready to pay and sit with them in order to set up an alternative repayment plan through which you can repay your debts with ease.
Start Making the Monthly Payments
Once the monthly payment structure is set, you should immediately start making the monthly payments to the creditors. You just have to remember the due dates and thereby make timely payments towards your multiple credit card debt accounts. Don’t make the mistake of defaulting on your accounts even after settling your debts as this will trash your credit score.
Before opting for debt settlement, you should be aware of the fact that debt settlement hurts your credit score. Since you’re not paying back the entire amount that you owe, this will have a negative mark against you on your credit report and will also plummet your score. Therefore, soon after you settle your debts; make sure you get a secured credit card to establish positive credit history and take some other required steps to repair your credit and become creditworthy of getting affordable lines of credit.