Negotiating Credit Card Debt

Tips for Settling Debt on Your Own

This article covers negotiating credit card debt yourself rather than hiring a debt settlement service to handle negotiations on your behalf.

Negotiating and settling debt on your own can be challenging, yet certainly doable, if you don't want to utilize the services of a company that specializes in settling debt to do the job. Different people have different reasons for handling their own negotiations. Here are the most common reasons.

  • You haven't found an experienced, reputable settlement company that you like and are comfortable hiring.
  • You found a settlement company you like but didn't like the terms of the agreement.
  • The fees for handling your negotiations are too expensive.
  • You are someone who prefers not to hire others for something you can do yourself.

Whatever the case, the most important characteristic you need to increase your chances of successfully negotiating credit card debt is... persistence.

Be aware that settling your debt will impact your credit rating and can have tax consequences. In addition, after your first call to the creditor, your card may be frozen.

Handling Negotiations

Call your credit card company and advise the representative who answers the phone that you are requesting a settlement offer on your outstanding debt. Ask to speak with a manager or someone authorized to grant you settlement relief.

You may be routed to different people until you get to the right person in charge to negotiate and settle your debt. Every company is structured differently and handles these types of calls differently.

Be sure to maintain a courteous and polite conversational tone at all times — even if you are frustrated or feel you are not being treated the way you desire.

When you get connected with an authorized settlement manager, make note of his or her name and explain your need to settle your debt. Explain how your financial situation has changed. Perhaps you lost your job, are going through a divorce, or had an illness that has depleted your resources.

Point out that you are already lagging behind in payments and are seriously considering bankruptcy. Explain how much you currently earn, and emphasize that there is no way for you to repay the full balance on your card considering your circumstances.

Be prepared to answer questions about your income and expenses. It is also helpful to point out that you have been looking for more work (if that is true) but have not been able to advance your employment or secure a part time job. Be honest and forthcoming.

It is important to let the manager know that you are sincere and serious about repaying as much of the debt as you can, as quickly as you can. Again, reinforce the fact that you want to do everything possible to avoid filing for bankruptcy.

The Offer

Once you've thoroughly explained your financial situation and concerns, ask the authorized manager what he or she proposes in terms of a settlement amount. When negotiating credit card debt, it is appropriate to make a counter offer, particularly if you are unable to pay the amount the creditor wants.

Typically, credit card companies want a single payment rather than putting you on an installment plan. Though, some will be open to arranging a discounted payment plan over a set number of months.

Based on the conversation flow, you may need to make the initial payoff offer. In this case, give a number that reflects what you are able to pay in one lump sum, if possible, leaving a little room for negotiating.

Negotiating credit card debt make take multiple calls over a period of weeks. That's where your persistence plays a key role. Be sure to take notes during each of your settlement calls so you will always have the discussion points available for ready reference by date.

Once you've reached an agreement on the settlement amount and terms, get everything in writing — even if you have to draft a document yourself. You and your credit card company need to sign the agreement and all this needs to be done before you pay.

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