How to Settle Credit Card Debt
Settling a credit card debt means getting a creditor or collection agency to accept less than full payment on the debt. For instance, if you owe $1,000, you might convince the creditor to accept $500 as payment in full. It takes time, patience, nerves of steel and a thick skin to settle a credit card debt, but it can save you thousands of dollars you can't afford.
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Instructions
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Settle Credit Card Debt
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Stop making your credit card payments. Companies have no reason to settle with someone who continues to make timely payments. Most credit card companies only settle when they believe that if they don't make some kind of deal, they won't see a penny of the money they're owed.
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Ignore threats. At some point, your account will be turned over to a collection agency that may call threatening to sue you, garnish your wages and take your house or car. Take heart in the fact that most agencies won't go to the effort and expense of actually filing a lawsuit.
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Make an offer. Many debts are settled for as little as 7 cents on the dollar. Therefore, your opening offer should be no more than 25 percent of the debt. Do not make an offer you can't afford.
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Expect that your first offer will be refused.
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Use the threat of bankruptcy to keep the company talking. Remind its representatives that if you declare bankruptcy, the company may get nothing. Continue to negotiate until you reach a mutually acceptable settlement.
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Take your time. There is no reason to rush into a bankruptcy. Every day you wait, your debt gets older and harder to collect, and your creditors are more likely to cut their losses.
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Get all deals in writing. Before you send in your payment, make sure that the person who negotiated the settlement with you has the authority to do so. Be certain that the payment you are sending will settle your credit card debt.
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Tips & Warnings
Some credit counseling agencies and attorneys will help with debt settlement if you don't feel up to handling the task on your own.
A credit card settlement will show up as a negative on your credit report, so don't go this route unless you are truly out of money and options.
