How to Settle Credit Card Debt With Creditors

Settling credit card debt refers to the process of working with a credit card company in hopes of settling on a lump sum (usually 30%-40%) to wipe off the remaining balance owed to the creditor. Someone who owes a credit card company $10,000 will usually end up paying the creditors $2,000-$4,000 in settling their debt. Settling debt with credit card companies is an excellent alternative to filing for bankruptcy.

Difficulty: Moderately Easy

Instructions

1. Gather Your Credit Card Records
   
   To get started in settling your credit debt, you first need to gather documents such as: Exactly how much debt you owe each creditor, how long you account has been delinquent, credit card numbers, etc. If you are unsure of how much total debt you owe to creditors, go online and look up your credit report.

2. Contact Your Credit Card Company(s)
   
   Give you creditor a call and explain to them that you cannot pay off your entire balance and you would like to settle with them. The creditor will review your account details and offer you with a settlement amount.
   
   Note: Keep a calm tone and be friendly with the creditor, arguing or losing your cool will result in them being less inclined to give you a fair settlement.

3. Consider The Creditors Offer
   
   As a rule of thumb it is not advised to settle on anything above 40% of your total balance. If you are asked to provide an amount above 40% kindly decline and try settling your debt with them on a later date. Be sure to stress that you will file for bankruptcy if you are not offered a favorable credit card settlement.
   
   Note: Always be sure you are speaking with an account manager and not a representative. Account managers have more authority when it comes to settling credit debt with their customers.

4. Accepting an Offer
   
   If you are given a favorable settlement, be sure to specify whether you will be paying the debt settlement amount in a lump sum or in monthly payments. Most creditors require that you pay in a lump sum, however monthly payments are possible. Also remember to request a debt settlement agreement letter.

5. Save Your Agreement Letter
   
   After you have settled with a credit card company always remember to request a letter confirming the settlement amount you both agreed upon. File this letter so it is on hand in case the credit card company brings up any discrepancies on the settlement in the future.