How to Settle Credit Card Debt Yourself

Ever think that you could settle your debt for 50%, 40%, or even 25% of what you owe to Bank of America, Chase, or other banks? Although daunting, settling your debt yourself can alleviate your stress from collection notices and calls.

Settling your delinquent accounts will save you both time and money and allow you to start improving your credit rating. Although not a cure-all for every situation, for the right people, settling may be the right choice to relieve you of credit card debt stress. Settling will take a little effort; but take a breath and settle in, because the benefits over the alternatives may just be worth it.

Difficulty: Moderate

Instructions

Things You'll Need:

• Calculator
• Writing utensil
• Paper
• Account numbers
• Contact numbers for creditors
• Telephone
• Fax machine (optional)
• Email

1. Gather any information on the accounts you have: account numbers, current balances, phone numbers for creditors, and collection notices. First, you will want find out if your count is eligible for a settlement. Secured accounts are not available for settlement, and also your accounts must be past due; at least a few months behind but usually six is when creditors will begin to settle.

2. Evaluate your current financial status; how much can you afford for a settlement? Remember, you want to make sure you have a clear amount you can pay, both as a lump sum and what you could possibly afford in multiple monthly payments, before you call any creditor. If you can't afford to pay a settlement you made, it become null and void.

3. Once you have a clear number that you can afford to pay as a lump sum, figure out the percentage that you want to offer. For example, if you have a credit card with at $2,000 balance, you may first want to offer a lump sum payment of $400. Like haggling, you will want to offer low to start and negotiate with the creditor.

4. Call the creditor you wish to settle with and let the representative know that you need to speak with a settlement negotiator. Keep in mind of the following before you try to negotiate with them:
   
   1. If an account is not on your credit report as bad debt, or "not charged off", and the creditor offers you 50% or lower; this is usually a good deal.
   
   2. If an account is charged off, it is likely that you will get lower settlements, so push for them.
   
   3. If an account is close to charging off, try to get 50% or lower, as this is sometimes the creditor's last chance to get your money before they transfer, or "sell", your debt out from their company.
   
   Once your speaking with the settlement negotiator, inform them of your financial hardship and what you are offering to do to pay off the debt.

5. Once you first offer an amount, it is likely that the creditor will tell you that they can't settle with you or that they can only settle for a much higher amount. Again, state the reason of your initial financial hardship and let the creditor know that you are eager to settle your debt, but only have limited funds. Ask the creditor what options are available, making sure to tell them that you're not sure how long your funds will be available. Usually the creditor will offer a lower offer.

6. This process will continue back and forth; continue to make counter offers until you come to an agreement you are willing to accept. The creditor are not allowed to hang up on you while your civilly negotiating your account, so haggle with them as long as you need to.

7. Once you have come to an agreement (if possible), ask for a copy of the settlement letter to be sent to you so that you can verify the settlement before you give them checking information.

8. Once you receive the settlement letter, make sure your payments are sent on time. After you have completed the settlement, wait about 2-3 months and you should receive a letter or statement showing a zero balance on your account.

Tips & Warnings

• Make sure after the 2-3 mark after completion of the settlement that the account is marked on your credit report as "Paid with Settlement" and not as a bad debt.
• Settling your accounts is for those who cannot pay the full balance, not for those who can afford to.
• If your account is with an attorney, it is likely you will only get 50% or higher settlements.
• You should give priority to accounts that are with an attorney, as they can summon you to court, garnish your wages, or cause you to have other horrible fates.
• If you still have further questions, look around at the other eHow articles about this subject to gain further info before calling your creditor.
• Settling accounts is only for those who are financially insolvent. Creditors can look at your assets to determine your financial status.
• Settling accounts will initially hurt your credit score but will give you a good starting point to building your credit score.
• Not all companies/banks are the same, some will settle lower than others, some companies bottom line is 50%.
• The authors of this article are absolved of all consequences that may occur because of it. Put this information to use at your own risk; to your credit score in particular.
• If you save more than $600 dollars with your settlement, you may need to claim it on your taxes. Speak with whomever you do your taxes to see how you can be exempt from this.