Why Credit Card Companies Will Negotiate

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Credit card companies will often negotiate with debtors because it is easier to renegotiate debts and loan amounts than to go into default with the bank. Hire an independent adviser to negotiate with credit card companies with advice from a personal financial adviser in this free video on credit cards.

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Video Transcript

Hi I'm Roger Groh. What are you going to do if your credit card bills are huge and there is not a hope that you can pay them? Well one of the avenues that is open to you is to negotiate a different structure with the credit card company. Now there are two basic ways to do that. One is the credit card company actually forgives part of what is owed to them and you agree to pay a lower amount over a period of time. The second thing is the amount, the total dollars that you owe doesn't change, just the period does that you are going to pay that back in and the rate of interest that is accumulating on that debt will also change too. Now why would a credit card company do that? Well banks issue credit cards and banks hold the debt of your credit cards and if you don't pay your credit card there is a penalty assessed to that bank on their balance sheet. That's all pretty complicated but Congress just set aside 750 billion dollars to bail the banks and other finance companies out for specifically that so it is easier to renegotiate a loan and keep it in good standing than it is to have it go into default and that is why the credit card companies would like to negotiate with you on what you are paying and for how long. One note if you elect to do that there are any number of avenues that you can go, you can hire people to help you. Be sure that they are working for you and not for the credit card company or bank. The reason is that you will not get fair representation because their heart's going to be in the wrong place where if somebody works only for you, probably on a fee you know that they're just working for you in order to cut the best deal. So I'm Roger Groh and that's why a credit card company will renegotiate.

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