The very first thing to do when you are in this situation may perhaps seem irrelevant.  However it is important because everything you do after this step will be put at risk if you do not take the important first step.  You must take responsibility for the situation you are in and commit to changing your lifestyle in whatever ways necessary in order to prevent being swamped by credit card debt again in the future.  This may mean that you get rid of your credit cards altogether, or it may mean that you only allow yourself to use credit cards for certain purchases.  Whatever you end up deciding – stick to it.  Lecture over.

Before we can really get into the mechanics of how to negotiate credit card debt you need to review the position on your credit cards and determine the composition of the debt itself.  The easiest way to do this is to make a list of all your cards and then take each card statement one by one and split the outstanding balance between the amounts you have actually spent, the interest charged and if necessary the charges incurred.  You may have to review a number of credit card statements in order to completely establish these balances.  Apply any payments to the charges first, then to the interest and finally to the outstanding capital purchases.  The reason for this step is to determine what it is that you will be negotiating over with the credit card company.

The next step is to examine you income and expenditures each month.  The objective here is to be determine what expenditure you will be able to cut each month in order to enable you to free up as much as possible in order to pay down your credit card debt.  You cannot start negotiating credit card debt unless you are able to be clear and assertive about what you can afford to pay and what would be too much.  In order for you to be effective in your credit card debt negotiation this step is essential.  One final warning.  When evaluating your expenditures ensure that you do not sacrifice essential items, such as groceries and mortgage payments.  Credit card debt is unsecured and so you cannot lose the roof over your head if you fail to pay.  But if you start missing mortgage payments this is just the sort of eventuality you run the risk of falling foul of.

Once you have established the above you are probably ready to start negotiating credit card debt settlement.  You have a number of options available to you in your negotiations.  The first, and perhaps the quickest and simplest is to see if the credit card company will accept a lump sum payment of a reduced overall amount in full and final settlement of the outstanding balance.  Clearly this can only occur if you have access to a lump sum, perhaps through the use of savings, or by borrowing money from a friendly source such as another family member.  This card credit debt negotiation settlement technique does work and is certainly one way to bring closure to the whole problem quickly, but you should be aware that the write-off of the unpaid amount by the credit card company will be noted on your credit report and will therefore affect your credit score in future credit applications.  In addition, during the conclusion of your negotiations it is very important to ensure that the credit card company provides you a statement of full settlement in writing.  If they do not you may leave yourself vulnerable to the debt being chased later on.

If you do not have funds available to negotiate a lump-sum settlement the next step would be to try to negotiate a program of payments that will settle the debt over time.  You might either arrange this through a debt management program, or attempt the negotiation yourself.  With a debt management program all your cards would be included and all the credit card accounts closed as part of the process.  In addition debt management programs do charge a fee, although this is not particularly onerous.  Try to avoid the numerous debt management companies advertising on the web and instead look for nationally recognized debt management programs.  These will be less expensive and more trustworthy to act for your best interests at all times.

If you do decide to undertake your own credit card debt negotiation then there are number of pointers you need to try to address with the credit card company.  Try to get the company to agree to stop charging you late payment fees, high or penalty rates of interest and over-limit fees.  There is no point in them doing so as it may well end up pushing you into a complete default position which will be more costly for the company.  Try to get them to agree to charge a reduction from the standard rate on interest.   Present to the credit card company the amount you believe you will be able to pay and try to get them to work with you to determine a rate of interest that allows you to repay a significant part of the capital outstanding for each payment, rather than ending up just continually paying off interest charges.

If you get agreement then it is important that you both stick to the agreed plan and try to ensure that the credit card company does not report on your credit report any adverse event.  This may be difficult since such reports may be just a standard event, but in order to protect your future credit score it is definitely worth the effort in trying.  One final point to note is that whilst you remain in your work-out it is likely that the credit card company will limit or completely remove your credit limit.

If the aforementioned steps do not work the final step for negotiating credit card debt settlement is to try to get the credit card company to agree to fore go payments for a period of time.  This will effectively give you a period during which you can take a payment holiday.  This step is really only viable if you have had a change of circumstances, say for instance you have lost your job, and need a period of time in order to find another, following which you would recommence payments.  During this time you really want the credit card company to reduce the interest rate charged and cease making non-payment or late payment charges.  They will probably agree to this, but in the end you will have to start paying again and ultimately still pay the debt down in full.

Hopefully you can see that negotiating credit card debt is a worthwhile and potentially financially rewarding activity to undertake, especially if you are in danger of struggling, or are presently struggling with the payments on your credit cards.  If you don’t deal with the debt through negotiation it is likely that the outcome will be more expensive and damaging, so you are encouraged to take control and deal with it as soon as possible.

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More often than not, the interest gets so out of hand, it ends up topping even the principal amount.  This is truly a nightmare since the interest does not stop, instead it keeps accumulating in ever increasing amounts.  Eventually, you will end up paying double, triple or even quadruple times the original amount that you owe your credit card company.  A significant reason for this is that many individuals that have credit card debts tend to ignore them believing that in some way they may just go away.  They neglect the minimum payments and can incur additional charges as a result. Before they know it, they are already thousands or even tens of thousands of dollars in debt, all thanks to the high interest rates and poor management of personal finances.  In order to avoid this, it is necessary to settle the credit card debt the right way.

However, if you follow a couple of simple credit card debt settlement methodologies, tips and strategies, you can thus avoid paying more than what you already owe.  If you are already up to your eyeballs in credit card debt then there may well be credit card debt relief available by following this advice:

• A simple yet very effective way in order to settle that debt is for the owner to pay at least 20 percent more than the minimum amount required by the credit card company each month.  This is done primarily to stop the interest from eventually getting bigger than the principal amount owed.  This is called “to keep the interest in check” method.  Since payment is tendered monthly, the principal amount will thus be lessened thereby also lessening the monthly interest it comes with.

• Consolidate you credit card balances into as few as possible and then destroy the cards where the balances have been cleared so you will not be tempted to use them again, continuing the cycle of debt.  Make sure that you consolidate the balances on the card with the best overall interest charge.

• Look for special offers on interest charges for balance transfers.  Some credit card companies offer reduced interest charges on the balance transfers for the life of the debt.  This will immediately arrest the build up of the interest debt element of your card balance.

By taking into account these strategies, your credit card debt settlements will catch up with the principal amounts outstanding.  You will no longer have sleepless nights or even nightmares just by thinking of the surging and rapidly growing balance on your credit card.  Just make sure that you follow these strategies and you will be on you way into settling any and all credit card debts that you have as soon as possible.

It is however possible that this credit card debt settlements strategy will not work effectively.  This may be because of unforeseen circumstances or down to poor discipline.  If this is indeed the case and you find that despite your best efforts the balance on your credit card continues to build you really need to examine alternatives to provide you with the necessary credit card debt relief.

There are many offers that can be found on the Internet offering credit card debt solutions, or some form of credit card debt elimination.  However, a great many of these so called credit card debt solutions really involve the process of debt consolidation.  This is not necessarily a solution to anything as the old say is true – you can’t borrow you way out of debt.

If you do find yourself in real difficulties then there is no better advice than to simply approach the credit card company and commence a process known as credit card debt negotiation. Write to the credit card company and request that together you come to an arrangement by which you can pay down your debt. The arrangement may contain certain conditions such as lower interest rates, a particular sum of money to be paid every month, a span of time in which the remainder of the amount owed will be paid in whole and the like.  These arrangements may come in the form of “clauses” in an agreement.  Since these credit card companies will necessarily value any form of payment rendered to them even if the amount is little then you will have solved the primary problem of having huge interests to worry about whether it be monthly, quarterly or yearly.

The key to ensuring you make full credit card debt settlement comes down to two central factors, determination and discipline.  With these you have a very good chance of success, without them you have almost none.

Related posts:

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