While it is possible to get out of credit card debt by negotiating yourself, it is challenging. Here are some tips and the best ways to reduce or eliminate your credit card debt by using this approach.
You need to determine what kind of arrangement with the credit card company will work best for you. There are four primary solutions and they include: workout arrangement, lump sum settlement to get out of credit card debt, forbearance, and a debt management plan.
Be sure to ask the credit card company for a breakdown of your bill. Determine how much was actual purchases and how fees and charges. If the review of the credit card bill and any statements show that had a credit limit of $3,000 but have an outstanding balance of $5,000 when adding in late fees, charges, and interest then you may be able to negotiate back to a payment for the principal balance only. In some cases individuals may also get a reduction or elimination of the various fees if you pay it off.
Before you negotiate to get out of debt, be sure to take a look at your income as well to determine how much you can afford to pay towards your debt each month. Know exactly what you can afford, and do not overextend yourself. If you negotiate a solution and then fall behind again then your options will be even more limited.
The next step is to call your credit card company, as often and many times as it takes. The reason for the multiple calls is that it is typically not very easy to get the correct person. You may get bounced around a bit and you need to be persistent in order to get a debt settlement or reduction on your own. You need to find someone from the creditor that can negotiate with you and address your concerns. It is a good idea as well to send them a hardship letter.
The fact is that customer service representatives who will answer your call most likely will not have the authority to negotiate with you or grant what you need, even if they won't admit it. Always try to ask for the the team or department that handles workout arrangements or debt settlement arrangements. Usually this can be done by asking for a credit manager upstream, and asking for someone with the authority to negotiate and make this deal to help you get out of credit card debt. Find the top ways to negotiate a lower interest rate.
Unfortunately every bank and credit card company is structured differently, with different department names, policies, and special credit card assistance programs. From experience, some department names to ask for and try include: workout program, loss mitigation, and the in-house help program.
Once you do get the correct person on the line, you need to ask for that person's name, telephone number, and ID number (if there is one). Keep everything for your records. Then begin to negotiate and explain what you need and why. After you are finished with the call, write down a brief summary of the conversation with the time and date. In particular, note who you spoke with. Keep all of your notes in a notebook with whatever additional correspondence and deal terms that you get from the credit card company.
Be open and honest. Tell them what you want to pay, then ask them what can you do. The negotiations that take place to get you out of debt will more than likely take a while, and be a “marathon”, not a sprint. You should expect to make multiple phone calls to the credit card company and also talk to a wide variety of people, who may even contradict each other on the deal.
Credit card debt negotiation can have other impacts, including :
Be open and honest. Sum up your situation for them. You need to explain that your financial situation has changed, that you have an emergency or some other issue, but stress that you still want to honor your commitment to pay your bills and debts. You can either ask what they can offer you, or better yet propose your own plan. During the negotiations they may say yes, no or they may refer you to another department. Learn how to negotiate lower fees and rates.
One option that is worth considering is saying to the effect that if you can't reduce my credit card payments by X amount, I'm not going to be able to pay my debts or bills. Or you may decide to focus on getting a lower interest rate, which will have the effect of automatically lowering your credit card payments due to the lower rate and shift more of your payment to paying off the principal balance.
Never be afraid to negotiate strongly and haggle. Like in most negotiations, you should very rarely accept the first offer presented to you. You never do that when you buy a house, or buy a car, right. And do not do that here either. At the end of the day the creditor wants to find a solution to so they can guarantee some form of payment from you.
One common question is should you mention the B-word (bankruptcy) to them. If it is something you're considering doing, then absolutely yes, you need to say it to them during the negotiating process. This may allow the creditor the opening they need to present you with a better offer. Find additional ways to get help negotiating.
People change jobs. Banks are sold or merge. Life happens. Therefore, for your protection you absolutely need to get an agreement in writing that puts everything down on paper. It should cover the fact that the account was paid off (or will be paid over time), you need to determine what will go on your credit reports, and you should get forms for tax reporting (called a 1099-C). Get the deal in writing before you pay off the debt.
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