There are many things that people fear and out of control credit card debt is not something that always comes first to someone’s mind when they think about the worst financial hardship that could happen. But, when it does happen to someone, it can feel as though it is the worst thing ever and that they are buried so far that they will never see any light. But this does not have to be true as there are many ways to go about fixing the problem including considering credit card debt negotiation. What credit card debt negotiation does is take the debt you owe and either reduces the total amount that you owe or find a way to make it easier to pay it off.
Generally, when a credit account hits a collection agency, there is more room to work a credit card debt negotiation plan. This means that if you owe a total of four thousand dollars, they may be willing to take a lump sum payment of two thousand dollars and call the debt paid off. This helps the company in that they are finally receiving money from the debtor and the debtor is helped by the reduced amount of debt. Credit card debt negotiation plans are often a win-win situation for both parties involved. And while it is true that there will be a small mark on your credit for paying less then the total due, the affect is much less then leaving the debt sit or filing bankruptcy.
What to Do
If you look at your credit card bill you will see that your interest rate is listed on there in a spot that is easy to find. If your rate is over 10% then you have something you can use for negotiating credit card debt. These are arbitrary numbers set by the credit card company and you can use them when you are negotiating credit card debt. As long as you always pay your principle you are fine. I had a friend that would call his credit card companies once a year and tell them that if they didn’t lower their interest rates he was paying the card off in full and canceling it. More often than not the rates got lowered. This also affects your monthly payment and can help you control your monthly debt.
The best and generally the cheapest way to go about tackling credit card debt negotiation is to call each of your creditors yourself and explain your hardship. While not every single credit card company or collection agency will be able and willing to accept a deal, there is a good chance that one or even a few of those on your list that you owe will be willing to work with you. Even though you would love to see every creditor on your list cut your debt in half, the fact is, even if one or two were able to slice your debt in half, you will have been successful in your credit card debt negotiation.
If you are feeling that you are not outgoing enough or maybe you are just simply too scared or shy to contact your creditors, you may need the assistance of someone else. There are agencies that are dedicated in helping you with credit card debt negotiation and since it is their job, they may know a few tricks that you do not and this could make all the difference in getting it done. It never hurts to call in some professional help but try to stay away from those who want to charge you hundred of dollars for their assistance because successful credit card debt negotiation isn’t promised and you could up even worse off then before. For more useful information please visit Reduce Your Debt.
Reduce Your Debt
January 15th, 2008
It’s unfortunate, but the stark reality in the United States is that bankruptcies have increased by an astonishing 40.16 percent during the first three quarters of 2007. This represents a total of 623,399 bankruptcies filed during this period. As if this isn’t bad enough, the news is even worse in the Detroit area, where Chapter 7 personal bankruptcies increased by a whopping 63 percent during the first ten months of 2007.
Troubling as it may be, these facts are not surprising given the current state of the country’s housing market; with foreclosures at an all time high it’s almost expected that credit card debt and delinquencies are also skyrocketing. Because of the credit card situation, so many people find themselves experiencing much difficulty making ends meet. These same individuals have a strong desire to avoid bankruptcy, but they’re not sure what other options may be available to them. This leads many people to closely examine debt settlement, which is somewhat misunderstood. Therefore, if you’re considering this form of debt relief it’s important to learn as much as you can so that you’re able to make an informed and educated decision.
What is Debt Settlement?
Debt settlement (debt negotiation) is an agreement between a debtor (consumer) and a creditor to fully satisfy a debt for a reduced payoff amount. This process typically occurs as negotiations take place between the consumer (or a professional firm hired on their behalf) and the creditor.
Are You a Good Candidate for Debt Settlement?
You may be a good candidate for debt settlement if your debt is simply out of control and you find yourself constantly worrying about this situation. You may even have experienced several nights of lost sleep due to the stress brought on by your lack of ability to make ends meet.
If you feel as though there is no end in sight, and you’re borrowing from one creditor to pay another I highly recommend that you consider debt settlement as a possible solution to end your financial woes.
Please understand, however, that if you should reach an agreement with one or more of your creditors to pay your account(s) off for less than the full balance, funds must be available to pay the agreed-upon settlement prior to the deadline. Some folks access a home equity line of credit for this purpose, while others simply borrow from their retirement fund or a relative. If these options are not available to you, it may be necessary to set aside a reasonable amount of money each month until you are in a position to negotiate a settlement with your creditor(s).
Will Debt Settlement Affect My Credit Score?
If each of your credit card accounts is current, there’s a very high likelihood that your credit score will be negatively impacted. This is due to the fact that creditors will not cancel thousands of dollars worth of credit card debt simply with a phone call. Rather, all accounts considered for debt settlement must be delinquent. Clearly, delinquent accounts on one’s credit report will reduce the overall credit score. Fortunately, with each zero balance reflected on your credit report, your credit score will increase and should be well above 600 within 6-9 months after completing the debt settlement process. For more information regarding your credit score and debt settlement, click here.
Will My Creditors Sue Me?
When credit card accounts are delinquent, obviously creditors maintain the right to take whatever action is necessary in an effort to collect the money owed to them, so obviously there is some potential for a lawsuit. That being said please understand that the probability of litigation is relatively slim. You see, the majority of creditors would very much select to resolve consumers’ past due accounts outside of a courtroom, and avoid litigation altogether. Even though most creditors will not sue, please note that there are some cases where creditors do litigate to collect what is owed them.
If you’re considering debt settlement and would like to learn more, click here.
Marie Megge is a consultant in the credit services industry. Over the past several years she has assisted many individuals in resolving their debt-related matters. For more information regarding credit and debt visit http://www.donaldsonwilliams.com
January 15th, 2008
