How to Negotiate Your Credit Card Debt
April 18, 2012 
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How to Negotiate Your Credit Card Debt
Dealing with credit card debt is making many people frown, but in reality this is not such an intractable problem. When planning to negotiate down your credit card debt you must start by researching the legal specifics of your state, know the local laws and taxes and get a minimal understanding of credit reporting. And the most important thing, you must keep cool and manage this problem like any other in your life, least you want to let it become your life.
Debt is not to be treated lightly. A survey showed that American families owe on average $ 20,000 in unsecured debt. Credit cards have high interests and expensive penalties – there is no surprise they spiral out of control, especially in these uncertain times.
Credit consolidation and credit settlement advertisements are all over these days. Companies (or more often, law firms) offer to settle your debt to 40% to 60% less and/or help you repair your credit report.
This is a lucrative business and you should make sure you will be getting any kind of service before paying more money for this kind of counseling.
Some of what they are doing to settle you debt is probably within your power to do it yourself. In general they try to negotiate a settlement with the aid of a lump sum you agree to pay to the credit card issuers in return for erasing the whole amount owned. This can be attractive to credit card companies, who find it an acceptable way to remove the loss from their books for about 60% of the total amount (loan+interest owned).
It is up to you if you decide to call the card issuers personally and negotiate down your debt yourself. Not particularly a phone call for the weak, you must prepare to make the offer (the lump sum) and ask for settlement in the best terms for you.
Debt settlement is recorded in your credit report – so this needs to be followed-up with, making further arrangements so that future lenders are not prevented from working with you by your past settlements.
Many families are on the brink of financial disaster, not just because of debt but because of hard economic times. More people have lost their jobs in the last six months, and the card issuing companies are fully aware of this. You have bills to pay, make sure that you inform credit issuing companies that you’ve lost your job and check and see if you have credit card insurance.
Insurance is part of the original offer for a credit card (on application). It should not be very expensive, but worth a lot in case of unexpected loss of revenue (following an accident, for example, that would prevent you from going to work, or in the event of unemployment itself). If you see that month after month keeping up with your payments becomes more and more difficult, it might be interesting to see if possible to apply for it retroactively as a precaution.
Accumulating credit card debt is a risky game, as many families discovered in these difficult times. Taking too much unsecured credit and releasing equity from property are signs of a growing economy. A readjustment is required during periods of recession like this we are currently experiencing. You must insure your monthly income allows you to pay the bills – otherwise do not waste any time before looking into credit card insurance, debt consolidation or settlement.
Shane is an Internet writer covering personal finance with a focus on debt settlement and how to negotiate credit card debt. He is a contributor to prestigious magazines like Times and appeared on Dr. Phil’s TV show in 2007.
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