So you want to resolve your debt and negotiate with creditors… here’s how from an insider!
If you have credit card debt, you may want to get out of it and fast! Credit card debt can be overwhelming especially if funds are tight. You may think the best option is settle these debts. We always suggest consulting a professional, like an attorney who knows the law and can protect you through the process of settling debts with creditors but if are going to try to negotiate with your credit card companies on your own, follow these steps:
- Stop using the credit card you are trying to settle: This is an important first step that’s pretty painful for a lot of consumers to accept. You must stop charging and certainly do not take a cash advance or balance transfer. Make sure you stop using all of your credit cards from the bank/creditor you are trying to settle with. For example, if you have two American Express cards and one you want to settle and the other you are currently using, it is unlikely that the creditors will negotiate with you. Also, do not open any new cards, especially from the same creditors you are trying to negotiate with
- If you can’t pay your credit cards then stop. It is sometimes necessary to stop paying the cards because credit card companies will generally not resolve the balances if you do not show a hardship for being in debt. Trust me, they will be happy to continue to accept your minimum payment for the next 20 years since it includes a lot of interest and there is always a chance that you will continue to use your credit cards and rack up more debt.
- Be patient: Be patient because it will likely take some time before the creditors will be willing to settle your credit card debt. Can be as short as 90 days from the date of your last credit card payment to maybe even several years for the creditors to start to negotiate a settlement or resolution of your credit card debt with you.
- Be prepared for creditors calling about your delinquent debt: During this process, expect a lot of phone calls from the creditors even bordering on creditor harassment. While you want to do this on your own, it is a lot of work with a lot of problems. Working with a settlement law firm can help you and make sure that the collection agency is following the Fair Debt Collection Practices Act, which lays out when the credit card company can contact you, what they can and can not say to you and other illicit debt collection practices. Make yourself familiar with these and the complaint process in case a creditor does not follow these rules so you know how to protect yourself from creditor and creditor harassment.
- Negotiate: Firmly negotiate the terms with your credit card company. This may take a few attempts to get them to settle for less than the full balance if at all. Some creditors won’t work with you directly and will not give you the best debt settlement deals. Keep in mind that you want to keep track of who you spoke to and when, keep a notebook by the phone when talking to them so you can make notes of the conversations with your creditors. Know that many creditors will take a better deal if you agree to the settlement in lump sum, meaning you make one payment to the creditor but again a very experienced debt settlement firm can get interest free settlement terms making the resolution of your debts simply and easy for you. If you have a hardship, such as a loss of job or medical issue, make sure to explain that to the creditor to let them know you have a good reason for not being able to pay back the debt.
- Get everything in writing: Whatever debt settlement or debt reduction agreement you agree on, make sure you get it in writing along with a schedule of payments. Ask them for a settlement letter mailed and emailed to you with the terms of the settlement. This will include your name, the account number, the current balance, and settled amount, the payment terms (due dates and amounts) as well as who to make the payments to.
- Don’t miss debt settlement payments. Make all the settlement payments on time and as agreed. Many settlements will void if you miss or are late with just one payment. Make sure you make all the payments on time so that you can get rid of your debt fast!
- Check and update your credit reports. Check all three credit reports (Experian, Equifax, Transunion) to make sure that it reflects that the account has been settled and now has a zero balance. Do note that this change can take anywhere from 30-180 days to reflect on your credit report and insure there is accurate credit reporting on your debts.
Settling a debt with creditors can be frustrating and time consuming. Also you may not be successful and could end up in more debt. It is always best to consult with a legal professional at a debt settlement law firm that concentrates in debt resolution, debt settlement and debt relief. Attorney’s who concentrate in this area know the law, know how to deal with your creditors and know how to make sure your debts are settled properly. You can settle your debts on your own but keep in mind these tips from the experts who do so every day, so debt settlement goes right and you can get the settlements you deserve.