Credit Card Debt

Tips to Deal with Credit Card Debt Settlement

There could be times when there is a sudden emergency, and you are required to make huge finances for some time. You might then find it challenging to keep up with your credit card balances causing severe financial stress at a time.

A credit card debt settlement can prove quite appealing in such a situation, especially when the finances are covered by both a bank and a debt settlement agency. Negotiation with credit card debt would not be encouraged by the issuers since it is done only in sporadic cases.

But, when you have no other alternative than settling, you must find out how to negotiate the debt settlement as it might help you understand the process and dodge any misleading information.

Ensure that the Debt is Yours

Above all, make sure that the debt is yours. You may request a debt verification letter either verbally or by sending a mail to your creditor. You can look out for a good template design that would be quite helpful.

Statute of Limitations

Never agree to any terms on the phone unless you get validation or a verification letter. First, confirm and make sure that the debt is not a zombie debt. It will help if you find out your state’s statute of limitations.

If you have proof that the debt is past the statute, the creditor cannot legally collect it even if you owe the debt. Your proof is in the debt verification/validation letter that you would have from them.

Reducing Debt Balance

Try to reduce the balance of your debt as much as possible. If you have credit card debt you could consider consolidating it into a more manageable amount, you can find more information about that here: You can also negotiate your debt where possible. Debt collectors can take less than the owed amount because they buy your debt from the original company for a much lower amount.

Take advantage of the different quotas many collectors would make at the end of a month for credit card debt settlement. Negotiate terms that both you and your collector can agree upon, going as low as possible by offering to pay not more than 30 percent.

Getting Rid of Negative Reports

Settle for an agreement where your collector avoids any negative marking on your credit report. Instead, ask them to report it as you have paid as agreed. Ask them if they can remove the tradelines, which are accounts and history on your credit report connected with the debt, especially when you plan to pay off a lump sum.

The creditor may or may not be agreeable to this, but it would be quite beneficial to keep away from any negative tradelines because it takes around seven years to drop off from your report.

Be Aware of Taxes

For all your negotiations, you might be asked to pay taxes on the amount being excused. If you can smartly reduce what you owe, paying taxes would be worth the debt that you don’t have to pay.

Lastly, get it all in writing whatever your creditors have agreed upon. This way, you can deal very well with your credit card debt settlement, and you’ll see your credit score improve as a result of the reduction in debt.



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