Do It Yourself Card Credit Debt Settlement
From LoveToKnow Creditcards
Save money while resolving your credit card problems with a do it yourself card credit debt settlement. Negotiating with creditors yourself can save you money, but it is not without pitfalls.
Negotiating Basics
Prepare Before You Call
When you are preparing to call a creditor to make a settlement arrangement, it is important to have everything you need in front of you. This includes the following:
- A copy of your most recent bill
- Letters from the creditor offering a settlement
- A specific amount you are able to pay should a settlement be reached- either a lump sum or a monthly payment amount
Making the Call to a Creditor
If your account is seriously past due, such as 4-6 months in arrears, don't expect the collection department to be cordial. Collectors are trained to verify your personal information, such as phone number, employment and home address, and then to get a payment from you. Occasionally these collectors are well versed in settlement arrangements, while others will refuse any settlement agreement. Make it clear that you are willing to make a payment or are interested in a settlement at the beginning of the call.
Speak With Someone in Charge
Talking with a collector who refuses to budge can be a very frustrating experience. If this happens to you, there are three options available to you:
- Terminate the call, but do so as politely as possible, using profane language only makes things worse. Remember, most calls are actually monitored and recorded.
- Ask to speak to a supervisor or department manager. These individuals want to make reasonable payment arrangements or settlements.
- Write a letter addressed to the department manager or the president of the company outlining your plan to pay off or settle the account. Be very specific in regards to the dollar amount you will be paying and the dates you will be making the payments.
Favorable Credit Settlements
The goal of settling an account is to get it reduced to a manageable amount. You want all late fees, finance charges and over the limit fees removed from your account. Typically, these three things will amount to 30-40 percent of the total balance. If a creditor is unwilling to settle within the 30-40 percent range, decline to make an arrangement at that time. Odds are in your favor that they will send you a settlement letter within a few weeks that is more favorable to you. While this may be aggravating, waiting out the creditor may save you money in the end.
Do it Yourself Card Credit Debt Settlement Don'ts
There are some things that can derail your efforts to settle your credit card debt. Avoid these pitfalls so that you can rid yourself of creditors and begin to rebuild your credit.
- Keep a record of all of your conversations with creditors and include the date, time and the person's name you spoke with. It may come in handy later if there is a dispute over payment or settlement arrangements.
- Don't argue with collectors or use profane language. Your phone call is often recorded and it may make creditors less likely to offer you a favorable settlement amount.
- Don't write paid in full on any checks you write to a creditor, especially if it is an amount that wasn't agreed upon. It is an urban legend that if a creditor cashes the check with this written on it, the debt will be considered settled.
- Always get a letter from the creditor with the agreed upon amount of the settlement or similar payment arrangement. A verbal agreement isn't valid in many states and it would be your word against the collector.
- Know your rights as a consumer. Many collectors are counting on you not knowing your rights so that they can intimidate you. Find out what your rights are as outlined by the Fair Debt Collection Practices Act by visiting The Federal Trade Commission.
Conclusion
A do it yourself card credit debt settlement is possible if you prepare yourself. Have copies of your most current bill or settlement offer letter on hand before you call a creditor. If you have trouble getting someone to make payment or settlement arrangements, go directly to the person in charge. It is also important to keep your cool under pressure, never use profanity when talking to a creditor. Finally, if you are unsure of your rights as a consumer, visit The Federal Reserve Board and research the credit card laws in your state.
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Comments
Matt, consumers should not write "paid in full" on a check that does not actually represent a debt paid in full. Thank you for your comment.
-- Contributed by: Tamsen ButlerActually it is not an urban legend that putting paid on full on a check will cause the person cashing the check to be bound by the stipulation. Look up full satisfaction & accord in your state law. Most states support this practice. There are requirements that the notice be conspicuous in my State, and they also provide the person that cashed it up to 90 days to realize what they've done and give you the money back. After that you are in fact, paid in full.
-- Contributed by: MattKevin, have you contacted the lenders to try to work out a solution? If you truly can't meet the minimum payments - and have proof that this is the case - they may adjust the payment schedule. The debt will likely stay on your credit report for up to seven years after the date it is settled. Either way you will have blemishes on your credit report, and either way you will have to rebuild your credit.
Whether you should declare bankruptcy or not is a decision that should be made based on factors beyond what it will do to your credit score. If you are considering bankruptcy, talk to a bankruptcy attorney to find out what your options are.
-- Contributed by: Tamsen ButlerThis page has been accessed 39,946 times. This page was last modified 01:14, 30 January 2009.
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