Credit Card Debt Negotiation – a Useful Guide for Everyone

Two people shaking hands after debt settlement.
Photo by Cytonn Photography on Unsplash

Credit cards may be the easiest and the most convenient way to shop, but with more and more people falling prey to credit card debt, they should come with a statutory warning! If you are nodding your head vigorously in agreement, then you probably have the misfortune of having credit card debts at hand.


But all is not lost! There is no dearth of options that you can consider to take care of the situation. Credit card debt negotiation could be your perfect way out if the idea of making minimum monthly payments for years makes your head spin. Credit card debt negotiation involves negotiating your debts with your creditors and settling mutually for an amount that is much lesser than the original amount that you owe them. This can be paid off within a period of a few months, to about 3-4 years.

Negotiating credit card debt

You can hire credit card debt negotiation services from a company that offers you debt settlement or credit card debt relief. These boast of a team of expert and experienced people who carry out the negotiations on your behalf. In the meanwhile they also create a trust or account in your name, to which you are required to make monthly payments.

When enough money has been collected in the account (or if you are able to arrange a good sum of money upfront), the actual negotiation starts and they pay off certain amount of your debts in a lump sum amount. Your creditors settle for a reduced or discounted sum, instead of the whole amount you owe them, in exchange for the one-time payment. The remaining amount, from the discounted sum, can be paid in easy monthly installments.

What’s in it for your creditors?

The obvious next question is that what is in it for your creditors? Minimum monthly payments work well for them because you keep paying interest, and the longer you carry out with your payments, the more interest you pay them. This means that you actually end up paying much more than you owe them in the first place. Also, the monthly payments mean that you have to keep paying them for years and years – making it an endless cycle.

However, if you start falling back on your payments for 3 months or more, then they realize that there is a chance that they may lose all their money if you declare bankruptcy. Hiring a debt collection agency is another option for the creditors; but it also means huge fees and charges that have to be paid. Your creditors, therefore, also prefer this option, and are willing to negotiate and settle for a discounted sum. In fact, you may end up paying only 50% of the total amount you owe!

Negotiate your credit card debt settlement yourself

The credit card debt negotiation services obviously come at a price, and a hefty one at that. The other option then is do-it-yourself credit card debt negotiation. It may require lots of planning and patience, and even though you may not have the experience, but because you’re doing it for yourself, you may manage to cut a better deal.

Here are some other quick tips you should keep in mind:

1. If you’re hiring credit card debt negotiation services, make sure that you do your research and pick one that has experience and a good network. Testimonials and recommendations should also help you decide.

2. Credit card debt negotiation scams are also a known fact and many people have fallen prey to such scams. Make sure that you keep track of your money once you start making monthly payments to the debt negotiating company. It is absolutely essential that you know what is happening to the money that you are paying to the debt negotiation company.

3. Since you stop making payments to the credit card company, your credit score may go down even further during this period. However, on the flip side, once the payments are settled, its effect on your credit card report will be very limited.

With credit card debt negotiation, you can hope to get back your financial independence in a few years max, depending on how much you are willing to pay every month. Instead of making minimum monthly payments and interest every month over years and years, this option (debt negotiation) is more feasible if you want to quickly clear your debts.

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