Credit SparkFinancial Tips for the Average Joe

One of the best ways to get out debt is through negotiating credit card debt with either the credit card company or the collection agency. You can try to settle any unsecured debts, such as credit cards and medical bills, for only a portion of  the total amount. Depending on which you are dealing with, your tactics will be quite different because of the circumstances.

When the debt is still with the credit card company, they are usually reluctant to settle. This is especially true if you have been paying on time. From their perspective, it doesn’t make a lot of sense if someone makes his/her payments regularly but suddenly cannot afford it anymore. As such, you are looking at minimum 60 days since your last payment before they start listening to you. This means you have to be patient and to contact them continuously so they know your financial difficulties. However, don’t miss payments for the sole purpose of trying to negotiate credit card debt settlement because if it goes to collection your credit will be severely crippled.

So what if it’s already in collection? Well, it’s not all doom and gloom. In fact you most likely can settle at approximately 25% because most debt collectors acquire your debt at mere cents on the dollar (3 to 11 cents depending on the age). Your original company at this point has already decided it’s better to sell it for pennies and receive a tax benefit than trying to get the money back. This is good for you as collection agencies will be eager to settle if you can prove you are close to being bankrupt. Regardless, they still comes out making a gain. However, don’t assume they will just give in easily because they definitely won’t.

Negotiating credit card debt yourself usually gets a better deal because you won’t need to pay any fees for others’ services. If you are not comfortable with credit card debt negotiation though, it’s not a bad idea to hire a professional debt settlement attorney to do the work for you. For those who want do it themselves, always keep track of everything from every discussion with every person. Correspond through registered mail is the ideal way when dealing with collection agencies, while phone correspondence is fine with credit card companies. Remember to use your main leverage, that is the fact your creditors would get nothing if you declare bankruptcy and to present to them evidences of why you are in trouble. Finally, don’t forget to negotiate a favorable credit rating like “paid as agreed” or “settled” rather than “charged off”. This is extremely important as a a ruined credit report is not a whole lot better than bankruptcy.

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