Thursday, June 23, 2022

How To Get Credit Card Companies To Settle For Less

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Adjusting Your Payment Due Date

must you STOP making payments to settle credit card debt?

Another useful thing you can negotiate with a credit card company is to move your payment due date. This can make it easier to balance your budget by making sure bills are spread evenly throughout the month. Most credit card companies will allow you to adjust the payment due date by up to 14 days. Simply review your bill pay schedule and determine the best time to move a bill, then call the creditor to ask.

Check Your Credit Reports Regularly

You can typically check your credit reports for free, once a year. However, the three major credit reporting agencies Experian, TransUnion and Equifax are currently allowing consumers to check their reports weekly for free.

If you sign-up for a credit card relief package and are meeting the terms of that relief package, such as making a lower minimum payment, the company must report to the credit reporting agencies that you are current on the account. However, if you were already behind on your payments at the time you receive relief, the lender is not required to report that you are current.

And, if you find an error, you should work to dispute it, this is when it would be helpful to have a copy of the written agreement on hand.

Look Into Debt Settlement

For-profit debt settlement companies work to negotiate lump-sum settlements with creditors.

Debt settlement companies ask you to stop making payments to your card issuer and instead require you to make monthly payments to your debt settlement company to build your account, Sterling said. Once your account grows large enough, the debt settlement company will contact your card issuer and make an offer to settle for less than you owe. If the issuer accepts the offer, the debt settlement company pays your creditor and keeps a percentage of the money youve paid them.

This is often a last resort, and if you go through with this option it will lower your credit score.

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What If My Creditor Isnt Willing To Settle For As Low As I Hoped

If the debt collection company wants too high of a price, end negotiations and let the debt age some more.

Over time, that debt collection company will either be willing to go lower their offer or will sell your debt to another debt collection company and you can get a fresh start at negotiating with the new collection agency. As a debt collection account ages, it becomes cheaper and better settlements can be obtained.

Be Prepared For Creditors Calling About Your Delinquent Debt

How To Get A Credit Card To Settle For Less

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 cannot 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.

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Can You Negotiate A Settlement With A Debt Collector

Yes, absolutely. You may even have more room to negotiate with a debt collector than you did with the original lender or creditor. It can also help to work through a credit counseling agency, an attorney, or a debt settlement firm. However, you can also do it on your own. If you do, make sure you record your agreement, so the plan and the debt collectors promises are in writing.

Effects Of Debt Settlement

Debt settlement can have the tremendous positive effect of allowing you to avoid filing for bankruptcy. However, the downsides include having to work with multiple creditors and no guarantees of success.

Keep in mind that a debt settlement will be reported on your and may lower your credit score. However, the debt is already on your credit report, bringing your score down. A debt settlement gives you the opportunity to start rebuilding your score.

You may have to consult an accountant to determine if the debt settlement will be considered a taxable gain that you will have to declare on your taxes. Some kinds of forgiven debts are considered taxable income, while others are granted exceptions.

Although debt settlement via creditor negotiation is not a perfect solution or the right fit for everyone, it may be an effective and viable option for many.;Settling your debts can save you from bankruptcy and give you the freedom to start rebuilding your finances.

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What Can A Professional Debt Negotiator Do For You

These are just two examples of people who were in debt but got out of it faster with the help of a professional debt negotiation team. Debt.com works with top-rated providers that offer a variety of solutions to fit your needs. If you cant get creditors or collectors to work with you, then maybe its time to get a team that will.

Connect with the right experts for credit card debt negotiation.

What Can You Do To Settle Your Debt And Save Money On Your Debt Management Plan

Can You Settle Credit Card Debt If You Are Still Current?

If you do not have the time, patience, or skill set for negotiating with creditors, you can always negotiate through a;debt settlement firm. or a credit counselor. There are significant advantages to doing so.

  • Debt settlement companies employ professional negotiators who have experience in negotiating a settlement in challenging circumstances.
  • They do not be intimidated by your creditors.
  • Debt professionals will not respond emotionally to the situation.
  • They will focus on saving you the most amount of money and will bring all their expertise to bear on your behalf.
  • If they have been in the industry for more than just a short while, they most likely will already have relationships with major credit card companies and other major creditors.
  • They understand fully how the negotiating process works for each creditor.

Once an agreement is made, your debt settlement firm will also ensure that it is put in writing and properly signed and executed by both you and your creditors. This eliminates any legal problems down the road and provides you with added peace of mind.

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The Basics Of Debt Settlement

Debt settlement involves negotiating with creditors to significantly reduce the amount of money you owe. Unlike the less dramatic forms of achieving debt relief, like debt consolidation or a debt management plan, with debt settlement, you repay only a portion of the principal you owe.

Lets say, for instance, that youre overdue on $5,000 you owe to one credit card issuer and $5,000 you owe to another credit card issuer. In order to get at least some of their money, the card issuers then decide to accept a lump-sum payment representing 50% of what you owe. So, instead of possibly not getting a penny from you, each creditor receives a lump-sum payment of $2,500.

What Are The Drawbacks Of Debt Settlement

Not everything about debt settlement programs is rosy. There are a few disadvantages to this approach. First, your creditors are under no obligation to settle with you for less than the full amount you owe. So, there is a chance that your debt settlement program will not handle all your unsecured debt.

Additionally, debt settlement programs do not handle any type of debt secured by collateral, meaning that you will still owe the full amount for any secured loans.;Even when successful, debt settlement hurts your credit because it impacts your payment history adversely. Since your debt settlement company will advise you to stop making payments while they negotiate with your creditors, you will be racking up late fees and penalties, which have a negative effect on your credit.

You may still receive some unwanted calls from collections agencies or creditors until a settlement has been reached. Your creditors may also initiate garnishments to collect amounts due.;Lastly, once a settlement is reached, you may be taxed on the amount of your debt that is written off by your creditors. Depending on what that amount is, your tax liability could be significant.

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What The Bill Would Do

Assembly Bill 1405 wouldnt change how debt settlement companies work, but it would add more regulation. Existing federal regulation is limited to companies servicing customers across state lines.

The state bill would mimic some of those federal rules, applying them to California-based companies, as well as adding new rules like giving customers a three-day cooling off period before the contract takes effect.

The bill is advancing despite almost unanimous opposition from Republicans. Several lobbies have removed their opposition after successfully pushing for amendments, including one that would remove regulations around referral fees, a major source of income for the industry.

But before the most recent amendments, the debt settlement industry had coalesced in opposition to the bill. The Consumer Debt Relief Initiative, composed of members of the debt settlement industry, maintained that new regulations would harm the very consumers that the bill is trying to protect by driving debt settlement companies out of California, leaving consumers with few options.

How To Settle Credit Card Debt When A Lawsuit Has Been Filed

You can settle credit card debt in collections for much ...

When considering a service like debt settlement, there can be a fear of getting sued by your creditors.

The truth is in certain states, financial creditors are allowed to sue you over credit card debt.

Now, that doesnt always happen and every persons financial situation can vary based on the creditors.

However, if you do owe any significant amount of debt you still have a chance that your creditors could sue you.

Were you sued for credit card debt?

You still have options.

Heres how to settle credit card debt when a lawsuit has been filed, even if you cant pay!

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Before Negotiating Get Organized

Next on the list is to get organized. ;Gather all your credit card bills together in one place. ;That way you can understand just how much debt you have.

Write down each account on a sheet of paper with all the appropriate info for each account. ;Make a list with the following info for each credit account you want to negotiate. ;Here’s the info you’ll want on your list:

  • Name of the credit card company
  • The amount you owe on the account
  • The current interest rate you’re being charged
  • Customer service phone number for the account
  • Notes- Here you can write who you spoke to, what new terms you negotiated, etc.

How To Get Out Of Credit Card Debt Without Paying Everything You Owe

Debt is tough. Sometimes it is hard to imagine getting out of it, and you can feel like your back is against the wall. One idea, that sounds good in theory, is to somehow get out of debt without paying it all off. Of course, this is an appealing strategy, but pursuing it can cause more harm than good. Here are the ways you can technically pay off debt without paying everything you owe, along with important reasons to consider other options instead.

Background

In this article, we are talking specifically about credit card debt. There are other types of debt that have forgiveness options, such as student loans. However, there are not typically formal forgiveness options through major credit card companies. When you use your credit cards, creditors have the full expectation that you will repay the money. After long periods of missed payments, your creditors may lower these expectations and charge-off the accounts and send them to collections. After this period, there may be opportunities to pursue alternative payment arrangements for less than what you owe. However, these always accompany damage to your credit score.

Settlement

Debt settlement is not cheap, either. You can expect to pay fees between 15 and 25 percent of the enrolled debt. On top of that, if your debt is forgiven then the forgiven amount is treated as taxable income!

What about DIY settlement?

Bankruptcy

Better Options

Recap

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Get A Written Copy Of Your Agreement

If you choose to move forward with a financial relief option, its important to understand the terms of the agreement before agreeing to anything. Once youve accepted a relief option, make sure to get a copy of the agreement in writing.

During the relief period, you want to make sure to look at your statement each month for any errors or inaccuracies, and if you see anything, make sure to refer back to the agreement so you can dispute it.

Debt Settlement Might Create Income Tax Liability

Must You Stop Making Payments, To Settle Credit Cards?

Example. Claire owes $12,000 on a credit card and successfully negotiates with the credit card company to settle the debt for $8,000. She pays $8,000 to the credit card company, which forgives the debt and reports it to the credit reporting bureaus as “paid in full.” The credit card company reports the settlement to the IRS, which notifies Claire that she must pay taxes on $4,000, the amount the credit card company forgave. To the IRS, the settlement was equal to the credit card company giving Claire $4,000.

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Sample Credit Card Debt Settlement Offer Letter

I am writing about an account that is in collection with your company. The account number on my statement is .;

The original creditor was Capitol Credit Cards and the Visa account number for that card was . The account has not been paid on in almost two years and I want to correct this matter.

When the economy tanked, I lost my job and also suffered from health problems. I didnt have the money to pay my bills and this account soared from $500 to $2,000 with late fees and interest.;

I want to settle the account for the original amount owed $500. I have the money from a small settlement I received from my back. I am unable to return to work, but I still want to make this debt right.;Upon your approval, I will immediately release funds in the amount of and settle this account.;

Please contact me if you have any questions. I can be reached during the day at . I look forward to resolving this matter.

Sincerely,

Get The Agreement In Writing

No matter what agreement you ultimately reach, make sure you get the agreement in writing and stick to your payment plan. If you have more financial trouble, contact the creditor before you fall behind so you can renegotiate. If you wait until you default, the creditor might not be willing to renegotiate with you.

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Why Work With A Debt Settlement Company

If youre in so much credit card debt that the best option seems to be jumping out the nearest window, please read this.

There is a better way out known as debt settlement. You should consider it, however, only if youre currently desperate enough to be standing on the ledge of a tall building. Heres a typical scenario:

Suppose you have $30,000 in credit card debt or other debt. Maybe you have a sob story, like you got laid off or you bet a fortune that Jeb Bush would be elected president. Whatever, you simply cannot get out of debt.

So you hire a debt settlement company to call the creditors and offer a smaller amount say $16,000. You tell creditors if they dont take it, youll probably have to file for bankruptcy and theyll never see a dime.

So they bite! They accept your offer, you get out of debt for $14,000 less than you owed and get on with your life. It all sounds great, but there are plenty of reasons not to order champagne for a big Im-Free-Of-Debt party.

How Debt Settlement Impacts Your Credit

Can Credit Card Companies Cut My Limit Without Warning?

Its important to know that your credit scores have already declined if youre at the point of resolving your credit card debt or other debt. Although this can be stressful, your top priority should be to get out of debt and get your finances back on track.

Talk to your credit card company about whether it will report your agreement as a settlement to the credit bureaus. If so, that settlement could appear on your credit report for about seven years and may damage your credit score. Ask your credit card company to report the settlement as paid in full instead. Once your debts are settled and wiped away and you are keeping your financial house in order, your credit scores will move up.

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How Debt Settlement Affects Your Credit Score

Credit scores are generated by the information found in your credit report. When the credit reporting bureaus review your credit report, an account with an account condition of “Settled” may be seen as a negative. A settled account may be seen as proof that you were unable to pay your balance in full. New lenders may look into your full credit report to understand how likely you are to repay any balance they lend to you, so a “Settled” account shows that you were unable to completely repay a balance in the past.

For this reason, while a debt settlement can reduce what you owe and prevent you from using the credit card , you should expect to see a credit score drop when a debt settlement is officially made. This record of your debt settlement will remain on your credit report for seven years, which can also affect your ability to be approved for loans or new credit lines, and could even be seen as a negative when you apply for a rental home.

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