Thursday, March 16, 2023

How To Settle Credit Card Debt

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Know Your Negotiation Options

must you STOP making payments to settle credit card debt?

Before negotiating with a credit card company on your own, you should get familiar with the types of settlement options that are typically available to consumers. If the credit card company is willing to entertain the idea of a debt settlement, then the odds are high that they will want to make one of the following arrangements.

Before You Jump Into Debt Negotiation

CRN advocates settling credit card debt as a personal financial solution. We have provided debt settlement education and debt negotiation services since 2004. We are good at it. We have made our customers, members, and readers good at it. We are also not your Aunt Mildreds debt settlement company .

We have decided to create and publish the online debt relief program for many reasons. We may fully lay out more of the reasoning in a later update to this section, but for now, here is some of the considerations we have in doing this:

Debt settlement works for the right person and the right situation. Debt settlement does not work for the wrong person, nor does it work well for the wrong situation.

We decided to create and publish this guide so that you can tell the difference between whether settling credit card debts is right for you, and if it is, when, why, and how much of your money to put into this method for resolving debt. We hold nothing back. We offer our support freely to the public through dedicated feedback in the comments on virtually every page of the site, and on our DebtBytes YouTube channel.

If we can save you from making uninformed debt and credit decisions that can hurt, rather than help you, we want to. If we can save you money when you settle credit card debts, we will.

Debt Settlement Could Hurt Your Credit Rating

Settled debt could have a negative impact on your credit reports and scores in a few different ways. First, a debt settlement company might advise you to stop making payments on your accounts. Those late payments could hurt your credit scores.;Remember, a creditor generally wont accept less than you owe if your bill is current.

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The Older Your Debt Is The Less Reason There Is To Settle

Every state has a statute of limitations on how long a debt collector has to sue you in civil court to force repayment of a debt. The maximum statutes are 10 years. So, regardless of where you live theres no more than a 10-year window where a collector can take you to court to collect on a debt.

You should check with your state Attorney Generals office to find out what the specific statute of limitations is for your state. If your debts are old and close to that statute, theres less reason to pay them anything. After 10 years they can still contact you to attempt to collect, but they have no legal recourse. And if you tell them to stop contacting you, they must honor that request.

If you have any debts that over that statute and the collector is still bothering you, send them a cease and desist letter using the template you can find below. Just be careful to keep the wording close to what it says in the template. If youre not careful and you acknowledge that you owe the debt in any way, you can actually reset the clock on the statute of limitations!

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

Wondering how to pay off credit card debt? Youre not ...

George Simons

Summary: Are you being sued for credit card debt? Wondering if you can settle and make the lawsuit go away? Learn what you should do when you’re being sued but still want to settle your debts.

You may feel overwhelmed and scared when you are served with a lawsuit, especially if it’s for unpaid debts. If you are facing challenges with your unpaid debts, it’s important to know that you are not alone. You have options. Even if you have been sued, you still may be able to resolve the issue.

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Myth No : If I Dont Settle The Debt Stays Forever

  • Debt settlement is for consumers experiencing a legitimate financial hardship.
  • You dont need to hire someone to help settle your debts, but it may help just watch out for scams.
  • Keep in mind that any forgiven debt may be taxed as income when tax season rolls around.
  • Debt settlement can hurt your credit score almost as much as bankruptcy.
  • Debt settlement is not your only option when you cant make payments. Forbearance lets you make smaller or defer; payments for a period of time.
  • Not all types of debt qualify for settlement.

The truth:;There is a statute of limitations for collecting on debt.

Many collectors, whether the issuer or a person or entity who has purchased old credit card debt, attempt to collect debt that is often time-barred meaning the;statute of limitations has run out, Ayers says.

The statute of limitations laws vary from state to state, but if a debtor has not made a payment on an account for enough years, the debt is no longer enforceable in court.

Some companies buy old and time-barred credit card debt and then send out letters trying to collect or, without actually trying to collect, offer to settle for, say, 10 percent, Ayers says.

Some courts have ruled that these non-collection letters do not violate the Fair Debt Collection Practices Act, but the United States Court of Appeals for the 5th Circuit has ruled that some actions can violate the FDCPA, he says.

Schedule Your Free Debt Analysis

Potential clients speak with a certified debt specialist regarding their financial situation.

The debt specialist evaluates the callers financial situation and suggests the optimal debt relief strategy.

Clients choosing to enroll in our debt relief program are then guided through the enrollment process.

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How To Negotiate Credit Card Debt Settlement By Yourself

  • Kate Rockwood

If you find yourself crippled by credit card debt, having racked up charges that will be hard to pay off, you might be able to settle your accounts with your lenders for less than what you owe. And you might not need a debt settlement company to do it. Heres how to negotiate credit card debt by yourself.

Settling debt means coming to an agreement with your creditors to pay back part of what you owe while being forgiven for the rest. If youre considering settling your credit card debt, youve probably already missed some payments, perhaps even several months worth. You may have already been referred to a collection agency. All of this puts a big dent in your credit score. ;

The Pros Of Professional Debt Settlement

How to Settle Credit Card Debt with Discover

Although debt settlement does have many great benefits, its not the only solution available to those in need of debt relief. A professional will assess your specific situation and do their best to pick the best option, be it debt settlement, or any other of the many options including:

When youre negotiating a debt settlement, creditors will generally attempt to get as much money out of you as possible. Without the help of an expert debt negotiator, you may not get the most beneficial terms to settle your debts. In other words, you may end up paying more than you would have needed to settle your debt. You could negotiate with creditors on your own, but, it is safe to say that with an experienced professional you will get a better settlement offer and you will end up paying back less.

Check out what questions you should ask your debt collection agency.

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Determine If Youre A Good Candidate

Answer these questions to;decide whether DIY debt settlement is a good option:

Have you considered bankruptcy or ? Both can resolve debt with less risk, faster recovery and more reliable results than debt settlement.

Are your debts already delinquent? Many creditors will not consider settlement until your debts are at least 90 days delinquent. Bovee, the debt settlement coach, says youll have a better chance of settling a debt;with;the original creditor that is around;five months delinquent, which is around the time many creditors will sell the debt to a third-party debt collector.

Do you have the money to settle? Some creditors will want a lump-sum payment,;while others will accept payment plans. Regardless, you need to have the cash to back up any settlement agreement.

Do you believe in your ability to negotiate? Confidence is key to;DIY debt settlement. If you believe you can, you probably can. If your confidence is wavering, DIY debt settlement may not be the best route for you, Bovee says.

How To Settle Credit Card Debt With Citibank By Hiring A Company

Overall, getting help from how to settle credit card debt with Citibank is a good thing for anyone that is in financial trouble. This is one of the few options available for someone that wants to eliminate their debt without having to file bankruptcy, and it can help improve a persons credit score. However, it is important to make sure that you do your research and understand the details of how the process works before agreeing to work with a debt settlement agency. If you take the proper steps to protect yourself and learn all you can about how the process works, you should be able to get out of debt without having to worry about losing any of your personal assets.

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The Pros And Cons Of Debt Negotiation Services


The best benefit of using a debt settlement company is obvious: It helps you get out from under seemingly insurmountable debt with proven and effective debt solutions. It can also help you with credit card debt relief and other unsecured debts, and sometimes even help settle tax debts.

You can also achieve your debt settlement goals in as few as two to four years, depending on the type of debt management program you choose. Please remember that every case is unique and that there is no typical outcome.

Another great benefit to enrolling in a debt settlement program is that its an effective alternative to other, less attractive options. For example, it is a preferable alternative, for many, to filing for bankruptcy, taking out a debt consolidation loan, or using a credit counseling agency.

Instead, you enroll in a debt relief program that helps you save money until you can pay off a good portion of what you owe. In addition, you get a crash course in Personal Financial Management 101 as you save up to pay off your debts, which can help you make better decisions in the future.


As with any debt management plan, this system does have some drawbacks. Since the process of debt settlement usually involves not paying creditors while you save up money, it will negatively affect your credit score. Youll also most likely still receive debt settlement letters from creditors, as well as numerous phone calls, as that’s a common tactic for debt collectors.

So What Is Debt Settlement

How to settle credit card debt before going to court

Debt settlement is a debt relief option offered by banks and credit card issuers wherein they will forgive a portion of your debt if you agree to pay the amount agreed or offered in the settlement. This means that instead of paying 100% of your total debt amount, the credit card company will agree to erase your debt if you pay an agreed percentage. This percentage can range from 30% to 50% of your debt .

Lets say you owe a total of $5,000 on your credit card. If you get a debt settlement offer of 50% one-time payment, then that means you will only need to pay $2,500 now and the rest of your debt will be erased.

The reason why credit card companies agree to a debt settlement is that they would rather get paid something rather than get nothing at all. Take note that credit card debt is categorized as unsecured debt meaning they have no collateral like a mortgage or an auto loan so they cant really recover anything from you unless they sue you in court and pursue a judgment.

While there are debt settlement companies that you can hire to do this process for you, you can do this yourself. It might be time-consuming but you also minimize the risk of being scammed by unscrupulous debt settlement companies.

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If A Creditor Fears That A Debt May Have To Be Written Off All Bets Are Off

Offloading all or a portion of your personal debt via settlement can seem like a daunting task when you feel like you’re in over your head with debt. But one of the great truths in business is that everything is negotiable. Even when the price or terms of something seem set in stone, getting a discount is often as easy as knowing whom to ask and how to ask for it.

When it comes to the balances you owe on your credit cards, for example, there might be an opportunity to negotiate what you actually owe. With a little bit of knowledge and guts, you can sometimes cut your balances by as much as 50% to 70%.

Understand Why Credit Card Companies Negotiate

If you’re going to try and negotiate with a credit card company, then you should know what often motivates them to do so. Credit card companies, many of which are owned by banks, have several priorities.;The first is to generate profit for the parent company and its shareholders.

When it becomes evident that someone may be unable to pay his or her balance, a shift in the credit card company’s;priorities happens that can work to your advantage.;The bank or credit card company becomes concerned with getting as much of the balance back from you as possible and closing or restricting your account.;This allows them to avoid charging off the entire amount on their income statement, which would cause their stock to fall, management to get lower bonuses, and perhaps even dividend payments to shareholders to be reduced.

Absent some sort of unique set of circumstances, a bankruptcy filing would be the worst-case scenario for the credit card company because it stands to lose everything it has extended you.;It means that they may be willing to forgive a large portion of the debt balance in hopes of getting back something rather than nothing.

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How Debt Settlement Works

Debt settlement occurs when you pay your creditors a lump sum that is significantly less than what you owe. Settling spiraling debts is sometimes the best solution for creditors, allowing them to recoup at least some of the money you owe them.

That being said, debt settlement has a few major disadvantages:

  • Not all debt collectors accept offers to settle debts.
  • If they do, youll need to save enough money to make the lump sum payment required, which can take years.
  • Even if you manage to settle your debt, its recorded on your credit report, causing your score to drop.
  • The forgiven amount of your debt can be considered taxable income, unless you qualify for an exclusion.
  • There are a few ways to initiate the debt settlement process. You can write a debt settlement letter to your creditors, specifying the amount you can afford and stating that this is the sum youll pay in order for your debt to be settled. Request a response by a certain date to keep the process moving.

    While its possible to negotiate a settlement yourself, many people choose to use the services of a debt settlement company. Experienced debt settlement professionals do the difficult work of negotiating with your creditors on your behalf. Reputable companies are transparent about the risks involved, the length of time the process could take and how much it all costs.

    Community Tax: Best For Tax Debt Relief

    How To Settle Credit Card Debt With Wells Fargo

    Community Tax is our top recommended debt relief service for tax debt. Community Tax has consulted with over 100,000 clients since 2010 and has resolved over $800 million in tax debt.

    Community Tax has an impressive A+ rating by the Better Business Bureau, which is rare for the tax relief industry. Their tax professionals can assess your tax situation and offer a custom-tailored program to get you out of tax debt fast.

    Community Tax offers a variety of debt relief options including:

    • Offers in Compromise
    • Penalty Abatement
    • Partial Pay Installment Agreement

    You can get a free consultation with Community Tax, where one of their tax law experts will review your case and discuss the best potential resolution to your tax debt. If you become a client of Community Tax, they will work with the IRS on your behalf to significantly reduce your tax debt or even eliminate it altogether.

    Negotiating with the IRS on your own can be a very frustrating and challenging process. The experts at Community Tax will fight on your behalf to garner the most favorable outcome for your situation.

    • $10,000 minimum tax debt requirement
    • A+ Better Business Bureau rating
    • No hidden fees

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