How to settle credit card debt?

17th Nov 2009 by Tom Lindmark

I assume by settle you mean to pay less than the outstanding balance on the credit card. If that's the case then the procedure amounts to nothing more than calling your credit card company and making them an offer. Don't expect your first offer to be accepted, particularly so if you are current on your payments. You have to provide them with reasons why they should accept less than what you owe. A job loss or diminished income or unexpected expenses such as major medical costs are examples of situations that will induce them to deal with you. The more they think that they will receive no payment and have to write off the loan the more inclined they will be to make a deal. Don't accept their first offer and even be prepared to miss a payment or two to get the message to them that things aren't good with you. Eventually, they will come around and most often you can expect to get them to waive late payments, penalty interest and over-limit fees. They may also knock off some of the principal amount. Be advised that any payments you miss will impact your credit score and that if you do reach an agreement they will report the balance as settled not paid in full to the credit reporting agencies. That will affect your credit score for a while as well.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com