Credit Card Settlement
Credit card debt settlement can be a tedious task, especially when you are facing a financial crunch. When we start using a credit card, most of us don't foresee this problem. It's only when we receive the statement of outstanding dues, do we realize that we are in deep trouble, and look out some debt settlement strategies which are likely to pull us out of the crunch situation.
How Does Credit Card Settlement Work?
In this process, the debtor or the consumer agrees to pay a stipulated lower amount, than what he actually owes to the credit card company, in full. This is most often done when the debtor has a particular amount of money with him, and he is willing to pay it, if the creditor agrees to settle the whole outstanding debt in lieu of this money. From the perspective of credit card companies, even though they don't get the entire amount, there is a hope that they would at least get a part of it - and therefore they go ahead with settlement.
Both the sides try to negotiate and come to an agreement. Most of the debt settlements, which are given a green signal by these companies, belong to debtors on the verge of bankruptcy. At the end of the day, the debtor is satisfied that he has paid his outstanding debt, while the creditor is satisfied about receiving a substantial part of the outstanding dues.
Negotiate Credit Card Debt Settlement
The entire process of settlement is not as easy as it sounds. Sometimes the creditor and the debtor have to indulge in series of negotiations to come up with a mutual agreement. The companies agree to negotiate credit card payoff, only when they feel that the chances of getting the entire sum back are dull. You can initiate the settlement either by writing a letter to the concerned person or talking to him on the phone or in person. You will have to be well prepared before you initiate the settlement.
Never use profane language when communicating with the creditor. A customer care representative will not have the authority to grant debt settlement offer, so you can try getting in touch with a superior or the person in charge of settlement. Being rude, will only hamper the negotiation process. On the other hand, being on good terms with the company representative can ensure that you get the best possible credit card debt settlement deal. When the company agrees, make sure that you have the written agreement in your hand before you make any payment.
Credit Card Debt Settlement Letter
It is a formal request, made in writing, by the debtor to the creditor, asking him to lower the amount of outstanding credit card debt he owes to the company. The company takes this as an opportunity to get back their money, and agrees to get into negotiation for the debt settlement. In simple words, this letter is a debt settlement offer initiated by the consumer. Your name, account number, existing balance, paid amount and the settlement amount should be clearly mentioned in the letter. You can also take the help of an attorney, who is familiar with the legal implications of the matter, to write the letter on your behalf.
When you opt for a debt settlement, the creditor is allowed to make a note stating "settled for less than full amount" in your credit report. This can prove to be a hindrance, when you would want to extend a credit in the future. In debt management, opting for a debt settlement should be your last priority. Instead, opting for interest rate negotiation is considered a wiser way out.
