How to Settle Credit Card Debt



    Inability to settle credit card debt on time can result in serious consequences for the credit rating of an individual. Credit card debt arises as a result of failure to make timely payments whereby the debt includes principle repayments and cost of servicing debt in terms of interest.

    It is recommended that action is taken before the credit card organization sells the debt to collectors. The following options, however, can allow you to settle your credit card debt in a timely manner without bearing the negative implications.

      Debt Settlement Companies
      Debt settlement companies are profit organization that act on the behalf of an individual and negotiate the terms and conditions of the debt with the credit card company. The debt settlement company designs an action plan that entails setting apart a specific amount each month and depositing it within the savings account in order to accumulate the desired amount needed to pay off the debt.

      However, caution must be exercised in choosing a debt settlement company and you must initially ascertain the fee charged by the company and disclosure requirements if any.

      Negotiating with The Credit Card Company
      In order to settle credit card debt, you can negotiate with the credit card company by drafting a negotiation strategy and preparing budgets and income forecasts and providing original documents for any other debts that you are currently facing. You can inform the credit card company the reasons for non-payment and build a case that allows you to settle for minimum monthly repayments.

      Throughout the negotiation process, you must be aware of your rights so that no undue advantage is taken of the situation. The original balance without any late fee charges and penalties must form the baseline for your negotiation and you can either negotiate for a lump sum payment or monthly payments depending on the leverage provided by the company.

      End of month negotiations can allow you to strike a bargain as agents are largely interested in completing their quotas and might gladly settle for less than the original amount. The terms and conditions of the negotiation must be agreed in writing so that any future sources of discrepancies are removed.

      Taking Help from a Credit Counselor
      Credit counseling companies specialize in providing personalized plans to individuals that are in dire need to settle credit card debt. The counselor analyzes the financial crises faced by the individual and drafts an action plan that highlights the steps that can be taken to effectively pay off debt. The counselor usually works with the person to develop a budget that addresses the immediate concern of how to settle credit card debt.

      Bankruptcy
      The last resort for an individual in severe debt crises is to declare bankruptcy whereby the court will design a repayment plan that allow the person to pay off the debt within a time frame of three to five years without surrendering personal possessions or property.

      You must settle credit card debt before the account is sold off to collectors or you are forced to declare bankruptcy as these actions can severely harm your credit rating and prevent you from gaining access to various sources of finance in the foreseeable future.

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