Negotiate credit card debt » Bankruptcy

Credit Repair – How to Negotiate Credit Card Payoffs

admin — Fri, 22 Oct 2010 19:05:08 +0000

In the past many people have hired lawyers or debt settlement companies to negotiate their credit card payoffs for them. This is still an option, but you need to be careful before you decide to use them. Many times when you use debt settlement companies to handle your negotiations, you will end up with marks on your credit report that are as bad as bankruptcy.

Another thing to keep in mind if you are thinking about hiring a professional to do this for you is the cost. Many will charge you an initial set up fee, then either several hundred dollars or a monthly fee. One thing to keep in mind is these companies are also paid a percentage of what they negotiate your payoff amount to. This percentage is paid by the credit card company. So it’s in their best interest to negotiate a higher payoff amount than you want.

But there is hope. Everything they do for you, you can do yourself for a fraction of the cost. The way these services work is they submit dispute letters on your behalf, and charge you hundreds of dollars to do it, with no guarantee of success. They send the same letters you can for the cost of a stamp and a little bit of time.

Sit down before you start calling them and determine how much you can afford to pay them. Write down whatever that amount is so you know that you can not go over that amount in your negotiations. Also figure out how long it will take you to pay off the amount you agree on. Use several different amounts to get a rough timeline so you know about how long it will take no matter where you end up in negotiations.

The easiest cards to settle are going to be those that you are behind in payments on already. If you are not behind, it will be harder to negotiate a payoff because there is no indication that you are having trouble paying the bill.

Now when you sit down to make the call, document everything. The name of the person you talk to, date and time of the conversation, what you agree to, and anything else that strikes you as important.

I recommend that you start out with an offer to pay off 25% of the total debt. Don’t worry that its too low, they are going to counter with something close to 100%. If you have several cards that are behind in payments, it will be easier to get them to settle lower. Be prepared to settle at around 50% or a little higher.

You need for them to believe that a settlement that high is going to be very difficult for you. Then you can make the stipulation that if you settle that high, they need to remove all late payment notations on the account, and show a notice that the account was “Paid as agreed.” If they don’t agree with those tell them you will not pay anything then and will stop paying them all together.

After that they will become much more likely to give you what you want in negotiation. Before you pay a penny toward the negotiated amount, tell them they need to send you a letter spelling out and agreeing to the terms negotiated on the phone. If they don’t include everything agreed to on the phone, call them back and tell them about the discrepancy. Let them know that if everything agreed to on the phone is not in the letter you will not pay anything.

Start this process with the card with the lowest balance. This will be the quickest to pay off, and then free up the money from that payment to put toward other cards. After you pay that card off, move to the next card with the lowest balance and repeat the process.

By: Steven Parsons

Debt Negotiation Equals Reduction and Debt Canceled

admin — Sat, 03 Jul 2010 15:59:24 +0000

There is a new way termed debt canceled which is a process to eliminate your credit card obligation with self-negotiation. Being financially free by self-negotiation may seem difficult because you are required to work this process. The procedure for financial relief can be really simple when you find the right help you need. You contact your creditors and request that they cancel your credit card debt because you are unable to pay them based on your hardship so you can avoid bankruptcy. You can just send your creditors letters explaining your situation and that it would be to their advantage to cancel all of your money owing. You will need to give them all of the pertinent information about yourself so that their decision to cancel your financial responsibility will go your way. Credit negotiation does not have to cost you any money because you can do this yourself with a little help from knowing about debt canceled. Complete elimination of your financial burden is the goal to go after.

Using a formula called debt canceled provides you all the information you need to get your situation under control. Your credit card account balance can be erased. You can receive the relief you are looking for. What exactly is the definition of Debt Canceled? This is when the bank or credit card company cancels your entire obligation that you owe them because of your inability to pay. You then will have no more monthly payments because your balance has been canceled. You are then free and clear of any commitment to that bank or credit card company.

Debt management, consolidation, paid negotiation, reduction, & paid counseling are things of the past. Even if you use debt consolidation you will still have monthly payments for years with a balance. Discover how to eliminate debt with no monthly payments or balances by self-negotiation in the way of mailing letters describing your situation instead of phone calls or setting down at a table to negotiate. Creditors may try to manipulate you over the phone just to get you to send them more money. Never negotiate your credit card liability over the phone. The same holds true when setting down at the table in person to negotiate. You do not want debt reduction. You want a complete elimination of your entire liability, which would mean no more monthly payments or balance on your credit card accounts.

You can avoid bankruptcy and the high costs that come with it by using a system of debt elimination explained in detail. I’m not a lawyer but I know that there are new kinds of debt solutions today for the one who is struggling with money owing and has no money to get the help they need. The Banks and credit card companies are making millions of dollars off of our purchases and then give us back pennies as an incentive to charge more. How can you eliminate these monthly payments and balances using their program?

Debt negotiation equals reduction and debt canceled of all credit card obligations to become financially free. When your spouse losses their job and could not find work then your income will not be enough to pay your credit card balance and your basic living expenses. Even when you charge not only food but also your utility bills. Finally the money owing was getting more than you can bear because spending had to continue, going deeper into financial ruin. You may or may not be able afford to file bankruptcy. You can get some free financial counseling and credit management as an option. Study the subject of money owing and learn some legal things.

By: Bill Naugle

Debt Negotiation Advice – How a Proven Settlement Company Can Reduce Your Debt Fast

admin — Wed, 28 Apr 2010 00:56:31 +0000

You have been searching most desperately for debt relief. Do not worry; you are not the only one who is doing so. Most US citizens are searching for debt relief to handle their Credit card debt. What are the various options available to you?

The options fall in broadly three categories; debt counseling, settlement, and bankruptcy. Let us take a look at all three and see which option is the best for you. If you are a small time debtor with a few hundred dollars of Credit card debt, counseling is the best option for you. You need not be even reading this article. If you have come this far it is needless to state that you are down with Credit card debt of more than a few thousand dollars. In this case you need to look at debt relief through bankruptcy or a debt settlement.

Bankruptcy is a legal procedure and needs to be taken very seriously. It has certain nuances and requires detailed documentation. The biggest disadvantages of bankruptcy are two; it does not discharge all types of debt and will cause a huge dent in your credit score. If you though that you could max out all your Credit cards and file bankruptcy you were really mistaken. Debt acquired without the intention of paying back amounts to fraud and can not be discharged by bankruptcy.

Take a look at debt settlement. You need to sign up with a debt settlement company for debt relief. After that you stop paying your installments and answering collection calls. The settlement company will do it on your behalf. You can go in for a consolidation loan to pay up 40 to 50 percent of your outstanding debt at one go. In exchange for a one time payment the debt settlement company will negotiate a waiver for you. Balance of the amount will be waived legally.

The consolidation loan comes at a decent rate of interest with easy installments. You become debt free within two to three years.

By: Lisa Archer-Jones

Is Debt Settlement Legal?

admin — Sat, 24 Apr 2010 15:27:34 +0000

The simple answer to a complex question is YES. Debt settlement is a legal solution used by thousands of Americans to help them avoid bankruptcy. The theory behind debt settlement is very simple: negotiate deals with credit card companies that are mutually beneficial for both parties. This ultimately leads in the credit card company receiving a lump sum payment, and the consumer paying off the entire debt for a percentage of the outstanding balance. The greatest advantage for the credit card company is that they avoid any future problems with collecting on the debt, and any concession made on the creditor’s part is most obviously tax deductible. The consumer is at no time breaking any laws or committing any illegal acts.

So, if the answer is so simple, then why is the question so complicated? The problem with debt settlement is not the legality of the practice, but the ethics of those who practice it, namely debt settlement companies. Unfortunately, a number of unethical debt companies have been found to take advantage of consumers’ financial strife to boost business.

They essentially promise clients unrealistic results and then charge them outrageous administration fees for services they never provide. Thus, we see that legislation is not so much to protect credit card companies, but in fact to protect unknowing consumers. For this reason, a number of states are requiring debt settlement companies to complete forms and register activity with the state’s Attorney General in order for them to be more easily tracked. This helps the government to identify unethical companies in a legal and ethical industry. The idea is to eliminate those companies that have

So, if you are considering joining a Debt Settlement program, relax! What you are doing is legal, ethical, and morally correct; just make sure that the company you chose is also!

By: Scott Wallitsch

Eliminate Credit Card Debt – How to Get Help

admin — Thu, 22 Apr 2010 13:16:04 +0000

Consumer debt in America is at an all-time high, which means that thousands of Americans are struggling with how to eliminate credit card debt without resorting to bankruptcy. In many cases this is not as easy as they might think, particularly because many credit card companies are just not easy to deal with.

There are a couple of recommended methods for dealing with credit card debt, and they are good, solid methods – in theory. In reality, they don’t always work so well. Let’s examine the most common methods that are usually suggested for people trying to eliminate credit card debt and see where they fall short.

1. Make a budget. Well that sounds like good advice, right? Sure. Except for the fact that most people are so far in debt that they can’t even see the light of day, AND many are also not making as much money as they were this time last year. When your expenses are actually higher than your income it is pretty hard to make a budget work. The numbers just don’t crunch that way no matter how you look at it.

2. Stop Using your Cards, they tell you. Well OK, but if you are in the situation mentioned above, you may very well be using them for basic needs like rent, food and electricity.

3. Work with the credit card companies – Good luck with that! These companies are businesses. They care about their bottom line and that is it. Your personal and financial problems just don’t mean a thing to them. They want their money and that’s all there is to it. I’ve yet to hear of a credit company that felt sorry for someone because they lost their job or got sick and just let their payments slide. Sorry, but it’s just not going to happen.

As you can see, most of the methods that people suggest for ways to eliminate credit card debt are just not practical. The sheer magnitude of debt that people find themselves in make budgeting and not using their cards impossible.

There is one thing that does work though and that is getting a third party to negotiate with your creditors for you to eliminate credit card debt. This is how it works:

Many of the third party debt relief companies are 501(c)3 organizations. That simply means that they are non-profit organizations. This means that when they negotiate with the credit card companies for you, any concessions or reductions in your debt that they make for you can be tax write-offs for the credit companies. So, even though they may have told you personally that there was nothing they could do for you, usually the tax write-off is worth it to them to make an effort to help you work out a way to eliminate your credit card debt.

The 501(c)3 organizations are often able to lower your monthly payments, reduce your interest rates (sometimes to as low as 0%,) waive late fees, and get the collection agencies off your back. They will also consolidate your debts into one monthly payment that you can actually afford to pay.

You may have thought that if you wanted to eliminate credit card debt, you would have to fight the battle alone. Thankfully, though, with the current economical crisis in the US and around the world, more and more companies are starting to help consumers dig themselves out of the financial messes they are in. One of the most responsible things that you can do is to get help when you need it, before it is too late. A 501(c)3 debt relief organization is the place to start on your journey to eliminate credit card debt.

By: James Ashford

4 Credit Card Debt Settling Mistakes That Can Cost You

admin — Fri, 16 Apr 2010 13:00:34 +0000

The way credit card debt settling services work is that they negotiate with lenders, such as credit card companies, on your behalf. They can negotiate lower interest rates, easier payments, or sometimes even having the debt canceled entirely. They sound like a great way to deal with debt, but there are some things that you should know first.

There are a number of possible problems you can run into with these services. Let’s take a look at three of the most common…

They Can Hurt Your Credit Score

When a debt settlement service contacts your credit card company to negotiate on your behalf, the credit card company will often put a note on your credit report stating that debt settlement proceedings are underway. This can cause a drop in your credit score, as well as cause you to be declined for other financing.

You Can Wind Up Paying More

Most debt settlement services collect a lump-sum payment from you that is enough to cover all your payments, and then they distribute the payments to the lenders.

But if they don’t make any of those payments on time, you’re the one that pays for it. This can include more interest plus late fees and other service charges that get added to your balance.

You’re not in control of the payments they’re making, and therefore you can’s manage them as well as if you were handling it yourself.

You Can Run Into Legal Trouble

When debt settlement proceedings are underway, you can still be sued by lenders. Settlement is not like bankruptcy – it doesn’t give you any kind of legal protection, so you’re still at risk of being sued.

Tax Implications

If a debt settlement service manages to get some of your debt canceled (ie. you don’t have to pay it back) it can have income tax consequences. You’ll be taxed on the amount of money that is forgiven, since it is effectively a type of income for you.

As you can tell, there are a number of potential landmines when you start working with a debt settlement company. Before you take the leap, you should always weigh all your options to be sure you’ve done everything you can for yourself.

You can find out more about how to pay off credit card debt on the Debt Reduction Academy website. Visit debtreductionacademy.com/articles/qanda.php now to get a free copy of my Debt R.E.D.U.C.T.I.O.N. System for paying off debt as quickly as possible.

By: W. M. Blake

Debt Collections – How to Pay Off Accounts in Collections

admin — Tue, 13 Apr 2010 16:20:26 +0000

Next to bankruptcy, having an account in collections is the worst entry you can have on your credit report. It will lower your score, and make it difficult- if not impossible- to obtain new credit. Creditors realize that if you have an account in collections that it went unpaid for a long period of time, and it makes them fear that if they lent you money they would not receive payments on time, either. Once you have an account in collections, your goal is to improve your credit and get the collections accounts deleted, or at the very least, updated on the credit report to say “Paid as agreed”, “Current”, or “Settled”.

The damage is done the moment the account is reported as being in collections. Before you pay off that collection account, you want to negotiate with the debt collector to have the credit report updated to one of the more favorable notations, as described above. You do not want to deal with the nightmare that many people face because they didn’t negotiate with the creditor and get the intention in writing for the update of your credit report- some people have paid accounts off that are in collections and their credit report is not updated. For at least seven years after the account is paid off; the individuals end up having problems getting new credit because the account still appears in negative status on the credit report.

The Best Scenario for You

The best you can hope for in terms of improving your credit is to have the collector delete the account from your credit report entirely. Send a “pay for delete” letter to the collector, and offer a settlement payment that you will pay them in exchange for the deletion of the account from your credit report. Get the collectors response in writing before you make a payment, to be sure you have proof of the arrangement in the event they don’t follow through with their end of the bargain.

If you prefer to call the debt collector, you chance being recorded saying something that can be used against you in a judgement case. You’ll want to get the agreement from the collector in writing anyway, so it’s a good idea to do this in writing anyway.

Debt collectors do not have to remove accurate entries from your credit report, even if you offer a settlement, so not all debt collectors will agree to this scenario.

Second Best Scenario for You

There are a number of collectors who will hold out in hopes of getting the payment in full and will refuse to delete the account from your credit report in exchange for a settlement (less than amount owed) payment. If this is your situation, you’ll have to offer to pay the full amount to get the collector to delete the account from your credit history report.

Not as Good, But Acceptable!

There are some collectors who simply refuse to remove an entry from your credit report, even when you’ve made payment. You would then want to get the collector to agree to update the notation to “Paid in Full”; whether you make a settlement payment or the full amount.

Unfortunately, a number of collectors won’t report it as “paid in full” if you settle. If you get the debt collector to agree to a settlement payment, but not “paid in full”, it would still be acceptable and better than your current situation to have the account reflect “Paid- Settled” on your credit report. It will not result in an instant, huge boost in your credit score, but it is certainly better than the situation you’re in now (having the account in collections) and is the best alternative if you can’t get it deleted or marked “Paid in full” for making a partial payment. (If you have the money to pay the account in full, do it because the notation on your credit report for an account paid in full is much better for you over the long term!)

By: Debbie Dragon

Debt Negotiation

admin — Fri, 02 Apr 2010 18:51:18 +0000

Debt Negotiation happens in two basic ways: by a professional, or by yourself.

Here are a few strategies the professionals use when handling a debt negotiation on your behalf.

In this discussion, we are only looking at “unsecured debts”, which includes credit cards or medical debts most commonly. It simply means any debt which has no collateral, such as a car loan, home loan, boat loan, etc.

Before you start any debt negotiation, you should expect that you’ll take a “hit” on your credit score. Any creditor who lent you money is not going to just let you get out of paying any less than the full balance and let you retain perfect credit.

That said, all credit automatically repairs itself when all future payments are made on time. In many cases someone can suffer credit damage from a debt negotiation and within two years, provided all future payments are made on time, have an excellent “A+” 730+ fico score.

In addition, many people confuse credit “Score” and credit “ability”. If you have a perfect 850 fico score, but do not qualify for more financing because you are carrying too much debt already relative to your income, then you have zero credit ability. Frankly, the creditors have worked hard to make you believe these are the same, so that you keep paying. If you are looking for debt negotatiation, you are probably carrying too much debt. If you’re willing to stop using your credit cards for a while and don’t plan to buy a home or car in the near future, then it may save you many thousands of dollars.

The most common strategy the professionals use is to stop making payments, and instead save the money up so that a single lump-sum payment can be offered.

In addition to this, a debt negotiation professional will also prepare a specially formatted letter containing a legitimate reason why you could afford the debt before, but cannot afford it any longer, and if things continue, it will end in bankruptcy or charge-off. This usually contains a factual story, referred to by professionals as a “hardship”. This can include medical events, loss of job or income, dramatic increase in expenses due to some sudden unforseen reason i.e. divorce or adjustable mortgage changes, or a natural disaster.

There are a few reasons why a debt negotiation professional can reach a better, lower debt negotiation settlement offer than you doing it yourself.

First, debt negotiation companies deal with thousands of clients at a time, so they’re able to reach higher up the chain of command. A consumer will usually reach a lower-level technician, who is not authorized much leeway for debt negotiation. An attorney or non-attorney professional can speak with a vice president because they are offering sometimes hundreds of thousands of dollars spread over many accounts based on certain status and net discount amount.

Second, debt negotiation companies know how to say and how to package what needs to be said, at the right time, to the right people.

Third a debt negotiation expert knows the system and averages for each company. A creditor has the legal right to sue you in court for non payment, which could result in a legal judgement, which can mean garnishment of wages directly from your employer, additional court fees, and more credit damage. A professional debt negotiation company can minimize the risk of being sued while still reaching a settlement around 42 cents on the dollar.

Last, because a debt negotiation company has either attorneys on staff, or non-attorney trained negotiators on staff (depending on your state’s laws, and your file), they know the creditor’s tricks. The credit card industry makes literally billions of dollars per year in profit, and they don’t make this by being nice. However nice the customer service representative may seem on the phone, they have one agenda: to get as much money from you as possible. Most typically, for anyone in a bit of debt trouble, the creditor will suggest “Credit Counseling”.

The dirty secret about credit counseling is that “Credit Counseling” was invented by the credit card companies. They want you to feel like they’re helping, but when you enroll in these programs, you’ll repay 100% of your debt plus interest, suffer credit damage, and they’ll often collect a monthly fee on top of it ($49 a month x 48 months, for example is $2,352 in fees, not including interest). They usually won’t tell you this, but they also get a 15% “fair share fee” from the credit card company, so the IRS has revoked the “non-profit” status of many of these companies.

Like plumbing, taxes, or fixing your computer, you can handle debt negotiation yourself, or you can hire a professional. Those willing to educate themselves to learn how to do it right can definitely save some money. That said, for the reasons stated above, often times the settlement amount offered on a debt negotiation you conduct yourself may not be as discounted as what a professional may get, and therefore the service in almost all cases pays for itself. For example, if you get offered $.80 on the dollar, but a professional gets $.42, then it’s actually cheaper even with the cost of service to have a debt negotiation service handle your case.

One dangerous byproduct of staying in debt is not having enough time to invest for retirement. Most people don’t know exactly how much money they’ll need to retire. Do you? The sooner you use debt negotiation to clear your debts, the sooner you can build your investments to ensure you can retire the way you want – instead of living your golden years as a burden on family, with lower standard of living, or working past retirement.

By: Roger V

What Happens If You Do Not Pay Credit Card Debt?

admin — Thu, 18 Feb 2010 07:39:07 +0000

What happens if you do not pay credit card debt seems be a question that many people are asking during today’s economy. This question will not be answered the same depending on what you plan to do about not being able to make your credit card payments.

If you fall behind on credit card payments and become paralyzed to the point where you ignore the situation you are in, you are going to have problems. You will get collection calls from your credit card company for about six months. After that time, your credit card company may sell your account to a third party collection agency. They can be very harassing and down right nasty.

With the economy being what it is, more and more credit card companies and collection agencies are taking legal action. They will place a judgment on your credit report and in many cases will garnish you wages for the outstanding balance on your account. This is something you want to avoid at all cost. So, the sooner you face reality and begin to deal with your situation the better off you will be.

It is best to work with your lender and see what type of hardship programs they offer. Credit counseling may also be an option for you, but you will still have to make a 2 percent payment each month. Your collection calls will stop, your unsecured debt will be consolidated into one monthly payment, your fees will stop and your interest rates will be reduced significantly. But not everyone is able to make a minimum payment.

Debt settlement is growing in popularity as many people are being faced with bankruptcy. This is an alternative that can have you debt free in 12-36 months. Debt settlement is a debt help option where your credit card balances are reduced through negotiation.

By: Marjorie Salada

How to Negotiate For Debt Settlement

admin — Thu, 11 Feb 2010 11:17:46 +0000

Before you think of bankruptcy, let’s take a look at debt settlement negotiation as a solution to your problems. Negotiation with the creditors is one step closer to solving your financial problem because if you can get them to lower the interest and allow you to repay the payment in a longer time, you will stand a better chance to repay all the debt and free yourself from the financial burden. You should always be open for doing that, as it will free you up for daily tensions, which can kill you and have a very bad effect on your health.

Of course, when you are negotiating with the creditors, you need to be polite and always watch your manners, as it is easy to get emotional or angry when you are negotiating. They are the ones who determine whether to help you or not in settling the debt. There is no use getting angry, as you need to remember that it is not their fault you get into such a situation. You should always take care that you should be cool and try and get a good deal out for yourself. Always make it a point that you are not getting into any issue of any kind while you are negotiating.

Try to ask for lowering the interest rate as well as longer time for repayment so you can lower the repayment rate every month. This will increase your ability in repaying all your debt within the time frame. Explain to them how this will be useful for you and how this will benefit both you and the lenders. Let them see the benefits and you will stand a better chance of winning this negotiation. It is best to keep calm throughout the negotiation. You can save some money if you are trying to reach a settlement and that can get you a good discount.

If they rejected your request, you might have to find other ways to solve your problems before you jump into the bankruptcy bandwagon. Too many people have chosen to declare bankruptcy and living a life so painful. This is perhaps a lesson for you so that you will not get into such a trouble in the future. Take a step at a time when solving the problem as rushing will not help in any way. But you should always approach the situation with a open mind.

By: Tom Tessin