If you're like many other people struggling with the state of the economy, you may have suddenly found yourself bound with credit card debt. This is easy to do if you're trying to survive with less or no income. If you're barely able to make your minimum payments, or you're missing them and collecting late penalties, it's time to help yourself. There are four varied plans to getting help from your credit card company, and they are explained below. Each of these options requires a credit card hardship letter. Option 1: Credit Card Debt Settlement This route is not available to many because it necessitatesthat you have significant savings that you can use. The hope is that you negotiate with your creditor to take a partial lump sum payment of your debt and to negate the rest. For instance, you may owe $15,000 on a credit card, so you convince the lender to agree that you'll pay them $8,000 if they forgive the $7,000 remaining. They would write off the $7000 as a loss for their business. The reason this might be appealing to your creditor is that if you are struggling this much, you're most likely on the verge of bankruptcy, in which case, they would not get anything. Better to get $7,000 from you than $0. However, in order for it to be a viable option for you, you need to have the money sitting there to provide them, as soon as you reach a resolution. The lump sum amount you negotiate can be anywhere between 25-60% of what is owed. The other downside so the settlement option is that you will owe taxes on the portion of your debt that is waived. The IRS considers this as regular income, and as such you will have to pay tax on it. Option 2: Negotiating a Lower Interest Rate If you have made payments reliably up until very recently, then this could be a great option for you. You will need to explain your hardship, and show your creditor that you will be able to make reduced payments. However, when creditors reduce interest rates, the payments can be reduced quite significantly. In addition to petitioning a lower interest rate, you can also request tha the creditor waive various fees that have been charged to your account, specifically any past due payments fees. While some companies will agree to this and others will be against, there are no negative effects for asking. Note:I can help you pursue this option by writing your credit card hardship letter Option 3: Negotiating a Payment Plan This option is agreeable for you if you don't have a good payment history with your creditor, strangely enough. If you're few months behind in your payments, and are obviously really struggling, your creditor may be willing to work with you to outline a payment plan that is best for you. Again, if you're already proving to be a credit risk, they would rather receive something from you than nothing, so they'll be antsy to construct a plan that works for you. Option 4: Having a Professional Negotiate on Your Behalf If, for whatever reason, you can't decide which of the above choices are best for you, you can turn to a professional to take on your case and negotiate with your creditor on your behalf. There are myriads of credit card counseling services. Simply verify that the company you pick is legitimate and reputable. As with other financial situations, there are myriads of scams to avoid. Note: Even if you work with another company, you may be asked to create a credit card hardship letter
Credit Card Debt Settlement
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