Debt Negotiation

In exchange for the forgiveness of an outstanding debt, a lender and a borrower agree to make a substantial, one-time payment against an existing balance.


The Basics

Why would a credit card company knowingly want to forego a significant portion of its debt? It’s typically because the lender is short on cash or is concerned about your ability to pay off the whole balance in the future. In both cases, the credit card issuer is seeking to protect its financial bottom line, which is crucial to consider while negotiating. Credit cards are considered as unsecured loans, which ensures that the credit card company cannot take the property to pay off the debt.

Negotiating a credit card balance may seem to be too good to be true, but it isn’t. Lenders, predictably, don’t want to encourage debt settlement. According to the Federal Trade Commission, about half of debt settlement cases end successfully, even though there is a lack of independent evidence on success rates. If you’re seriously behind on your payments or on the brink of bankruptcy, your lender may be able to consider anything in return for a second chance.


The Negotiation Procedure

Start by calling your credit card’s customer service department’s primary phone number and requesting to talk with someone in the “debt settlements department,” preferably a manager. Describe the seriousness of your situation. Emphasize that you’ve scraped together a small sum of money and are trying to settle one of your accounts before the money runs out. You’ll be more likely to get a better offer if you say that you have many accounts on which you’re actively negotiating debt payments.

Give a fixed dollar sum equal to about 30% of your current account balance. The lender would almost definitely counter a higher percentage or dollar sum. If a payment of more than 50% is suggested, consider negotiating with a different creditor or just saving the money to help offset potential monthly bills.

Last but not least, get your debt settlement agreement in writing after you’ve reached an agreement with your lender. It’s not uncommon for a credit card company to agree to a debt settlement over the phone only to hand over the outstanding balance to a collection agency. Ensure the written agreement specifies the sum you must pay to be excused from making any more payments on the entire balance.


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Our team has extensive knowledge and has worked with clients in all areas of real estate. We work hard to achieve the best possible result for our clients by considering their goals and conducting a thorough and objective analysis of the most effective way to achieve them.

Attorneys Real Estate Group will help you with any issue relating to debt negotiation. Feel free to contact us via our website or by phone at (800) 481-4049; we look forward to assisting you.