Negotiate Credit Card Debt with Collection Agency
When one first finds out that their credit card debt has gone to collection, the instinctive reaction is undoubtedly of despair and hopelessness. What’s coming are ruined credit and possible lawsuits or bankruptcy.
The situation however is not as bleak as your debt collector would like you to believe and successfully negotiating credit card debt settlement with them is still possible. It is not going to be smooth sailing, but with the right method and enough persistence, it can be done.
A few important considerations:
Collection agencies usually pay only about 5 cents on the dollar for your debt from your credit card company!
The number can vary from 1-10 cents on the dollar depending on how old the debt is. At this point, your original creditor believes this is the best he can salvage (the creditor also receive tax benefit).
What does this mean to you? Well, you can expect to reach a better settlement when you negotiate credit card debt with them because they will still be making a profit.
Tips on how to negotiate credit card debt:
Start your first offer at about 15% to 20%. You can probably expect to settle somewhere around 25-40%, but each creditor is different and a good settlement for one company may not be a bad deal for another.
Remember, the collection agency still makes out on top for a 25% settlement because they only pay a couple cents on the dollar for it. You can also expect a to settle for lower the older the debt is.
Always remember your best leverage when you negotiate credit card debt settlement: bankruptcy. Take comfort in the fact that you are in the driver’s seat and have something they are after.
Don’t get flustered if faced with rejections, your creditor would be more than happy to settle and receive a portion of the balance than lose everything if you declare bankruptcy.
Demonstrate your financial problems by providing income, budgeting problems, and debt obligations. Show evidences. Never tell them you need the settlement to buy a new car or home, which probably isn’t a good idea anyways at this moment.
Late fees and additional interest are usually garbage. Look at your actual principal and analyze your balance and find out how much do you actually owe and how much are penalties.
Most penalties are made up by the collection agency to fatten their wallet and can easily be waived when negotiating.
Everything you agree upon should be in writing. I prefer to communicate everything through mail (registered) that way you easily have access to written records. Effectively keep track of everything and it could make a big difference on your settlement.
Your final arrangement in credit card debt negotiation is your credit rating.
Try to have the collection listing removed from your credit report if possible. Otherwise, try negotiate the listing, in descending order of preference, as: “paid” only, “settled” only, and “paid charge off” only, with no other negatives for each.
Remember, you want to limit the damage to your credit as much as possible otherwise your credit would be just as bad as if the debt remains unpaid.
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Filed Under Credit Card Debt Relief, Credit Counseling, Credit Score, Debt Consolidation, Debt Elimination, credit repair, debt settlement | Leave a Comment
Tagged With collection agency, credit card debt, credit card debt negotiation, credit card debt settlement, credit rating, how to negotiate credit card debt, negotiate credit card debt, negotiate credit card debt settlement, negotiating credit card debt
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