Credit Card Debt Settlement

If you decide to apply for credit card debt settlement, you need a strategy

Credit Card Debt Settlement is crucial if you decide to settle for less than you owe. Forgiveness isn't and shouldn't be viewed as a free ride because it's going to cost you plenty. Maybe not just in terms of money, but all the other crap to negotiate credit card debt will create tremendous tension in your household. I had five cards and settled all of them. I actually had nine, but wanted to keep the other four in good standing, but as soon as I paid the others in full, the good ones were canceled.

Credit card companies suck and they are in cahoots. You can't win and it's like these guys play poker together every Thursday night and compare notes. No kidding, as soon as I paid my good standing cards in full, they were canceled. Bastards.

Anyway, five credit cards and each creditor called me an average of six time each night. We finally turned off the ringer, but we missed some calls from friends and family members when we did this. That's why the whole family should be board. Husband and wife and let the kids know what's going on. It'll be a good learning experience for everybody. I'll admit that I didn't do this and my wife really got pissed off with me. Some of the credit cards were in her name and some in mine, so we both took the hit, but the incessant calls were very troubling.

The overall plan should be to settle for twenty cents on the dollar.

If you owe ten thousand dollars, your goal is to settle credit card debt for two thousand dollars. If it's three thousand, so what? My philosophy is that you don't need to pick up the last dollar on the table. Yeah, I know credit card companies suck and I know you're probably going to be talking to someone in India, but remember the overall plan. Settle for much less than you owe. If it's twenty or thirty percent you're doing good.

These guys are going to call you.

India calling!

Don't kid yourself. They will call up to ten times per day and the constant ringing will eventually grate on your last nerve. It doesn't do any good to pick up the telephone receiver and immediately hang up. Why? Because it's a computer calling using predictive dialing software. If you answer, the computer signals that you are home and available to receive calls.

Besides calling you at home during the evenings, the credit card companies will call you at work and they will call your cell phone if they have a record it belongs to you. This will be embarrassing and it will piss you off. So what do you do?

I already told you not to hang up. Don't lift the handset and hang up. Bad idea. Don't be rude because you have to remember that these people are just worker bees making a dollar per hour. They don't know what the hell is going on in your life. They have no idea you have money problems or that your wife is sleeping around with the neighbors. Give the people in India a break. In fact, you can have some fun with them. I'll show you how.

You have to send a letter to the Correspondence Department of that particular bank.

If you get an American bill collector who knows what this actually means, you can ask him or her what the fax number is, but I warn you…these faxed requests get lost.
My suggestion is to send a letter to the address where you send your credit card payment asking them to contact you only by mail. No telephones, just mail. Make sure this is sent Certified Mail Return Receipt. Once they receive mail that was sent Certified, it becomes very hard to lose or misplace.

If they continue to call you after a reasonable time period, inform them that they have a letter on file with this request. Calling you and talking it up after receiving a letter like this is bad news for the credit card companies. Guaranteed you will no longer get any calls about your past due account.

This is bad news and good news. Of course, you don't have the constant, incessant ringing of the telephone, but it's bad news because you don't really know when they plan on charging this debt off. You do not want a charge-off on your credit report. This will be very hard to redeem and more than likely, it will stay on your credit report for the entire seven years. You're going to have to mark your calendar and at exactly 120 days from the time you first started being late, you need to call them. Of course they will be shocked. Kind of like when those distant relatives show up on your doorstep with their suitcases in hand. We were just driving through and thought we'd stay over with y'all. Before the shock wears off at credit card headquarters, ask if they are interested in a bulk settlement.

You will have to tell them your story but before you do that check your pulse and assess the conversation.

Since you're calling them, chances are you will not be connected to New Delhi, so you could get an American who is coherent. It is crucial that you develop a rapport with this person who does the negotiating. If you can't establish a rapport, tell them you changed your mind and hang up. Like every other situation in the world, people do business with people they like. If they don't like you and you don't like them, it just isn't going to work.

elemphathiasm

You're going to have to tell this person your story. In my case, my wife was diagnosed with cancer and I wanted to deal with a woman. Was I looking for sympathy? Not really, but I wanted to be able to reach somebody on a deep level. Whoever you start negotiating with will have to take the offer to their boss and as you wait on hold, you want someone who is selling your story. Do not, and I repeat, DO NOT GET PISSED OFF. Don't be rude, and if you are several thousand dollars apart on the settlement, thank them for their time and say good bye.

Your story can be made up, but it's better to be real.

My recommendation is to be honest because in the end all you really have is your integrity. Sure, you can't pay your debt and that's because stuff just happens. People get sick. We lose our source of income. We have kids going to college. All sorts of life's treasures confront us and sometimes we just hit the wall. If you just screwed up and spent too much money, well, you're going to have to face the battle because settling credit card debt is just part of the process. You're going to have to raise your credit score once again and you're going to have another credit card some day. If you have a spending problem or a budgeting issue, now is the time to work it out-to get your house in order, so be honest about the situation and promise yourself you'll do better.

You still have a little time.

Most charge-off's don't occur until 180 days, so the pressure mounts for the card company to make a deal. If the credit card company has to write the debt to zero, they will get about ten cents on the dollar. You are going in offering them twenty cents on the dollar. It's in their best interest to settle, but like all things in life, they want the most they can get and if they don't have to make a decision like right now, there is no urgency. Get the name and extension of you new, good buddy at credit card central and mark your calendar to call them back in two weeks. Remember, they can't call you and you really don't know when they'll write this debt off, so you've to keep tabs on them.

Make a deal to settle your credit card debt

settle for le$$

When you finally decide the time is near for a charge off and you need to make a deal to settle your credit card debt, don't try to get the last dollar. I've settled debt for twenty cents and some for thirty cents and sure, I could have beat them down even more, but I never did. Because of this philosophy, I have always been given ninety days to pay the settlement. No interest but very strict dates when I would pay. Not bad, right? Make sure you pay as agreed, but before you start the settlement procedure, get this in writing. Usually, they send a letter within a week and I will admit, I've paid before I had the agreement in my hot hands. Why? It's because of the rapport I established with my credit card rep. We had a sense of trust and my story was compelling and I had no thoughts whatsoever that the credit card company would renege. I recommend this only if you have the same gut feeling. Otherwise, wait for the mail. After you've paid the settlement in full, wait thirty days and get a copy of all three credit reports.

Credit Coach

Cards problems?

You're going to need some very specific and sophisticated help to get your credit scores back up and I'll introduce you to the best credit coach on the market. MY own scores shot up 215 points in 90 days and you can do the same. The reason you don't want to just buy credit reports is because you're going to need them every 60-90 days for the first year. You want to know that the settlement is being reported properly. Your contact at credit card central will be of no help and calling them will not work to correct credit reports. To raise your credit score and to keep your report in good shape, you have to deal with the credit reporting agencies: Experian, Transunion and Equifax. Your credit report should report the account as settled for less than full amount and as a result your scores will go up because you are no longer carrying the debt. This is still a negative mark, but it isn't a charge-off. What happens to the rest of the debt? The forgiven part? Remember, credit card companies suck and they want to make sure everybody pays their fair share and that the pain is spread out. They make sure you are not forgotten because your forgiven credit card debt is considered a gift and with any income you will pay taxes on their gift. Yes, expect to get a 1099 in January and remember to report it as income because the IRS will also get a copy of the notice of that generous gift. I told you they sucked.

What is a charge-off and how does it affect your credit?

mud dwellers

Accounting rules dictate that at some point the non preforming debt a bank is carrying be written to a zero balance. This is strictly an accounting procedure and it has very little effect on the rest of the world. In other words, you still owe the money. No free rides, baby. When the debt is charged-off, the bank packages your debt into a huge pile along with a bunch of other slackers and sells these charge-off's in bulk. Usually the mud dwellers –aka collection agencies, buy this type of debt and they pay five to ten cents on the dollar. I admit, I used to be one of them. Yep. All this crying and whining and stress and some guys carrying baseball bats pick up your credit card debt for pennies. If you owed ten thousand dollars, the selling price would be less than a thousand dollars. And this depends on the market and basic economics. Supply and demand. It's possible your debt may only bring pennies on the dollar. Keep this in mind when you negotiate with them.

Dealing with collection agencies-Gag me.

Mr Greedy

Well, you can imagine what happens when greed is in place.  Technically, you owe the entire credit card debt amount and the new owner, or assignee of the debt is into it for next to nothing. They won't tell you that they only paid a dime on the dollar when they start calling you–day and night. In fact, because this is now a commission based matter, you will have a lot of pressure to begin making payments. Try to remember that like everyone else, these people are trying to make a living. They have kids in baseball and they have a car payment too. It's not personal. Just remember if you get to this point that you have a lot of leverage and the negotiating field is much wider, but you are dealing with people who will be much more aggressive than those nice people from India. You'll be praying to speak to those guys in India once again! If you make payments to settle credit card debt with collection agencies I will share my personal thoughts with you on how I would handle the situation.

• I would never pay more than twenty cents on the dollar to a collection agency.
• I would never give them my bank account number or access to any account I own.
• I would send them a letter telling them never to call but to correspond in writing.
• I would make sure the statute of limitations has at least five years left before I made payments.
• I would only pay with a money order or cashiers check and I would always make copies.
• I would be prepared for a lawsuit because if I have a job they will go for a garnishment.
• For these reasons, I would always try to settle credit card debt before a charge-off.

After, Repair Your Own Credit! We're not trying to sell you anything! We want you to have a fighting chance to get out of debt and to put some money into your pocket. If you think this service is valuable, please consider donating to the cause. Thank you!

Learn more at the consumer debt consolidation site where you will learn about your options.

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