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If you’re struggling to pay off a large debt, you may consider a debt settlement option. This debt relief method involves written negotiations with creditors through debt settlement letters. When you receive a debt settlement letter, it’s essential to understand what it means. A debt collection agency usually sends this type of letter, indicating that they are willing to settle your debt for a reduced amount. They will give you a specific deadline by which you must respond to the offer. If you accept the offer, you must pay the reduced amount in full. It’s important to note that this is not the same as debt consolidation or debt management, and it will not reduce your interest rates or monthly payments. However, it does provide an opportunity to pay off your debt for less than the total amount owed. When To Consider Debt SettlementDebt settlement may sound like a dream come true, but it has consequences and shouldn’t be your first option. It is a meticulous process involving a lot of back and forth with the hope that creditors will forgive a portion of your debt. Depending on your negotiating skills and the status of your debt, you could end up paying a significantly lower amount or almost the same amount as your original loan. Debt settlement also eradicates your credit score, significantly lowering it and staying on your record for seven years. You will have difficulties accessing other loans in the next seven years until you’ve rebuilt your credit standing. Any forgiven debt is also considered taxable income, and you must legally report it to the IRS or face penalties. However, if you’ve tried all other debt relief methods and nothing seems to work, then a debt settlement may be the only choice to avoid bankruptcy. It will also give you significant relief from the financial stress that unpaid debt causes. What To Write In A Debt Settlement LetterWhen you decide to go the debt settlement route, it’s time to write a debt settlement letter. If you receive a debt settlement offer from a creditor, you can review the terms outlined. However, if you are the one who will initiate the debt settlement process, you must be the one to write first. Clearly describe your situation when writing a debt settlement letter. Creditors should believe that you cannot pay your debt entirely. Going into detail about your financial hardship will benefit you. However, stick to the facts and avoid embellishing the truth. Some creditors may ask for documented proof such as health records in case the cause of financial hardship is a health condition, illness, or severe injury. Other common causes of financial difficulties that are often considered include disasters and job losses. Be professional in your choice of words and share your complete information, like the total amount owed and your account number, so they can quickly identify your account. Outline the amount you are willing to pay and ensure you already have this figure. In rare cases, a creditor may agree to a fixed monthly installment. However, it’s beneficial if you already have the negotiated amount since a creditor will most likely agree to the settlement when they’re sure you can already pay off the debt. When proposing a settlement amount, start with 30-40% of what you owe, which provides a good negotiation baseline. Expect creditors to negotiate a higher amount. In your letter, include other requests such as updating your credit records, waiving any late payment fees, and reporting your account as fully paid. What To Expect After Writing A Debt Settlement LetterOnce you’ve written and sent your letter, wait for your creditor to respond. Include an expected response date in your letter. While waiting for a response, ensure you’ve saved the amount you indicated. Debt settlement can be a long process, depending on your creditor, and you may have to do several follow-ups. Keep all negotiations in writing, and once you’ve reached a final agreement, request a formal settlement agreement outlining the terms of both parties. Remember, you are entering into a new contract with the creditor, and you want to document the obligations of both sides. This will protect you in the event of issues in the future. Debt settlement may be tricky, but it’s worth considering before filing for bankruptcy. You can achieve the debt relief you need with patience and a cleverly written debt settlement letter. Read this other Processing Card blog to learn tips for negotiating debt settlement. The post Understanding Debt Settlement Letters appeared first on Processing Card. from https://www.processingcard.com/blog/understanding-debt-settlement-letters/ Credit scores are important because lenders consider them when deciding whether to approve a loan or not. A high credit score indicates you’re a low-risk borrower, which could lead to a lower interest rate. On the other hand, a low credit score could mean you won’t be approved for a loan or get a higher interest rate. So, it’s in your best interest to keep your credit score as high as possible. Paying off your credit card balances is one way to improve your credit score, although it’s not as straightforward as it looks. Depending on different factors like credit utilization, the amount paid, and total debt owed, your credit score can improve drastically or may even take a dip when you pay off your credit card loan. Here’s how it works. Factors To Consider When Computing Credit ScoresThere are several factors that credit scoring companies consider when determining your credit score. These factors are different for each company and are not fully disclosed. However, FICO, the most common credit scoring agency, shares its scoring factors on its website. These factors are:
To get the maximum points for each factor, you should:
The credit card utilization rate is an essential factor in determining your credit score. Companies look at how much you’ve borrowed versus how much is available for you to borrow. Ideally, you should borrow less than 30% of what’s available to you to get a high score. A low credit utilization rate increases your credit score. You can always control your credit card utilization rate by paying off your credit card loans to increase the available credit limit. The Impact of Credit Card Payments On Credit ScoresThe impact of paying your credit card loans depends on the state of your credit before the payment. Your credit score will jump several points if you suddenly pay off your credit cards and drastically reduce your debt. However, your score won’t rise as much if you have low credit utilization, even if you pay off the entire amount owed. If you decide to close a credit card, even if the utilization is zero and you’ve paid off all outstanding debts on that card, your credit score could still dive. Credit companies look at the total utilization across all your cards when computing your credit score. A closed card decreases your total utilization because it reduces your available credit. It’s better to keep a card with zero debt open since this increases your overall credit line and improves your utilization rate. However, if you have bad spending habits or if the card has annual fees that you’d rather not pay, then closing the card may be a better option. Credit card issuers send monthly reports to credit bureaus, so you can expect the impact of your payment to take effect within a month. Credit scores are calculated when credit is pulled, and the latest information available is used to determine the score. As a result, paying off your credit card balances is the fastest way to boost your credit score. However, note that not all types of credit card payments will improve your credit score. If you paid using a balance transfer to a new card, a HELOC, or a new line of credit, you shouldn’t expect to see a change in your credit score. This type of payment essentially means you still owe the exact amount. Credit bureaus look at your total credit — not just the credit on one card. The best payment type to boost your credit score is by paying using cash, debt consolidation or personal loan, or a cash-out refinance. Improve Credit Score With Less DebtUltimately, the best way to improve your credit score is to have the least amount of debt. If you should borrow or utilize your credit card, make sure you have enough cash to pay for the purchase. As soon as the bill is due, pay for the credit card balance in full. Avoiding late payments and maxing out your credit card will also keep your credit score healthy. For more articles on wisely managing credit card debt, check out Processing Card’s blog section. The post How Much Will Paying Off Credit Cards Improve Your Score? appeared first on Processing Card. from https://www.processingcard.com/blog/how-much-will-paying-off-credit-cards-improve-your-score/ Debt settlement negotiations can be tricky, and if you’re not familiar with the process, it can be easy to make a mistake that could cost you money. That’s why it’s generally a good idea to work with a professional debt settlement company. However, there are some situations where it might make sense to settle your debt on your own. For example, if you have a small debt, you may be able to negotiate a lower payoff amount with your creditors. Or, if you’re comfortable with the negotiation process, you may get a better DIY credit card settlement than what a debt settlement company would be able to convey for you. Ensure you do things right by following this step-by-step guide on settling your credit card debt. 1. Identify If You Are A Good Debt Settlement Candidate.First, you need to determine if you are a good candidate for debt settlement. This means that you should have significant debt and cannot make your monthly payments. If you only have a small amount of debt, you may be able to pay it off without settlement. You should create a list of every debt that is past due, the creditor’s names, the amount you owe, and how far behind you are. This information will serve as your basis for the plan and help you decide which debts must be handled first. A debt settlement may save you money and help you escape your financial woes, but only if it fits your needs. You can speak with a credit counselor or financial advisor to help you assess your financial situation. 2. Know The Terms Of Your Debts.You should also need to know the terms of your debts. This includes the interest rate, monthly payment, and outstanding balance. You will need this information to make an informed offer to your creditors. 3. Research Your Creditors.The next step is to research your creditors. You should find out who owns your debt, how they operate, and their policies regarding settlement offer. This will help you make an informed offer to them. 4. Create A Debt Settlement Fund.A debt settlement fund will be used to pay your creditors once they agree to your settlement offer. Remember, you may not be required to pay your debt in total, but you are still required to pay a certain amount. In most cases, you will be asked for a lump sum payment of 20 to 50 percent of what you owe. Consider opening an account that’s dedicated only to repaying your debts. Thus, you should start by saving up as much money as possible. Once you have a good amount saved, you can begin contacting your creditors and making offers. 5. Call Your Creditors And Make An Offer.Once you have all this information, you can make a settlement offer to your creditor. Be sure to put your request in writing so there is no confusion about the terms. Your submission should be based on what you can afford to pay and what you think the creditor would be willing to accept. 6. Negotiate With Your CreditorsThe goal of debt settlement is to pay off your debt for less than what you originally owed. To do this, you will need to negotiate with your creditors. This can be a difficult and time-consuming process, but it is essential to remember that you are in control. You can settle your debt for less than the total amount owed or choose not to pay. It is crucial to remember that creditors are not required to accept your offer and may counteroffer with a higher amount. 7. Create A Written Settlement Agreement.Get the settlement agreement in writing if your creditor agrees to your settlement offer. This will protect you if the creditor changes their mind or tries to collect the total amount later. You can negotiate a lower payment or ask for more time to pay. You may also consider using a debt consolidation loan to pay off your debt. 8. Settle The Amount You Have Agreed Upon.If you have agreed upon a settlement amount with your creditor, you must pay that amount in full. You may be able to do this by sending a personal check or money order, or by using a credit card. Be sure to get a receipt or other proof of payment to prove that the debt has been paid in full. If you are considering debt settlement, it is essential to remember that you are not alone. There are many resources available to help you through the process. Be sure to do your research and understand the process before you begin. You can consider numerous unsecured credit card debt settlement strategies, and DIY negotiations are one of them. If you want to learn more ways to set yourself free from debt, check out our resources at Processing Card today. The post Doing Debt Settlement Negotiations On Your Own appeared first on Processing Card. from https://www.processingcard.com/blog/doing-debt-settlement-negotiations-on-your-own/ When you have more debt than you can pay, you may want to consider a credit card debt forgiveness settlement. While it can’t erase all of your debt, it can remove portions, so you end up paying less than what you owe. This article will discuss how to negotiate a settlement with credit card companies and the pros and cons of doing so. What Is A Settlement On A Credit Card?Settlements are often the last resort after other debt relief methods have failed. It involves negotiating with your creditors for a lower sum – usually 40% – 60% of the original debt amount. You must make a lump sum payment or monthly installments until the credit card settlement amount is covered. Remember that a settlement stays on your credit record for seven years. During this time, your credit rating remains poor, and you’ll have difficulty accessing other types of loans like mortgage or business loans. If you qualify for one, you will end up paying higher interest rates. However, since it can provide significant debt relief, many financially challenged individuals still consider this route. They reckon that since their credit score is already poor, a settlement couldn’t hurt them further. The credit card company that forgives more than $600 of the principal amount must submit Form 1099-C to the IRS. You will also receive a copy of this form and be expected to include the amount in your income tax return. The IRS views a forgiven debt as an additional income, and any written-off or settled debt is a taxable income. There are two ways to approach an American Express credit card debt settlement. You can work with debt settlement companies or try a DIY credit card settlement. The latter is relatively easy to do, and with a bit of research, it would save you extra from all the service fees debt settlement companies may charge. How To Negotiate A Debt Settlement With Credit Card CompaniesBefore negotiating a debt settlement, ensure you have a complete picture of all your loans. Determine how much you owe and who your creditors are. If you have multiple debts you want to settle, you need to draw up a strategy and determine who you’ll approach first. Make sure you have exhausted all debt relief methods such as debt management and credit counseling before attempting a debt settlement. Unsecured credit card debt settlement is the final straw before declaring bankruptcy, so ensure you’ve tried other methods. Before attempting a settlement, you must have enough cash to pay the lump sum. Alternatively, if you negotiate for monthly installment, you must be fully committed to meeting those payments. If you are still accumulating debt and are not fully committed to paying off any settled amount, don’t attempt a debt settlement because not following the settlement terms can further damage your credit rating. Here are the steps you need to follow in negotiating a debt settlement with credit card companies:
Be persistent but patient when handling credit card debt settlements. Negotiations require a lot of patience. If you’re not comfortable negotiating on your own, you can hire the services of a debt settlement company to argue your case. Does Credit Card Debt Settlement Work?For many stressed-out borrowers, credit card debt settlement is a lifesaver, and it allows them to get out of debt and begin the long process of rebuilding their credit score. There are many reasons you can get into more debt than you can afford to pay, and some are uncontrollable factors, while others are just bad spending habits. Whatever your reasons are, having a debt settlement strategy to fall back on can be somewhat comforting. While not the most ideal scenario, it is still a way to consider. For more articles about credit card debt management, check out our resources to help you manage finances and think about credit card payments at Processing Card. The post How Does A Credit Card Settlement Affect Your Taxes appeared first on Processing Card. from https://www.processingcard.com/blog/how-does-a-credit-card-settlement-affect-your-taxes/ The credit card settlement process can be confusing and daunting, especially if you’re unfamiliar with the ins and outs of credit and debt. However, understanding the process is crucial if you want to settle your credit card debt successfully. Debt settlement is often the only option available to lenders who find themselves unable to pay off their loans. While credit card debt may be hard to settle, it’s possible. Credit card companies will exhaust all means to collect the total owed, but you can ask them about credit card debt settlement options to finally rid yourself of your debt. Do-It-Yourself Credit Card SettlementMost people considering debt settlement will tap the resources of a debt settlement company or an attorney. However, these will involve additional fees, which can further strain your finances. You may also encounter debt settlement scams that can rob you of the money that should have gone to paying your debt. If you’re confident with your negotiation skills, you can always try to do things independently. Understanding the credit card settlement process flow will help you navigate this reasonably easy situation. Just remember to be patient throughout the entire process and document everything. Keep a record of all the agreements and receipts, as this will help protect you in case challenges crop up in the future. Credit Card Settlement Process FlowFirst, contact your credit card company and let them know you’re interested in settling your debt. You can visit their office or call their customer hotline. Look for the credit collections department and tell them your intent to settle. From there, you’ll need to negotiate a settlement amount. Offer to pay around 40%-60% of the total debt. A low offer will give you room for negotiation. Depending on the status of your debt, the card company can ask for 60%-80%. Once you’ve agreed on an amount, you’ll need to make a lump sum payment to the credit card company. It’s best if you already have a lump sum payment saved up. You can tell the card company that this is the money you’re ready to pay immediately, and they will take it rather than risk writing off your debt as a loss. A lump sum amount will be your leverage when you make negotiations. However, if you don’t have a lump sum, you can negotiate for a monthly installment. Just be sure to meet the installment schedule, as a delay can be seen as a sign of default. Once the credit card company receives your payment, they’ll close your account and notify the credit bureaus of the settlement. You should keep a record of the settlement report and take note of the date of the settlement. Credit bureaus will view a settlement as a negative mark against your credit score for seven years. During this period, expect you’ll have difficulties accessing loans or getting approved for credit. Use the time to rebuild your credit standing by following sound financial principles. While the credit card settlement process may seem complicated, by following these steps, you can successfully settle your credit card debt and move on with your life. Bankruptcy vs. Credit Card SettlementBankruptcy can provide debt relief for individuals unable to repay debts. It can help those who have experienced significant financial hardship, such as a job loss or medical emergency. Bankruptcy can be costly and time-consuming and will require some legal expertise. It involves the public courts, and you’d need to consult a lawyer to make the right decisions. On the other hand, a credit card settlement is an agreement between you and your creditors to pay off your debt for less than what you owe. This can be an attractive option for those who can’t make their minimum monthly payments but still have disposable income. You must pay settlements in full before they are reported to the credit bureaus, and your debt is considered paid. If you cannot make the agreed-upon payment, you will still be responsible for the total debt. Both options will negatively impact your credit score, making it hard to obtain loans in the future. However, the effects are not permanent, and over time, you can rebuild your credit standing. What Happens After Credit Card SettlementUpon settlement of all your credit card debts, your creditor informs the credit bureaus. The debt is now paid, and even though your credit rating will reflect a negative mark for seven years, you can rest assured that you no longer have to worry about debt collectors bothering you. Check out this other blog by Processing Card to learn more about credit card settlement facts. The post Credit Card Settlement: What Is The Process? appeared first on Processing Card. from https://www.processingcard.com/blog/credit-card-settlement-what-is-the-process/ Credit card companies are willing to negotiate credit card bill settlements with consumers struggling to make their minimum payments. While credit card companies typically lose money on settlements, they often prefer this option to write off the debt entirely. For consumers, the main advantage of credit card bill settlement is that it can help them get out of debt more quickly. In addition, settlements can sometimes lead to a lower interest rate, saving consumers money in the long run. The main downside of credit card bill settlement is that it can damage your credit score. However, if you struggle to pay your credit card bills, settlement is your best option. What Are The Pros And Cons Of Debt Settlement?Debt settlement allows you to pay a smaller amount than the total amount borrowed, and it’s usually the last resort if you can’t pay your debt. Financial experts recommend avoiding this option because the downsides of credit card debt settlement can be severe. Other debt relief options you can try first are debt consolidation, debt management, and credit counseling. One of the most significant disadvantages of credit card debt settlement is the huge negative impact on your credit score. Debt settlement is typically considered when your payments have been long delayed, and your account has gone into collections. It’s the common option when third-party collection agencies are already collecting your debt. At this point, your credit score is already at the bottom. Adding a debt settlement may not aggravate it, but the debt settlement will appear on your record for seven years. This will make it challenging to apply for another credit card or loan. If you do so, you’ll be subjected to higher interest fees. Further, debt settlement destroys your credibility with your current creditors, and they won’t likely allow you to reuse your existing credit line. However, this can be a blessing in disguise. Since you’ve settled your debt and paid it off, you now have better control of your money and can begin spending only what you have. You can start building better financial habits without the threat of debt hanging over your head. Your credit score will slowly bounce back as you practice good financial management principles. It’s possible that before the seven years are up, you will regain your good credit score, giving you access to credit lines and credit cards again. How To Have A Successful Credit Card Debt SettlementIf you’ve decided to pursue a debt settlement, you must remember the following tips to succeed.
Get Out Of Debt With Credit Card Debt SettlementDebt can be a crippling thing that causes prolonged stress and sleepless nights, and it can rob you of life’s joy, especially when collectors persistently call at your door. Debt settlement is the most suitable option to help you out of your situation. Use the articles on Processing Card’s blog section to learn how to navigate credit card debt successfully. The post Can I Still Use My Credit Card After Debt Settlement? appeared first on Processing Card. from https://www.processingcard.com/blog/can-i-still-use-my-credit-card-after-debt-settlement/ Choosing the best credit card debt settlement companies can be tricky. Most offer highly competitive rates and services, but they charge about 20-25% of the debt as professional fees. They also take a client with debt amounting to $10,000 or more, although the National Debt Relief will accept clients with at least $7,500 unpaid debt. Despite the fees, consumers have reported savings of up to 30%. Take note also that tons of debt settlement companies run scams. They trick the borrower into depositing monthly payments in an unsecured account and ask them to stop making any payments to their creditors. Be wary of such illegal actions and report any suspicious companies to the FTC (call 1-800-328-4357) or the local authorities. Before you negotiate a debt settlement, you should first understand the pros and cons of credit card debt settlement and decide with your eyes wide open. How To Negotiate A Credit Card Debt SettlementDebt relief refers to strategies designed to make paying off debt more manageable. Debt relief services cover a wide range of options. The umbrella includes debt consolidation, debt management, and debt settlement. They involve reducing interest charges, changing payment terms, reducing the principal amount, refinancing, consolidating debt, and forgiving portions of the debt. Bankruptcy is the final option for debt relief. Although, before you consider either a Chapter 7 or Chapter 13 bankruptcy, you should exhaust all debt relief options first. When it comes to having credit card debt, debt settlement is the standard course of action when debt consolidation or debt management has failed. You should negotiate credit card debt settlement when you’re way behind your payments, especially if your account has entered collections. If you are just starting to struggle with credit card payments, but your payments are on time, consider other debt-relief options first because credit card debt settlement negatively affects your credit score. When looking for the best credit card debt settlement companies, you need to consider the following: 1. A reputable debt relief company will offer free consultations.This is a great way to get to know the company and see if they are a good fit for you. You should feel at ease with the debt settlement company, especially since they will represent you during negotiations. 2. Licensed debt companies will not charge upfront fees.Any company that asks for upfront fees is likely a scam. Legitimate debt companies may also ask you to make monthly payments to an escrow-like account so that when you have enough for a lump sum payment, they can begin negotiations. 3. Legitimate companies will have a good Better Business Bureau rating.This rating lets you know how other consumers have rated the company. Check for further business registration details and research their reputation as debt relief companies. Doing your research ahead of time can help you avoid scams and find a truly reputable company that can help you get out of debt. How Does Credit Card Settlement Affect Taxes?Any forgiven debt is considered taxable income and, as a result, subject to income tax. You are required by law to report this as a gain and pay the necessary taxes. Otherwise, you may face tax penalties which can hurt your financial standing. Debt settlement companies are also taxable and required by law to report their earnings. However, this method remains a cheaper option than bankruptcy despite the taxes and fees associated with credit card settlement. When you file for bankruptcy, you’re required to pay for legal fees as well as liquidate portions of your assets, depending on the type of bankruptcy you’re filing for. If you want to avoid paying taxes altogether, pursue other debt-relief options where you still pay for the entire amount owed. Negotiate on different factors like interest, penalties, and terms. Is A Credit Card Settlement Bad?A credit card settlement may be worth pursuing if you have no other options except bankruptcy. Even though a settlement can damage your credit score, your score is likely already low enough that it cannot be damaged any further. Credit scores decline when debts are not paid on time. The credit card settlement can be beneficial if you are committed to stopping the accumulation of new credit card debt and can commit to a repayment plan. After the settlement, you can rebuild your credit score and become eligible again for better loan terms and competitive interest rates. For more articles on managing credit card debt, check out Processing Card’s blog. The post What Are Debt Relief Services, And Should You Use Them? appeared first on Processing Card. from https://www.processingcard.com/blog/what-are-debt-relief-services-and-should-you-use-them/ When you’re facing financial hardships and can’t repay a debt in full, you can negotiate a credit card balance settlement with the bank or credit card company. You agree to pay a lump sum less than the total amount you owe. Debt settlements are often used to negotiate a debt reduction, but there are some potential risks many people don’t know about. The process of settling debt can be handled independently, or by a debt settlement company. Credit Card Debt Settlement Pros and ConsCredit card debt settlement can be an excellent way for individuals and businesses to get out of credit card debt. However, there are also some potential downsides to this type of debt relief.
How Can I Negotiate A Credit Card SettlementA credit card debt settlement do-it-yourself route is feasible for those who are brave enough to attempt the negotiation process on their own. It is true that there are a lot of legitimate debt settlement companies, but there are also a lot of fraudulent ones as well. Debt settlement companies also charge a percentage of the settled amount as their fee. If you are confident with your negotiation skills, you can always go the DIY route. Here are some credit card settlement advice and steps you should follow. 1. Call your card issuer and inquire about their debt settlement process.For Chase customers, you can call the toll-free number 1-800-935-9935 and ask to speak to the collection department if your account is already in collections. 2. Explain your predicament truthfully.If you are applying for a business credit card debt settlement, be upfront about your business situation and outlook. Discuss why you’re behind with your payments. Avoid being too dramatic or condescending. Be truthful and factual. 3. If debt settlement is approved, get ready to negotiate.It’s helpful if you already have cash saved and you’re prepared to offer a lump sum payment. This will increase your chances of getting a debt settlement approved. Typically, you’d negotiate for half of the amount owed, but the creditor will ask for more. 4. Keep Your CoolBe patient with the multiple back and forth and the lengthy negotiation process. It’s essential to keep your cool while being persistent. 5. Get Everything In WritingWhen the settlement is approved, get everything in writing. A written agreement will protect you in case the creditor changes terms in the future. Get Out Of Debt With A Debt SettlementIf you have tried various debt relief methods, but nothing worked, and you are worried that your debt will never go away, you may want to consider debt settlement. While this method will harm your credit score, it will give you significant debt relief. In the long run, debt relief will help you get back on track to becoming financially healthy. If you are having trouble paying your credit card debt, don’t be afraid to ask your bank or credit card company about debt settlement options. While you can always seek the help of professional negotiators, the process is easier than you think, and you can always attempt it on your own. For more articles about debt settlement and wise credit card use, visit Processing Card’s blog. The post How To Settle Credit Card Debt With Chase appeared first on Processing Card. from https://www.processingcard.com/blog/how-to-settle-credit-card-debt-with-chase/ If you’re struggling to make ends meet, you may be looking for ways to reduce your expenses. You may be thinking about credit card settlement options and how to ask a credit card company for a settlement. While it’s not easy to do, it is possible to reach an agreement that will lower your monthly payments and help you get back on track. Settling With A Credit Card CompanyIndeed, getting credit card loans wiped out is not possible. Credit card companies expect you to pay every penny you borrow. However, it’s possible to have some of these amounts forgiven, so you end up paying less than what you owe. Here’s how to ask a credit card company for a settlement: 1. Call your credit card company and explain your financial situation. Be honest and upfront about why you’re struggling to make payments. Once you’ve explained your situation, ask if the company is willing to negotiate a settlement. 2. If they are, be prepared to offer a lump sum payment that is less than the total amount you owe. You may also need to agree to a lower interest rate or an extended repayment period. Typically, you would want to ask for 40-50% of the amount owed. Most companies expect this and will negotiate for a higher amount, and asking for a lower amount allows you to have room for negotiations. If you’re dealing with a credit card company, expect to pay as much as 70-80% of the original amount. 3. If you can reach an agreement, get the terms in writing before making any payments. This will protect you if the credit card company changes the terms of the agreement later on. 4. Keep up with your payments, even after settling. Missing even one payment can put you back at square one and damage your credit score. When To Ask For A Credit Card Settlement?Credit card settlements, or credit card debt forgiveness, are not as generous as they seem. While they may seem to offer you financial relief, they will negatively impact your credit score and prevent you from accessing other loan types, like mortgage loans or business loans, in the future. The negative mark also stays on your credit rating for seven years, which means lenders will view you as a high-risk borrower for a long time. Therefore, financial advisors don’t recommend debt settlement as the best way to get out of debt. Paying what you owe in full may be challenging, but it will benefit you in the long run. Other methods, like debt snowball and debt avalanche, can help you pay the debt in full while maintaining a good credit score or rebuilding a damaged one. However, if a card settlement is the only available option, you can consider the following credit card settlement advice:
Can You Get A Settlement Figure On A Credit Card?While difficult, getting a settlement figure on a credit card debt is possible. You must be truthful with your financial predicament and patient during the negotiation process. If you have a brick-and-mortar store, learn how to accept credit card payments by reading this other blog by Processing Card. The post Can You Make A Settlement With A Credit Card Company? appeared first on Processing Card. from https://www.processingcard.com/blog/can-you-make-a-settlement-with-a-credit-card-company/ |
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