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Financial Guide: How to Effectively Negotiate Credit Card Payoff

How to Negotiate Credit Card Payoff
Negotiating credit card payoff may be advisable for debtors who have exhausted the possibility of credit card debt consolidation and other avenues of discharging credit card debts.
WealthHow Staff
Last Updated: May 25, 2018
People, who are straddled with credit card debt, may be relieved to know that negotiating with credit card companies is a distinct possibility. Although the companies operate with the intention of generating maximum profit, they may agree to negotiations and may be willing to accept, less than what is actually due in order to cut short their losses.
Instead of writing off the entire amount as bad debt, it is sensible to try to reach a consensus on the amount that can actually be recovered. Doing so will help the company recover at least a small portion of the debt.
The company need not turn over the debt to a debt collection agency or sell it off at 5 or 10 percent of its value, to agencies specialize in buying and recovering the supposed bad debts.The debtor may not be indebted to the credit card company alone. There may be a number of creditors who are intent on claiming their secured and unsecured debts.
In the event of the eligible debtor filing Chapter 7 bankruptcy, the credit card company may find itself in the unsavory position of not recovering the debts or receiving a paltry sum in lieu of the dues. This is because Chapter 7 works by absolving the debtor of the responsibility of having to discharge debts that cannot be requited.
Advantages of Negotiating Credit Card Payoff
man-Negotiating-Credit-Card-Payoff
The debtor also stands to benefit by negotiating with credit card companies since it may be easier for the debtor to deal with the in-house collection agency of the company rather than a third party debt collection agency.
The latter may sometimes adopt unethical measures to collect debts since the debt collection agency earns by way of commissions. In fact, dealing with a debt collection agency may not be the debtor's worst nightmare. The creditors may sue the debtor and obtain a writ from the court permitting wage garnishment.
In other words, a portion of the debtor's salary may be withheld by the employer in conformity with the writ issued by the court. It's evident that negotiating with the credit card company is a better option than being stranded with revolving debts that cannot be repaid.
Consequences
Although negotiations are the best bet for a person, who is in deep debt, it's possible that negotiations may fail. If this happens, the credit card company may persist and the inability to recover debts will reflect in the credit report.
Revolving debts, that can't be recovered, result in the debtor receiving a R9 rating that is self-explanatory and deters creditors from extending loans to the borrower. If negotiations are successful, the credit card company may agree to remove the information about defaults. If not, the information will remain on the credit report for a period of 7 years.
You Ought to Know That ...
Negotiating credit card payoff is not everybody's cup of tea. It may be prudent to hire a lawyer who can suggest the appropriate course of action. The lawyer would typically try and impress upon credit card companies the futility of trying to collect payments by illustrating the financial position of the client.
An agreement may be reached through a series of negotiations and counter negotiations. You may do it all by yourself as well, however the tact with which the layer can put forth your uncertain financial position is unmatched. When the settlement is reached, demand the negotiated pay-back amount description in writing. Do not accept anything verbally.
Wait for the creditors response, do not show over enthusiasm to settle the debt. This attitude may help you land up in a soup, as the creditor now has the upper hand to demand a full payment of the balance amount.
Before embarking on negotiations, debtors should try credit card debt consolidation or try paying off credit cards by availing a home equity loan since a non-revolving credit has a less negative impact on the credit score of the borrower.