Credit Card Debt Negotiation - Is It Right For Me?

Online, January 16, 2012 (Newswire.com) - It doesn't take a PhD to figure out that these days, most people are struggling financially. Dips in the economy, joblessness and inflation have conspired together to cause hardship for many Americans.

With those hardships has come increased use of credit cards. When people are between jobs, or have had an unexpected expense pop up, they may turn to credit cards in order to meet the unexpected obligation. The problem is that this only adds to their already overwhelming debt. And before you can get back on your feet financially, you must first get rid of your credit card debt.

Credit card companies have one main priority: Getting you to repay your debt so they don't lose money. If it becomes evident that you may not be able to pay your balance due, you may find that things might shift in your favor. It puts you in the unique position of being able to negotiate to make repaying your debt more doable.

When you speak with your credit card issuer, let them know that you are facing bankruptcy if you aren't able to negotiate some sort of debt relief. Credit card companies know that if you do declare bankruptcy, it's possible that the entire debt will be wiped out because credit card debt is seen as unsecured. This is the worst-case scenario for the credit card company.

When you begin debt negotiation, let your credit card company know that you want to make good on your debt, but you don't know if you can make it happen. At this point, you should offer to pay 25 percent of your credit card balance over the next few months in exchange for the company freezing interest costs and closing the account.

Bear in mind that you may have to spend time on this - more than one phone call and maybe hours of your time. Be sure to let the company know that you are doing all you can to be sure you have the money to repay a negotiated amount over the coming months, and that this is your only alternative other than bankruptcy. If they understand this, you have a better chance of getting the negotiation agreement you seek.

But don't forget: credit card debt negotiation does come at a price. You will find that it will leave scars on your credit report, lowering your credit score. But it can be an effective way for you to avoid bankruptcy, and allow the credit card company to recover at least a portion of the debt you owe.