Credit card debt is the national issue faced by most of the Americans nowadays. As a card user, when your outstanding balances have become overwhelming and you have lost your financial ability to pay them off, what must you do? You must dig yourself out from the hardship immediately by applying the right financial solution.
In order to become debt free, you are advised to negotiate with your banks or card providers to request for debt reduction. You are not required to declare bankruptcy because during financial crisis, many creditors are willing to accept the settlement proposals from the debtors who are knee deep in debt. Let me share with you 5 key steps you should take so that you can complete the debt negotiation process successfully.
# Step 1: Find out how much savings you have on hand
You totally can’t settle your debt with your creditor without having any cash on hand. Before commencing your negotiation process, you must first assess your financial position to find out how much money you have in your saving account. By doing so, it will be easier for you to propose the settlement amount.
# Step 2: What do you want to negotiate?
You need to get yourself prepared on what you want to offer to your creditor. Do you prefer to settle your debt one time off? Do you think proposing a monthly payment plan with lower interest rate works better for you? Do you require your creditor to waive all the late fees and over-the-limit fees? You need to decide carefully before conveying your message to your creditor.
# Step 3: Communicate with your creditor
Call up your creditor or write in to the person in charge from credit department. Make sure the person you are communicating with has the authority to make decision on your case. Bear in mind that you must be consistent in making your request. Don’t make different offers every time you call.
# Step 4: Protect your credit score
As you are aware, settling debt will definitely spoil your credit score. In order to protect your credit, you are reminded to set your condition when you are bargaining with your creditor. Get the assistance from your creditor to give more favorable report to the credit bureau. It is good if you can get your creditor to report your account as “paid” rather than “settled”.
# Step 5: Obtain written agreement from your creditor
Once your creditor has accepted your settlement proposal, you are advised to request for an agreement.
The last reminder for you: You should only make your payment after you have received a written agreement from your creditor stating the new terms clearly. Send the payment by check through registered mail. Do not provide any of your account details to your creditor. Make sure you handle the entire settlement process in a careful manner.
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