How To Negotiate Credit Card Debt

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If you’re someone after the recent recession, delayed in making credit card payments and lacking cash flow, or just facing general financial hardship, you can negotiate your credit card debt. me.

Negotiate or settle, your debt means you have to pay it for much less than what you owe your creditor. The amount you must pay is mutually agreed upon by both you and the creditor, and often experts (usually attorneys) are involved to help you achieve this negotiated amount.

While debt settlement is often a last resort because of the damage it can do to your credit score, it can be worthwhile for anyone struggling with a credit card balance. manageable but may not be able to pay.

Below, CNBC Select spoke with Leslie Tayne, a debt forgiveness attorney and founder of Tayne Law Group, about where to start negotiating credit card debt, how to find the right assistance, and what to expect. you can expect.

If you believe you fit the criteria for a debtor, meaning you simply cannot afford to pay the past due debt and are unable to make the minimum payments, the first step in You are doing your own research.

While searching for debt settlement programs, find a local debt relief attorney or debt specialist such as a credit counselor by visiting a credit counseling firm, such as the National Foundation for Credit Counseling or the Association of Consumer Consumer Credit Counseling Agency. You can also check with your state Attorney General and/or local consumer protection agency to find a reputable debt relief law firm. The best debt settlement companies should be accredited and have a Better Business A+ rating.

Tayne suggests finding someone familiar not only with creditors but also with tax and credit matters. They will know the details and details of the process and have relationships in place that you can benefit from.

“Because they do this for a living – and you should only go to someone who does this exclusively – they will have a long-term relationship with creditors, which can allow for more leverage and to understand what different creditors are looking for in payments,” she said.

Unfortunately, finding the right professional to help you manage debt takes some time and effort.

“There are a lot of companies out there that claim they can help, but you should be careful with who you work with because there are many implications when it comes to dealing with credit card debt,” says Tayne.

Not all debt settlement programs are eligible, so it’s important to verify through the sources we listed above before proceeding.

When researching the best debt professionals to turn to, your first clue should be to make sure it’s someone on the other end of the phone linked to a real company address, not a PO Box. Check the company’s website first to look for their contact information where a physical address will be listed and please call them and confirm.

Debt settler scams are all too common and something to watch out for as they enjoy attracting new customers.

“It’s easy to buy information about you and your debt, so it looks legit, but you’ll need to do your due diligence,” says Tayne. “Nothing should be full of pressure and nothing should have promises.”

It’s a red sign that the debt settler could be a scam if they make any straightforward promises or guarantees about how much money they can save you or how long it will take. to an agreement.

“There are simply no guarantees in settling the debt,” says Tayne. “Creditors change their policies frequently, and anyone who promises you… is not acting in your best interest.”

Basically, if it sounds too good to be true, it probably is.

Tayne adds that the cost of these services depends on who you go to, but there shouldn’t be any upfront fees that you have to pay to see the results. Reputable professionals will not charge you before they do any work for you. That means the call to the debt forgiveness company, as well as any conversation about potential services and solutions, should be free.

“We don’t get paid until the customer’s account is settled,” Tayne said.

Start by knowing exactly how much you owe and to whom you owe it. Make a list of who your creditors are and collect all of your financial documents, such as credit reports and credit card statements, that have this information. You can check your credit report weekly for free from each of the three credit bureaus on DailyCreditReport.com.

“The professional you’re working with will use this information to better understand your overall financial situation and how much you can afford in monthly payments,” says Tayne.

She also suggests writing down any questions that arise while you prepare your documents and to take your time when choosing an expert to help you. If you feel comfortable, hold a Zoom meeting instead of a call (in case you can’t meet in person during this time).

“You’re going to want to make sure that all the work is done in one office, not the call center,” says Tayne. Call centers work like sales centers, and they lack the direct service that a reputable debt company would provide. This makes for you as a consumer an unpleasant experience and proves that it is much harder to update status or answers.

“You want someone working for you that understands the financial part of the puzzle and doesn’t work on the sales scenario,” she says.

A very important part of negotiating your credit card debt is understanding what to expect along the way so there are no surprises. Know that your credit score will likely take a hit in the process as you work to reduce your debt.

Your credit will continue to be hit by late fees piling up and your balance continuing to grow as you negotiate, but once your debt is paid off, your score can rise again.

The time of the entire process will depend on each client’s case. Some cases may require several phone calls, while others benefit from one or more face-to-face meetings lasting an hour or more. “The total debt settlement process takes one to five years depending on the creditor, budget, and complexity,” says Tayne. “But that doesn’t mean it couldn’t be done sooner.”

Tayne notes that while you may see your credit score drop, most of her clients report an increase in their scores before the negotiation is complete. And finally, your account will be updated and your credit utilization rate will be much lower than before because you’ve settled your balance and cleared your debt. Both of these are factors that increase your credit score.

If simply paying off your credit card debt isn’t an option at this point, and your balance is piling up, negotiating can wipe this debt off for much less. with the original amount.

“You can then work toward planning for the future and setting new financial goals without the burden of debt,” says Tayne.

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