How to Settle Credit Card Debt: 4 Quick Tips

Credit Card Debt

The average American household faces $8,398 in credit card debt. If you’re facing a mountain of credit card debt, then you may want to consider credit card settlement. Knowing how to settle credit card debt means you can take control of your financial situation. 

Read these four tips for DIY debt settlement and take the first step towards financial freedom. 

1. Determine If Debt Settlement Is Right for You 

Consider all of your options, such as debt consolidation, credit counseling, or bankruptcy. You may find that settlement isn’t the best course of action for your financial situation. 

Are your accounts delinquent? Many creditors won’t consider settlement until your account is over 90 days behind. You should also have a lump sum of money available to pay the creditor as a part of the settlement agreement. 

2. Know the Terms You Want 

When you go to negotiate your settlement, you need to know how much you can pay and how the settlement will get reported on your credit report. You need to think about how much you can pay as a percentage of the amount you owe and an actual dollar amount. 

When determining what you can afford, look at your current budget to establish a concrete number. Don’t forget to account for taxes you may owe on the forgiven total. 

As for the reporting, your credit score has already taken a beating from the several months of delinquent payments. This is your chance to redeem yourself.

Most creditors will report the settlement as “settled” or “paid settled” but what you want to negotiate for is “paid as agreed”. This will minimize the damage to your credit. 

3. Make the Deal 

When it’s time to negotiate your settlement on your own, have patience and persistence. It can take several calls before you reach a desirable agreement. Don’t be afraid to try calling back and speaking with a different representative or asking for a manager. 

Stay clear and concise about your current financial situation. Stay focused on your goal and start with a lowball offer. Then work your way towards a middle ground while avoiding an agreement that’s more than you can afford. 

Once you reach an agreement, do not do anything until the creditor sends you a debt settlement letter. This will hold both you and the creditor accountable. Be sure to follow all of the agreement terms, or you risk the creditor retracting the agreement. 

4. Seek out Assistance 

Sometimes you need a little help to figure out what the best solution is for your financial situation. It can help to speak with an expert like to identify your options and choose the best solution. 

The process is relatively easy. You’ll fill out an application that won’t affect your credit score. Your application will then get matched with the best debt relief programs. You then review and compare your available offers and choose the best one for you. 

You Now Know How to Settle Credit Card Debt

With these four tips, you know how to settle credit card debt and get yourself one step closer to financial freedom. Remember, you need to be realistic about what you can afford and have patience. This will ensure you get the best deal for your situation. 

Check out the lifestyle section of our blog for more helpful articles on navigating the challenges you face in life. 

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