How to Negotiate Credit Debt


The median credit card debt among Americans currently stands at $3,100. If these numbers from Credit Karma are anything to go by, many Americans have credit card debt problems. Considering that the average household income is $61,937, most people use a considerable fraction of their annual income to reduce debt.

However, credit card debt can quickly become unmanageable, forcing one to negotiate with the credit card company. Working with your credit card company can help you come up with a solution that works for both parties.

If you have an unmanageable credit card debt and would like to negotiate with your credit card company but don’t know how to go about it, we can walk you through the process. Below, we have provided you with a detailed guide on how to negotiate your credit card debt.

Research Your Negotiation Options
You should understand the different options available to consumers before entering negotiations with a credit card company. Credit card companies accept various arrangements.

Lump-Sum Agreement
In the lump-sum payment agreement, the debt holder can play a lump-sum amount lower than the initially owed debt. You can only use this option if you have enough cash available to facilitate the payment.

Workout Agreement
With the workout agreement, the credit card company agrees to reduce the interest rates, waive or lower the payment, and eliminate late payment penalties on the approved plan. This option allows people with credit card debt to reduce their overall debt and complete the payment in a shorter time.

Hardship Agreement
The hardship payment agreement suits people that cannot facilitate credit card payments due to illness, natural disasters, job loss, any other hardship. The company can allow for low minimum payments and reduced interest rates and fees. The person in bed can also suspend credit card payments for some time without having to worry about a penalty.

Stay Consistent and Document Everything
The process of negotiating credit card debt can last a few days or weeks. Before contacting the company, understand how much debt you owe, the interest rates applicable, and essential details about your account.

Do not give up after the first discussion since it may not go as expected. Always document every detail discussed and the representative you talk to. If you reach an agreement with the credit card company, make sure you get the terms of the agreement in writing to avoid any future problems.

Understand the Disadvantages of Credit Card Debt Negotiation
Credit card debt negotiation can come with a few cons, and you need to understand them before choosing this option. Negotiations can negatively impact your credit score depending on the outcome. Credit card companies may close your account or find ways to prevent you from using their credit line. It would help if you also understood that forgiving credit card dates can qualify as taxable income.

Negotiations can drag on for a couple of weeks, but you may end up regretting not taking up the option. There are various settlement options you can choose from to satisfy both parties. However, always understand the disadvantages before negotiating a credit card debt.

Are you in the Arizona area and finding it hard to negotiate credit debt? Tio Rico de Ayuda can lend a helping hand. We will help you with your personal loan as well as advise you on how to negotiate your credit debt.