Credit Card Debt Negotiation

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Credit Card Debt Negotiation

Credit card debt has reached an all-time high in the last few years and many have turned to bankruptcy but there are other options to consider. But before doing anything, do some research, analyze which solution will work best for you, look at your debt and the amount of income you’re making, and then call the company and see if you can negotiate.

Credit card (Photo credit: Wikipedia)

In reality, there are three basic methods that can help with the credit card debt settlement process. The first is the lump sum settlement. If you have a large sum of money available, you may be able to arrange for a settlement that is less than what is owed. Sometimes this amount can be divided into three payments. However, by choosing this method, it will affect your credit score in the same way as if it were a charge-off.

Another method that can help with credit card debt is what is known as the workout arrangement. Under this method, the bank will lower or make void, your interest rate and usually will stop with punitive fees such as over-limit charges or late fees. These terms may be temporary or permanent, so that you can pay the balance. However, with this method, your credit line may be cut and you may not be able to use the card. Also, your credit score will be affected but if the company finds that you’re making payments on time and as expected, your credit score and history will be reevaluated.

The debt management program is when you talk with a counselor and he or she makes arrangement s with all of your creditors. In this program, all of your credit card account will be closed. This process will not affect your credit but it will hurt your score. But, this is a wiser a smoother way to handle your debts. There is usually a small fee with this method but if you can’t pay the fee, they will usually accept you as a client.

Lastly, there is a forbearance program that gives you relief for several months until you are back on your feet. In this program you will still have to pay for all that you have borrowed and sometimes more.

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