Make Debt Negotiation Work For You

Online, October 4, 2011 (Newswire.com) - Credit card companies have their own set of priorities, the first of which is to turn a profit. This means that the companies have a heightened interest in making sure you pay your bill each month.

If it becomes evident that you can't pay off your balance, the priority for the card issuer becomes getting as much money out of you as possible, so that they don't have to write off the debt. They would rather attempt to collect as much of the due balance as possible to avoid charging off the debt on their income statement, which can cause credit issuers' stocks to fall, and result in their management getting smaller bonuses and even lower dividend payments to stockholders.

Credit card issuers don't want you to file bankruptcy, because doing so would wipe out the entire credit balance, since it's unsecured. This is not a good situation for the credit issuer.
You may be able to negotiate your debt. By calling the credit card issuer and being honest about your situation, you may be able to get the issuer to agree to allow you to pay 25 percent of your balance over the next few months, as long as the issuer agrees to freeze interest costs and close the account.

But you should know there are costs to credit card debt settlement agreements. Your credit score will take a hard hit. But bear in mind that if you are already missing bill payments, it's likely that you won't see any real damage to your credit score. But you will have a difficult time getting any other loans - you certainly won't be able to get any loans with low interest rates.

Here's the bottom line: Debt negotiation, while it isn't the best-case scenario, is better than declaring bankruptcy. It will allow you to avoid bankruptcy, while allowing the credit card issuer to collect a portion of the debt you owe.

If at all possible, do not allow yourself to be put into this situation. You should work hard to keep your credit card debt in check, and this starts with paying off your high interest credit card debt. Pay above and beyond the minimum balance each month, until the card with the highest balance is paid off. Then apply that amount to what you owe on the next one, until it's paid off, and so on.

Bear in mind that this process may take a while - even years. But the key to getting control over your debt is to pay it off as fast as possible.