Credit Card Negotiations Versus Bankruptcy: Manage Your Own Debt Negotiation

When you’re drowning in credit card debt, it can sometimes seem like bankruptcy is the only possible outcome. However, many card banks offer alternative arrangements, including partial credit card settlement, an offset agreement, or even just a short-term bill reduction. These arrangements can make the difference between bankruptcy and keeping your finances afloat.

While these alternatives seem like the perfect solution, there is a problem: credit card negotiation can be a long and arduous process. It’s something consumers can tackle on their own, but those in debt should expect to face a series of lengthy phone calls and a frustrating search for random details of their financial history.

For those who think they are ready to challenge the process, here are the steps to take to negotiate their own credit card debt:

1. Determine what solution you want.

First, research the available credit card settlement options and determine which option will work best for your situation. There are four main settlement options available: lump sum settlement, debt management plan, compensation arrangement, and forbearance agreements.

2. Examine your own debt.

Before approaching a bank or engaging in any type of negotiation, look at your own debt. In general, it is helpful to request a breakdown of your bill from the credit card company. Then take a close look at the bill and determine how you paid off your debt and what type of debt you are facing. This means you consider how much of the debt comes from actual expenses and how much comes from late fees, over-limit fees, and other similar penalties. Those with credit card debt are often surprised to find out how much debt comes from these types of penalties.

At this stage, it is also beneficial to take a close look at your own income to determine how much you are actually able to afford. Create a detailed budget so you know what you can afford. This means that while it shouldn’t be overextended, it’s important to consider as much of the debt repayment amount as possible.

3. Negotiate.

It is only in this third stage that you will actually contact the company and begin credit card negotiations. Be prepared for this to be a long and tiring process, and for it to take a series of phone calls to get something done. Don’t start with a letter or email, as they are often unread and rarely responded to.

Remember, those who answer the phones initially are not usually the ones with the authority to help you with your problem, regardless of what they say. Typically, you want to enlist the help of a higher ranking person, such as a credit manager. Once you have the right person on the phone, be direct about what you want, but stay calm throughout the process.