If you have credit card debt and are the victim of credit card harassment or debt collectors hounding you on the phone, you may want to consider negotiating a debt settlement to bring their collection efforts to an end.
Debt collectors and debt collection agencies make their money by collecting as much from you as they can.
Before making their first phone call to you, they have either been contracted by the original creditor to work on a percentage basis (keeping a certain percentage of money that they collect) or "buying" your debt for pennies on the dollar and hoping to turn a profit by collecting more than they paid out.
Either way, everything they collect is profit for them after subtracting their costs of collecting the debt.
Let's get back to your credit card debt.
Suppose you owe $2,500 on a card with a minimum monthly payment of $100.
Now let's suppose that you actually have five of these kinds of cards and you are juggling a $500 total monthly payment on credit card debt.
Every month you fall behind on at least one of these cards, and now your credit report is full of past due balances and your FICO score is in the basement.
What can you do? If your collection calls are coming from the credit card companies themselves, then you still have a chance to work out a repayment plan with them.
Many companies will work with you because, ultimately, they want their money.
Some may drop your interest rate, allow for decreased payments for several months, or restructure the amount you owe them so that you are able to meet your obligation.
The advice here is to call them once you know you are in trouble financially - don't wait.
Now if you have waited too long and your past due debt is assigned to a debt collection agency, most credit card companies will no longer talk to you and they will refer you to the debt collector.
This is where you can negotiate to lower your debt.
Negotiate down, offer a low-ball settlement (as long as you can pay it) and get everything in writing before paying anything.
Many people have cut their debt by up to half or more.
This won't improve your credit rating, but if it's in the ditch already, every dollar saved will feel like a victory.
Before you begin the debt settlement process, you should brush up on your negotiation skills.
Remember that the best negotiators are those that can keep a cool head.
Being in debt is, by definition, fraught with emotion.
You must set that emotion aside in order to advocate on your own behalf.
In addition, have a clear understanding of what you can afford to pay - either in a lump sum or through a payment plan.
Debt settlements can backfire when you agree to a plan that's out of your reach; if you can't keep up your side of the bargain, debt collectors will come after you with both barrels.
Finally, never, ever give a debt collector your bank account information.
Pay via money order.
Debt collectors are notorious for making unauthorized withdrawals from consumers' bank accounts.