Credit Repair - How to Negotiate Credit Card Payoffs
In the past many people have hired lawyers or debt settlement companies to negotiate their credit card payoffs for them.
This is still an option, but you need to be careful before you decide to use them.
Many times when you use debt settlement companies to handle your negotiations, you will end up with marks on your credit report that are as bad as bankruptcy.
Another thing to keep in mind if you are thinking about hiring a professional to do this for you is the cost.
Many will charge you an initial set up fee, then either several hundred dollars or a monthly fee.
One thing to keep in mind is these companies are also paid a percentage of what they negotiate your payoff amount to.
This percentage is paid by the credit card company.
So it's in their best interest to negotiate a higher payoff amount than you want.
But there is hope.
Everything they do for you, you can do yourself for a fraction of the cost.
The way these services work is they submit dispute letters on your behalf, and charge you hundreds of dollars to do it, with no guarantee of success.
They send the same letters you can for the cost of a stamp and a little bit of time.
Sit down before you start calling them and determine how much you can afford to pay them.
Write down whatever that amount is so you know that you can not go over that amount in your negotiations.
Also figure out how long it will take you to pay off the amount you agree on.
Use several different amounts to get a rough timeline so you know about how long it will take no matter where you end up in negotiations.
The easiest cards to settle are going to be those that you are behind in payments on already.
If you are not behind, it will be harder to negotiate a payoff because there is no indication that you are having trouble paying the bill.
Now when you sit down to make the call, document everything.
The name of the person you talk to, date and time of the conversation, what you agree to, and anything else that strikes you as important.
I recommend that you start out with an offer to pay off 25% of the total debt.
Don't worry that its too low, they are going to counter with something close to 100%.
If you have several cards that are behind in payments, it will be easier to get them to settle lower.
Be prepared to settle at around 50% or a little higher.
You need for them to believe that a settlement that high is going to be very difficult for you.
Then you can make the stipulation that if you settle that high, they need to remove all late payment notations on the account, and show a notice that the account was "Paid as agreed.
" If they don't agree with those tell them you will not pay anything then and will stop paying them all together.
After that they will become much more likely to give you what you want in negotiation.
Before you pay a penny toward the negotiated amount, tell them they need to send you a letter spelling out and agreeing to the terms negotiated on the phone.
If they don't include everything agreed to on the phone, call them back and tell them about the discrepancy.
Let them know that if everything agreed to on the phone is not in the letter you will not pay anything.
Start this process with the card with the lowest balance.
This will be the quickest to pay off, and then free up the money from that payment to put toward other cards.
After you pay that card off, move to the next card with the lowest balance and repeat the process.
This is still an option, but you need to be careful before you decide to use them.
Many times when you use debt settlement companies to handle your negotiations, you will end up with marks on your credit report that are as bad as bankruptcy.
Another thing to keep in mind if you are thinking about hiring a professional to do this for you is the cost.
Many will charge you an initial set up fee, then either several hundred dollars or a monthly fee.
One thing to keep in mind is these companies are also paid a percentage of what they negotiate your payoff amount to.
This percentage is paid by the credit card company.
So it's in their best interest to negotiate a higher payoff amount than you want.
But there is hope.
Everything they do for you, you can do yourself for a fraction of the cost.
The way these services work is they submit dispute letters on your behalf, and charge you hundreds of dollars to do it, with no guarantee of success.
They send the same letters you can for the cost of a stamp and a little bit of time.
Sit down before you start calling them and determine how much you can afford to pay them.
Write down whatever that amount is so you know that you can not go over that amount in your negotiations.
Also figure out how long it will take you to pay off the amount you agree on.
Use several different amounts to get a rough timeline so you know about how long it will take no matter where you end up in negotiations.
The easiest cards to settle are going to be those that you are behind in payments on already.
If you are not behind, it will be harder to negotiate a payoff because there is no indication that you are having trouble paying the bill.
Now when you sit down to make the call, document everything.
The name of the person you talk to, date and time of the conversation, what you agree to, and anything else that strikes you as important.
I recommend that you start out with an offer to pay off 25% of the total debt.
Don't worry that its too low, they are going to counter with something close to 100%.
If you have several cards that are behind in payments, it will be easier to get them to settle lower.
Be prepared to settle at around 50% or a little higher.
You need for them to believe that a settlement that high is going to be very difficult for you.
Then you can make the stipulation that if you settle that high, they need to remove all late payment notations on the account, and show a notice that the account was "Paid as agreed.
" If they don't agree with those tell them you will not pay anything then and will stop paying them all together.
After that they will become much more likely to give you what you want in negotiation.
Before you pay a penny toward the negotiated amount, tell them they need to send you a letter spelling out and agreeing to the terms negotiated on the phone.
If they don't include everything agreed to on the phone, call them back and tell them about the discrepancy.
Let them know that if everything agreed to on the phone is not in the letter you will not pay anything.
Start this process with the card with the lowest balance.
This will be the quickest to pay off, and then free up the money from that payment to put toward other cards.
After you pay that card off, move to the next card with the lowest balance and repeat the process.
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