Tips for Negotiating Credit Card Debt

debt avalanche method

Why does paying off the highest interest rate credit card first make the most mathematical sense? The card with the highest interest rate is usually the one that will cause you the most financial pain.

1. Have your bills and budget in front of you.
2. Have a note pad with a working pen.
3. Confirm exactly how much you owe and write it down.
4. Ask to speak to the debt settlement, loss mitigation or workout department.
5. Negotiate the amount until you reach the number you can afford.

Here’s how to respond when you are sued for credit card debt:

1. Don’t ignore the summons. When you get a court summons for credit card debt, pay attention to it—and make a plan of action.
2. Verify the debt.
3. Consider debt settlement.
4. Contact an attorney.
5. Look at your budget.
6. Request a payment plan.
7. Make a lump-sum payment.

If you can’t pay your credit card balance, there’s help available. Many credit card issuers are offering assistance programs that include benefits like temporarily pausing payments and/or interest through deferment or forbearance, lowering interest rates, forgiving minimum payments and more.

Tell the debt collector that you’d like to settle your debt and you can pay 10% (or whatever amount you decide to start with) and tell them the date you can make your payment. This could take several days. If they accept your offer, they may ask for your bank information. Don’t give it to them.

Unsecured debts, such as most credit card debts, generally require the creditor to file a lawsuit against you and obtain a judgment before it can take drastic collection actions. Once the creditor has a judgment, it might be able to garnish your wages, levy your bank account, or place liens against real estate you own.

The time limit, either 6 or 12 years depending on whether it is capital or interest, will start running from the beginning again if you write to the lender, admitting or agreeing you owe the debt. This is known as ‘acknowledgement’. The rules are different if you owned the house jointly with someone else.