Can you really negotiate with credit card companies to pay less than the full balance?

20 Jun

Can you really negotiate with credit card companies to pay less than the full balance?

You’ve heard the phrase: When something sounds too good to be true, it probably is. Well, sometimes, though very rarely, what sounds too good to be true is as true as true can be.

A little background information–Credit card companies have loaned billions of dollars to millions of people. That really is what using credit cards is all about. You want to buy something you can’t afford, and the credit card company agrees to loan you the money so you can buy it. Most people don’t think of credit cards in those terms. It is time to view credit cards in a realistic way. This is probably the most important nugget you can take away from this writing.

In addition to lenders having so much money out on the street, add to the mix that thousands of people find it necessary to walk away from their debts by paying nothing back to their creditors by filing bankruptcy. Many creditors are truly open to negotiating with people who have the funds to pay a portion of the loan back to them.

The process is not an easy one, nor is it pleasant. Along with having the temperament to stick to your position during negotiations, you must continue to say “no” when the creditor says you only have to pay 90% of the full debt, or 75%, or 50%. It isn’t impossible to come to an agreement to pay as little as 25% of what you owe. You can also hire an attorney to negotiate with creditors on your behalf. They do this every day for people much like you. It is a good way to take the stress you would experience by doing it yourself out of the equation.

One very important note: you must also have the money available to pay to the creditor in one lump sum, or in some circumstances over the course of just a few months. You must talk with your accountant or attorney to discuss whether or not you should choose this option to erase your debt. Enlist the expertise of professionals so you don’t make mistakes that hurt you later.

If you don’t have enough money to pay off all of your unsecured debts through negotiated settlements, you could run into problems if you find it necessary to file bankruptcy at a later date. Filing a Chapter 7 bankruptcy generally provides an avenue to pay nothing to your remaining unsecured creditors, as long as your income and assets fall within the legal guidelines. If you pay one credit card company a reduced amount through negotiated settlement, and pay nothing to other unsecured creditors, the bankruptcy court views this practice as favoring certain creditors over the remaining creditors of the same class. All creditors of the same class (secured, priority or unsecured) must be treated in the same manner according to bankruptcy law. The court will investigate your financial history for a period of 2-3 years prior to filing bankruptcy. Get good legal and financial advice before you proceed with actions that harm your position in the long run.

You will find additional resources at my website that pertain to this topic:

Drop by, get in touch with me through email and begin to work toward freedom from financial stress!

All my best!

Betty Anne


Follow me on Twitter @sunsetdreamboox   

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