Sometimes just about everyone needs help with his or her credit card debt. Your current financial problems may be due to the loss of a job, an extended illness, or other circumstances beyond your control. While it is possible to go through a debt settlement company to arrange payoff terms with your creditors, the truth is that you can work directly with your creditors to arrange a payoff plan that will ease the impact on your credit rating and allow you to lower your debt in less time than you think.
Before you can begin the task of arranging payoffs on your credit cards, it is important to get a handle on your financial state. This means creating a workable budget that is based on the current amount of income you have coming in each month. Identify what portion of that income must go for necessities, such as shelter, utilities, and food. Keep in mind that the idea is to make sure you can continue to live a decent, although conservative, lifestyle while arranging the payoff of your credit cards.
In order to get the credit card payoff process rolling, proactively contact your credit card issuer. Be prepared to tell the issuer everything that is happening. Make it clear that you want to avoid bankruptcy and honor your debt to them through means of a payoff, but you need their help in order to work out terms to accomplish this. Let them know you have prepared a preliminary budget and have a pretty good idea of what you can manage.
Keep in mind that there is likely to be some negotiation on that figure. Obviously, your creditor will want to recoup as much of the debt as possible. At the same time, they will want to avoid the expense associated with collection efforts. For this reason, make your first offer somewhat low, perhaps a payoff of twenty-five to thirty percent of your total debt immediately. The chances of this offer being acceptable are very low, but it is worth trying.
At first, your creditor may be unbending. However, remind them that the alternative is bankruptcy, a situation where they stand to incur expense in responding to papers filed with the court, and will likely receive much less than they would if a payoff settlement could be reached. By convincing the creditor that you simply cannot commit to anything over a certain amount, the chances of getting them to soften and work with you will increase significantly.
When it is all said and done, there is a good chance that the final payoff amount will be around half of your original debt, perhaps a little more. Some creditors will extend this payoff in exchange for a lump sum payment, often made immediately or within a week of accepting the terms. However, there are cases, where the creditor will allow you to pay off the agreed upon amount over two to four months, using automatic bank drafts to clear the debt.
Whatever terms are agreed upon, insist on having them in some type of documented form. Email is fine, but it is often much better to have the payoff terms provided to you in writing by postal mail. While the negotiations are taking place, take plenty of notes. Record who you spoke with, what was said, and when the conversation took place. This type of documentation will make it much easier to prevent important details from falling through the cracks and possibly derailing the entire process.
If you have several accounts that need to be paid off in this manner, it is often a good idea to start with the one that has the lowest balance. Not only can you retire this debt faster, but you also gain a reference that can be used as you negotiate with other creditors. By providing proof that you do honor the terms of a payoff, you increase the chances that your other creditors will work with you in this manner, with a minimum of fuss.