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Credit cards are often necessary to bridge the gap between paychecks or account for unexpected expenses, but cardholders may only make minimum payments and never manage to get ahead. Credit card debt settlement is one option to help get your finances back on track, as lenders are often willing to negotiate and help find ways to solve your current credit crisis.
But what exactly is debt settlement, and what are your options? How do you start the process—and is it the best fit for your finances? Credit card debt settlement is the process of negotiating with your lender to accept a lump sum settlement for your credit card debt.
As a result, lenders are often willing to negotiate for a smaller, lump sum amount that clears the debt entirely. Your first option is to negotiate with your credit card company directly.
Not sure how to negotiate credit card debt settlement yourself? Start by getting your paperwork in order—this includes proof of your current debt along with information about your income and expenses. While the process is similar across card providers, the specifics will differ based on your current lender. The percentage credit card companies will settle depends on your current debt amount, financial situation and the benefit or loss assessment for lenders.
You can also choose to utilize a third-party provider to help start the settlement process. The problem? No matter which method you choose to settle your credit card debt, your first steps are the same:. Debt Collection Agencies Check with your last notice or bill to find the contact details of the debt collection agency. Whether you are reaching out to Citibank or to the collections agency through phone, messages, or a letter, the next step is to explain your current financial situation.
The most important thing is to show and convince them that while you want to pay the amount, it is impossible for you to do so as you are financially incapable to pay. You have to convince your credit card provider that if they do not agree to settle the debt, then you really have no choice but to stay delinquent and file for bankruptcy.
You might be able to negotiate a lower amount depending on your personal financial situation. Usually, the older the debt, the more amenable they are in negotiating. In case Citibank or the debt collections agency agrees to settle your credit card debt, make sure to get the agreement in writing BEFORE you pay any amount. This document is important because it will outline what will be done after you settle the debt. A typical debt settlement document will contain and confirm the following:.
After getting the written document and you find it acceptable, you can pay the amount. Make sure to keep and maintain all records of payment. If you do not get offered a debt settlement option, there are other options that you can explore.
While many customers attest that it is not easy to get a credit card debt settlement offer, it is not impossible to get offered one. However, you have to prove that you really do not have the means to pay the full amount and they cannot get any more money from you. The credit card company will not agree to a debt settlement if they can see that you have the money to do so.
They will just flatly refuse and proceed to sue you in court. This could result in your wages being garnished or having your bank account levied. Your email address will not be published. Related Posts. Citibank has a skilled legal team that goes after consumers that do not pay their debt.
This is why after you have been served with a debt lawsuit, you will be faced with a series of events that you must do.
When you default on credit card debt, the result is typically a lawsuit. This can become extreme and allow them to garnish your wages or even take money directly from your bank account.
You can do a few things, ignore the call and allow them to obtain a default judgment, or you can try to negotiate the settlement. If you truly wish to fight it, you can decide to do this, but first things first, you will need to respond to the summons.
In some cases, you might not owe anything on the debt. You could be a victim of one of the following situations:. If you have been sued then you will be served with a copy of the complaint against you as well as the court summons. This then will tell you the day you need to show up in court for your hearing. Typically if you are given three to four weeks to respond. You can settle the debt and this happens out of court. In some cases, you may need to respond directly or go through bankruptcy court.
It is essential to file in court because you do not want a default judgment to be entered against you. This means you automatically lose the case. The first step in fighting a debt collection lawsuit is not to ignore it. Ignoring your lawsuit can only lead to being negligent. In this case, a default judgment is automatically given to you, and you will automatically lose your case.
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