One of the great truths in business is that everything is negotiable. Even when the price or terms of something seem set in stone, getting a discount is often as easy as knowing whom to ask and knowing how to ask for it.
When it comes to the balances you owe on your credit cards, the opportunity to negotiate what you actually owe is as great as ever. With a little bit of knowledge and guts, you might be able to cut your balances by 50-70%. Read on to find out how.
The Basics of Debt Settlement
Debt settlement is the process of offering a large, one-time payment toward an existing balance in return for the forgiveness of the remaining debt. For example, someone who owes $10,000 on a single credit card may approach their credit card company and offer a one-time payment of $6,000. In return for this one-time payment, the credit card company agrees to forgive or erase the remaining $4,000.
Why would a credit card issuer willingly choose to forgo a substantial portion of the balance it is owed? Usually it's because the credit card issuer is either strapped for cash itself or is fearful of your eventual inability to pay off the entire balance. In both situations, the credit card issuer is trying to protect its financial bottom line - a key fact to remember as you begin negotiating. Remember, credit cards generally represent unsecured loans, which means that there is no "collateral" your credit card company can seize to help repay an unpaid balance.
While getting your company to settle your balance may sound too good to be true, it's not. Not surprisingly, lenders don't like to advertise settlement and there are no independent statistics about it success rate, but if you're severely behind on your debt payments and spiraling toward bankruptcy, your lender may be willing to take what it can get, giving you one last chance to get back on your feet.
The Downside of Debt Settlement
Although a debt settlement has some serious advantages, like eliminating a monthly payment and making your current debt load look smaller to potential lende