Some of you probably cannot free your mind from credit card debt. The fact that having credit card is such common today, it cannot be denied that debt problem significantly increasing. To help you out, it is necessary to know how to negotiate credit card debt settlement yourself. Settling credit card debt allows you to pay less than what you owed. In a chance you want to process a settlement, there are some steps to do.
Steps of How to Negotiate Credit Card Debt Settlement Yourself
Before going directly to the steps of how to negotiate credit card debt settlement yourself, it is important to note that the negotiation may bring some consequences. Some potential pitfalls may occur due to the settlement process.
- Ensure the debt
Before starting the negotiation, it is essential to make sure that the debt belongs to you. To ensure, you can request verification letter or debt verification. Verbal or mailing request is allowed. Another important matter is ensuring that the debt is not past or also known as zombie debt. On your verification letter, you can confirm that the debt is not a zombie debt.
- Reduce the balance
The next step to negotiate credit card debt settlement is by reducing your balance. Whenever you have debt, the debt collector paid money to buy your debt from the company you owe. If you negotiate, the debt collectors will commonly take less than your debt. In this step of how to negotiate credit card debt settlement yourself, you need to pay less than 30 percent of what you owe. Or else, you can negotiate to certain amount that both of you agree.
- Refuse settlement repot on credit report
It is important to make sure your credit agreement is not reported as settled. You need to avoid this if possible. Otherwise, ensure the creditor to report your credit as paid as agreed. If possible, you can also ask them to erase anything associated with your debt, including the tradelines. As it can stay for 7 years before dropping off, avoiding some negative report is an advantage for your future.
- Pay attention to tax
You need to know that you have to pay the tax for excused debt. As it is considered as income, tax is applied. To avoid this, you need to shave your debt. Make sure it does not exceed $600, or else it will be reported.
- Write your agreement
It is always essential to write any agreement you make, including when you are dealing with credit card debt settlement. The written agreement can be your proof in case the creditor does not honor what both of you already agreed upon. The time you want to make correction to the credit report, you also need this agreement.
There is a note to take into account. Due to the settlement, the credit score may rise. If you pay the debt, the credit score may jump higher. Follow the steps of how to negotiate credit card debt settlement yourself and stay aware of your creditor’s response.