Asking a credit card company for debt cancellation, also known as debt settlement, involves requesting the credit card issuer write off, or forfeit, a portion of the outstanding balance you owe on an account. But be aware: Getting debt canceled can be damaging to your credit, as the credit card companies are likely to indicate on your credit report that your debt was “settled.” This can lower your credit rating and be a potential red flag to future lenders.
Contact the customer service department of your credit card-issuing company and ask for the debt management or debt settlement department. The customer service agent may direct you to an individual to discuss your account, or she might give you directions on how to fill out an application or put your request in writing. The company may require you to provide proof of your financial circumstances, such as a notice of termination or recent bank statements or a rundown of all of your existing financial obligations.
Explain the reason you are behind on your account and why you don’t anticipate being able to meet future payment obligations. For example, describe a job loss, illness or severe injury.
Make an offer of how much you are willing to settle your debt for. Start low; for example, offer to settle a $2,000 debt for 20 percent of the balance, or $400. If the card company is interested in negotiating a settlement, it will likely make a counter offer, and you can continue to negotiate back and forth until you reach an agreement. Don’t say yes to any debt settlement agreement you can’t realistically pay.
Ask the company what other options are available to you if your request is denied. The company may be willing to lower your payments or allow you to defer payment until your financial circumstances improve.
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