How Do I Ask Credit Card Companies for Debt Cancellation?

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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.

Step 1

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.

Step 2

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.

Step 3

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.

Step 4

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.

    Warnings

  • Forgiven or settled debt may be taxed as income by the U.S. Internal Revenue Service.
  • The credit card company may not be willing to negotiate with you if you are current on your payments. And if you make any payment during the time you’re trying to negotiate debt cancellation, the credit card company may cease negotiations. The company's ultimate goal is to collect as much of the debt owed as possible, and if you apply even $10 here or there, there is no incentive for the company to negotiate a settlement because they’re still getting something from you.

    Tips

  • When you speak to a credit card company representative, ask for that person's name, title and extension number. This gives you a contact inside the organization you can follow up with and direct correspondence to.
  • If the credit card company is unwilling to negotiate via phone, put your debt cancellation request in writing and ask for reconsideration. It may take several attempts in writing and by phone to fully negotiate a deal.

References

About the Author

Lisa McQuerrey has been an award-winning writer and author for more than 25 years. She specializes in business, finance, workplace/career and education. Publications she’s written for include Southwest Exchange and InBusiness Las Vegas.

Photo Credits

  • George Doyle/Valueline/Getty Images