Do-It-Yourself Credit Card Debt Negotiation

••• 3D Credit Card Concept Climbing Ladder Out Of Credit Debt image by Scott Maxwell from

One of the options available to consumers wishing to lower their credit card debt is debt negotiation. You negotiate a pay-off amount on your credit account with your creditor, and then arrange a monthly payment to settle your debt. You can hire a debt settlement firm, but the costs can be high, according to Aleksandra Todorova, writing for the SmartMoney website. A debt settlement firm's fees can include an account set-up fee, a monthly administration fee and a fee based on the percentage of debt that the firm gets eliminated for you. You can save yourself those costs by using do-it-yourself credit card debt negotiation.

Stay In Touch

Do not avoid contact with your creditors if you realize you are heading for financial problems, according to Dana Dratch, writing on the Bankrate website. Always keep your creditors updated on your situation, and keep a detailed log of the conversations that you have with credit workers. Try to work on ways of staying current on your credit account by asking your creditors for help. When it comes time to negotiate your debt payoff amount, you will have a history of trying to work through the issue with your creditors that can help the creditors to understand why you need the negotiated payoff.


When you enter into negotiations with your creditors, one of the arrangements you should look for is to be able to pay back your negotiated debt in installments, according to Steve Bucci, writing on the Fox Business website. Your credit card company will consider your negotiated amount a lump sum debt. That means that interest will be added to the debt every month that it is not paid in full. Negotiate installment payments you can afford, but pay as much as you can each month to pay the balance off as quickly as possible.


When you get ready to contact your credit card companies for debt settlement, you should have goals on how much debt you would like forgiven. Analyze your credit card bills and determine how much of your debt is penalties and late fees, how much is interest and how much is principle. Begin your approach by asking for all of your penalties to be dropped and then ask for a reduction in your interest debt. The principle is money that the credit card company has paid out on your behalf. The company is less likely to agree to a reduction in the principle. Create reasonable goals for your debt negotiation and you are more likely to get results you can afford.


When you prepare for debt negotiation, keep the consequences in mind. A negotiated payoff amount will damage your credit score, according to the SmartMoney website. By the time you get to the point of considering debt negotiation, your credit score is more than likely damaged. Debt negotiation will add to that damage by a degree that varies from case to case. You will also have income tax consequences to consider. The debt that is forgiven in a debt negotiation can get listed as income that's subject to federal income tax. Consult an accountant before finalizing any debt negotiation agreement to see what the tax implications will be.