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Get a handle on credit card debt through the art of negotiation


With unemployment common in Tennessee and other parts of the country, many Americans have resorted to living mainly on credit cards, which means dealing with huge amounts of debt. There are many options for reducing debt, but what many people do not know is that before filing for bankruptcy, they can often contact their credit card companies directly and ask for a lower minimum payment, even a lower balance altogether. The trick is knowing how to do it.

Because credit card debt is unsecured, debt collectors can go after a person's possessions, such as a car or home. Therefore, many are willing to do what they can to work with consumers and receive as much of the owed debt as possible. Nonetheless, unless a consumer has a plan in place, the company will likely say "no way."

The first step for consumers is to determine how much is owed and how much they can reasonably pay. For a $15,000 debt, some credit card companies might accept a lump sum payment of about half that because they would rather get some money than none at all. So a reasonable offer might be $7,500, and ask for the remainder of the debt to be discharged.

Next, consumers need a valid reason why they cannot pay the debt. Have they become recently unemployed? Has a recent accident left them unable to work? The credit card company will need a detailed explanation, so be prepared. Patience is key because there are many departments at a credit card company. It is best to ask for the collections department right away, rather than stay on hold for several hours getting transferred from one person to the next.

Credit card debt is not easy to get rid of. However, with some patience and willpower, consumers can live within their means while saving money to reduce their balances and live debt-free.

Source: FOX Business, "How to Negotiate Your Credit Card Debt," Donna Fuscaldo, May 2, 2014

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