This post is for you if you have a lot of credit card debt and aren’t sure how you’ll ever get out from beneath it.
There are a variety of legal options for settling credit card debt, ranging from affordable payment plans to interest forgiveness to simply not paying all or part of what you owe based on certain legal legislation.
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Keep in mind that paying off credit card debt usually only entails repaying a part of what is outstanding. It is simple to bargain with credit card issuers if you have a little knowledge beforehand.
Babysit Delinquent Accounts
Remember that babysitting delinquent accounts costs the credit card company money, therefore it is often in the firm’s best interest to figure out a means to collect something that would take the account out of liability status for them.
Sometimes that means lowering or eliminating interest entirely, but you won’t get these kinds of concessions until you ask for them.
The following is a step-by-step guide to getting out of credit card debt without relying on a consolidation loan or other kind of debt relief. The majority of these options essentially shift debt from one location to another. Let’s have a look at how you can completely eliminate it.
Make Sure The Debt Belongs To You
Given that you made the transactions with your credit card, it may seem foolish, but this is the first and most critical step in calculating what you legally owe.
Begin with a formal dispute (which is usually filed with one of the three major credit bureaus) and a debt validation or verification letter.
The distinction between the two is virtually entirely semantic in nature. The creditor receives a verification letter. The collections agency receives a validation letter.
If your account is in collections, you should contact the collection agency directly because they are the company that currently owns the debt.
Check Statutes Of Limitations
Make sure the debt isn’t past the statute of limitations in your state. If this has happened, the debt is now known as “Zombie Debt.”
This word refers to debts that have been owed for years and have passed the statute of limitations on the owner’s ability to collect. The clock on the statute of limitations starts ticking when the obligation was last considered current.
PLEASE NOTE: Do not commit to anything over the phone or in writing until you have proof that your debt is not Zombie Debt. If you agree to make even one payment, you may unwittingly reset the Statute of Limitations.
Even if you technically still owe the amount, if you are contacted about a Zombie Debt account, the collection agency cannot lawfully collect. You are not legally liable if you can show that the statute of limitations has expired.
Debt Reduction Strategies
You can engage with the collections agency to decrease the amount due if it is found that you still owe the obligation lawfully. This is not the time to let pride get in the way. Attempting to lower the amount you owe is neither dishonest nor unethical.
Keep in mind that a large portion of the debt incurred with credit cards comes in the form of interest. Both the merchant and the credit card company are reimbursed once an account is in collections. It’s now time to negotiate with the debt’s new owner and reach an amiable agreement on the amount you’ll have to pay.
Because many organizations put restrictions on the number of accounts cleared per month, calling near the end of the month can be highly useful. On January 28, you’re more likely to obtain a better deal than on January 5.
If it is determined that you still owe the obligation legally, you can work with the collection agency to reduce the amount due. This is not the moment to be proud of yourself. It is not dishonest nor immoral to try to reduce the amount you owe.
Keep in mind that a large portion of the debt incurred with credit cards comes in the form of interest. Both the merchant and the credit card company are reimbursed once an account is in collections. It’s now time to negotiate with the debt’s new owner and reach an amiable agreement on the amount you’ll have to pay.
Begin by negotiating at a low level. To put it another way, offer to settle the debt for a minimal amount. A normal starting point is 30%. In many circumstances, you’ll just have to pay half to two-thirds of the total amount.
You’re also more likely to secure a lesser settlement if you can guarantee that you’ll pay the amount you’re offering in cash right away. Some organizations may take 30% in cash rather than keeping the account open for another two years while you make interest-free payments.
Once Your Case Is Settled
You should request that the collector not report the agreement on your credit record as part of the agreement. Having it on your credit report might be disastrous. Also, request that any tradelines related with the loan be closed. Before paying anything, make sure you get everything in writing.
Finally, keep in mind that because the federal government considers excused debt to be income, you may be liable for taxes on it. By eliminating those balances, you will not only be able to get out of debt, but you will also be able to improve your credit rating!
