subject: An Overview of Credit Card Debt Negotiation [print this page] An Overview of Credit Card Debt Negotiation
Today millions of people throughout the world are dealing with credit card debt that is overwhelming them. Many people turn to temporary fixes, such as debt consolidation loans and balance transfers in an effort to deal with their immediate cash flow problems; however, these things do not address the real issue of interest accumulating debt. In reality, more consumers should consider credit card debt negotiation as a tool for improving monthly cash flow and reducing the overall amount of carried debt.
The negotiation process begins by communicating with your current creditors. The purpose of this dialogue is to clearly present your current financial situation and to clarify the reasons why you are unable to continue in your current debt servicing agreement, unless it is modified. The most common method of credit card debt negotiation involves the lowering of accrued monthly interest through the reduction in the APR of the credit account. The creditor and borrower work together to develop a plan that not only protects the interests of the lender, but allows for the borrow to completely repay their outstanding debt. Effective negotiations not only end problems with delinquency on the part of the borrower, but it will also save the borrower a great deal of accrued interest.
It may be necessary to bring in a third party to assist in this process if you are unable to reach an acceptable agreement on your own. Two of the most popular resources for credit card debt negotiation are consumer credit counseling agencies and experts who specialize in consumer laws. The knowledge and experience that these outside parties provide can be advantageous in creating a settlement that is equitable for all parties involved. Often times the use of an outside third party can significantly reduce the total amount of outstanding debt that is required to be repaid.
Consumer counseling services will typically work directly with lending institutions, acting as a mediator between the debtor and the lender. The counseling service will typically work to create a monthly budget with the borrower and will then negotiate a reduced principal and interest payment with the creditors. In this form of credit card negotiation, the borrower will make payments to the counseling service. The counseling service will then divide those payments between the creditors. When the balance is paid off on one account, that monthly payment amount is rolled over to a different account each month, generally decided by the highest rate of APR.
The second method of third party negotiation is often known as credit card litigation. In this type of debt negotiation strategy, the debtor seeks legal solutions to relieve their debt obligations. Even though a lot of people would assume this means bankruptcy filings, this is a common misconception. Actually, this type of negotiation uses legal filings and from time to time the legal system to create a solution to the unresolved debt liability.
Whether you handle the process yourself or utilize the services of a third party, don't overlook the opportunity that credit card negotiation offers for reducing your overall debt and increasing your monthly cash flow.
