It’s been eye-opening to say the least.
For the past 10+ years I’ve helped hundreds of clients settle millions of dollars of excessive credit card debt for a fraction of what was owed — legally, ethically and responsibly — without the need to file bankruptcy.
As someone that actually works in the credit card industry, I can tell you that most people have no idea what goes on behind the scenes and a lot of the information on the Internet is incomplete or just flat out wrong.
Recently I got to thinking, “What if I died suddenly or became incapacitated, and never had a chance to share my valuable, hard-to-find information with someone that could really benefit by it?” What a waste that would be.
So I immediately decided to create this “executive summary” outlining the most important things I’ve learned about how to deal with problem credit card debt, what steps to take and mistakes to avoid.
To begin, if you’re struggling with credit card debt and you’re looking for a solution, the first 2 things I would tell you are …
1. Acknowledge your credit card debt is a problem.
It’s painful to admit, but you have to come to grips with the fact your credit card debt is a serious problem. It doesn’t matter if you’re young or old, male or female, high school diploma or Ph.D. Debt problems can happen to anyone.
Many people mistakenly believe that if you have credit card debt problems you’re just a deadbeat and financially irresponsible. It’s true these people do exist. But it’s been my experience that the vast majority of people with credit card problems are good, honest, decent people that simply ran into unexpected circumstances like a messy divorce, job loss or unexpected medical emergency that threw a wrench into their cash flow making if difficult (if not impossible) to keep up with their prior financial commitments.
Whatever the reason, if you’re struggling to keep up with your monthly payments you need to acknowledge you have a problem. It’s nothing to be ashamed of. It happens.
You can’t keep brushing your debt off hoping it’ll somehow magically resolve itself. It won’t. When you wake up in the morning, your debt is still going to be there with interest accruing.
It’s no different than your doctor giving you the lab results confirming you have a serious illness. There comes that moment where you have to pause, take a breath and internalize the gravity of the situation. It’s not happening to someone else. It’s happening to you.
Once you’ve accepted and mentally processed your predicament you can now get on with the business of seeking out and implementing the best solution.
2. Gather data and make a decision.
No decision will ever be perfect. There will be pros and cons to each solution. The goal is to do enough research so you have sufficient data to pick the solution with the greatest upside potential and least downside potential for your particular situation, then put your head down and go for it.
When you go online searching for possible solutions for excessive credit card debt, the financial pundits and gurus will usually only mention the following choices:
- Consumer Credit Counseling
- Get A Loan
That’s it. Those are your choices.
Rarely do they ever mention the fact that it’s entire possible to negotiate settlements on your outstanding credit card balances for substantially discounted amounts. I know because I’ve been doing this for clients for years!
Do the financial “experts” not know credit card debt settlement is an option? Or maybe they’re getting incentives from the credit card companies to not publicize this. Who knows for sure.
The fact is nearly ALL credit card companies and collection agencies engage in settlement negotiations to resolve outstanding credit card debt. It might just be the best kept secret in the financial industry.
Just know that attempting settlements on your outstanding credit card debt is an option that should be on your list to explore. If handled correctly, we routinely see settlements in the range of $0.30-$0.50 on the dollar.
Whatever path you choose, the most important part is to make a decision. It’s very common to hear an audible sigh of relief when someone decides on their solution. Sure, there’s still a lot of work to be done. But at least you can sleep better knowing that you have a plan in place and you’re beginning to take control of the situation instead of your situation controlling you.
Also, try and make your decision sooner rather than later. Not only because it’ll give you peace of mind, but because certain strategies require events to occur in a proper sequence. Timing can be critical.
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If you’ve done your research and you decide the best course of action for resolving your excessive credit card debt is to attempt settlements for less than full balance, here are my top 3 recommendations:
3. You must understand how credit card companies operate.
It is extremely naive to think you can just call your credit card company and tell them you’d like to settle your account for a discounted amount. They will LAUGH at you. In fact, many front-line customer service reps at credit card companies will tell you straight to your face they don’t do settlements, when in reality nearly ALL credit card companies do settlements.
The key is knowing how to get to the people that can offer you a discounted settlement.
And no, you can’t just ask to “speak with the manager”. You can ask until you’re blue in the face but they won’t transfer you. All credit card companies have a rigid internal protocol they follow (and it’s different at each company), so you need to work within their system.
4. You must know your opponent.
At my office, we have scouting reports on every major credit card company, collection agency and collection law firm. It’s taken us years to develop these reports, but I believe it’s the single biggest reason why we’re able to get such good results for our clients on a consistent basis.
Scouting reports will tell you things like:
- How low will certain creditors go? Should you take the deal they’re offering or should you hold out and try to negotiate something better?
- Will a credit card company sue me? Most won’t, but a few will. You need to know which ones to watch out for.
- Sometimes a collection agency will offer you a better settlement than the credit card company. Strange, but true. Without this information you’re at a severe disadvantage.
5. Have a 3rd-party agent represent you.
This recommendation may sound self-serving but I assure you it’s not. Having a third-party agent represent you in credit card settlement negotiations drastically changes the communication dynamic (in your favor) by removing you from the equation.
In negotiations, I could say the exact same thing as you — word for word — but it will come across with more impact and you’ll have more control if an authorized agent is speaking on your behalf.
It’s why people hire real estate agents to sell their homes, and why it’s a good idea to have an attorney represent you on legal matters.
In addition, it’s very difficult to talk to creditors and collection agencies about your own financial matters. I’ve been retained by educated, well-spoken people because they were a nervous wreck at the thought of trying to do this work themselves.
If you want the lowest settlements possible without having to confront your creditors yourself, here are some reasons why it might be a good idea to invest in the services of an experienced debt settlement professional :
- Scouting reports. As mentioned above, this is probably the number one reason we get such favorable settlements for our clients.
- Timing. As the songs says, “You have to know when to hold ’em and when to fold ’em.” In credit card settlement negotiations, timing is everything. Present your proposals too soon and you’re wasting your time. Wait too long and you’ll miss a golden opportunity. There is a right and a wrong time to approach a creditor or collection agency about settlement.
- Established relationships. Sometimes it’s not what you know it’s who you know. After years working in this industry we have contacts that will offer settlements to our clients purely because they know, like and trust us.
- Presentation. With certain creditors and collection agencies it’s much more effective to present your settlement proposal in writing, with others you’re much better off talking on the phone. The key is knowing when to use each method.
- Proper documentation. This is huge. When a settlement is reached, you must have the proper written documentation to confirm that the matter is final and they cannot come after you at a later date.
A competent, experience debt settlement professional will almost always get better results than you could have achieved on your own. And the best part is they do all the work.