I read your response to Mike about the massive credit card debt and getting no where. I am in a similar position and have two questions in regards to your response. First: In order to request (or attempt to start) a settlement with the credit card company do I first have to skip payments or can I call them directly? Second: If the card companies agree to a settlement, what affect (if any) will that have on my credit score?
Creditors are unlikely to do much for people that are current on their debts. That’s where they want you to be.
On one hand it’s a bit of a game or playing the system to get to a point of negotiating repayment for less than you owe. Those special terms are not available for people making the regular minimum payments. You typically have to be behind, in collections and a couple of months into that process before the departments you talk to have any authority to offer you those terms.
But being behind on your debts and being that far behind will appear on your credit report for the next seven years and a creditor can always decide to sue you instead of negotiating with you. When you default on your payments the creditors can use all legal means necessary to collect. Many of those actions are spelled out clearly in the client agreement you entered into. This may include jacking up your interest rate, charging you additional fees, suing you, etc.
There is nothing that prevents you from calling your creditors at any time and discussing the situation with them. You should never hesitate in checking out what they will or won’t do, directly.
There is nothing magical about debt settlement. It’s a process. But it’s not the only way to tackle debt.
To get a better idea of your most likely available options I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.
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