Credit card debt settlement is the process wherein you shrink your debts through negotiation with your creditors. It helps you pay almost half of what you owe on your credit cards. This process is also known as credit card debt negotiation.
OVLG gives you debt relief in 6 small steps. Our attorneys give you the best credit card debt settlement advice in 48 states 24*7. All you need to do is navigate the credit card settlement process and trust us.
Ready for settlement of credit card debt? Wait for a minute. Check out the myths and truth first to make a well-informed decision.
Settle before your accounts are given to collectors
The first black spot is created on your credit report when you default on credit cards. And, the second black spot is created when your credit cards are given to collectors. Your score may drop between 45 and 65 points once your accounts go to collectors.
Create a strong negotiation strategy
Compile all facts - your income and expenses. Then create a convincing story and present it in front of your creditors. You've to explain why you can't pay the full amount by all means. Remember, creditors already know you pretty well. Make sure you don't lie. If you don't want to take a headache, then leave everything to OVLG. We'll take care of everything.
Be patient and wait for the right time
Creditors may not accept the initial offer. This doesn't mean it's the final decision of creditors. They may accept a modified version of your offer. So, be patient and let us renegotiate with creditors. Also, don't be ashamed of yourself. It's not a crime to settle credit cards.
Get a written agreement in your hand
Irrespective of how you settle your credit card debt, never ever pay a penny without getting a written agreement beforehand. OVLG always gives a written settlement agreement online. You can check the clauses before paying a penny.
Does settling a debt hurt your credit? The honest answer is, when you go for settlement on credit card, your FICO score will go down. But the magnitude of the effect depends on various factors like:
The most obvious question is, 'Why does your FICO score gets hurt after the settlement of credit card debt?'
Good question.
Any account status other than 'Paid in full' can hurt your FICO score. That’s because you’re not paying the full amount. FICO rewards borrowers who pay the full balance on time as per the agreement. When you opt for a lump sum credit card debt settlement, you're not paying the full amount. This means you're modifying the original agreement. You’re paying only a portion of the outstanding balance and that too not on time. That's why your FICO score gets penalized.
Yes. That's because it's better to pay something to creditors than ignoring your credit card bills completely. Honestly speaking, you're more likely to consider this debt relief option when you have a high outstanding balance, high credit utilization ratio, and late payments. These factors have already dropped your FICO score. So a lump sum credit card debt settlement won't make a big dent in your FICO score unless it’s in a fantastic condition.
1 Save
Save money till your creditors are ready for settling credit card debt.
2 Negotiate
Negotiate either on your own or through OVLG
3 Pay
Make a lump sum payments as agreed during negotiation
Credit card settlement is not as easy as you think. There is a lot more to it. Here are a few mistakes you should always try to avoid.
Sending a Cease and Desist letter quickly:
If you think that you will get rid of debt collection calls by sending a Cease and Desist letter, then you are absolutely right. As per the FDCPA laws, collection agencies can’t call you after receiving the Cease and Desist letter. However, they can take other steps to retrieve payments.
Some debt collection agencies file a lawsuit against you after you send the Cease and Desist letter. That is their business policy. Think carefully now. Do you want to get sued for a debt? Unless you don’t want to face a lawsuit, avoid sending a Cease and Desist letter without asking professionals or an attorney.
Moreover, if your goal is to settle credit card bills, then why would you send a Cease and Desist letter? Why would you stop communication with collection agencies? You should always keep all the doors open for communication.
Threatening to file bankruptcy:
If you think that creditors will agree to reduce your outstanding balance by threatening to file bankruptcy, then you are dead wrong. First of all, don’t underestimate creditors. They are dealing with thousands of debtors every year. So, they understand the psychology of debtors quite well. They understand the difference between a bluff and a real threat.
Moreover, it isn’t easy to file bankruptcy. There is a strict eligibility criterion that you need to fulfill. If your debt amount is too small, then you may not even qualify for it. Creditors know this fact better than you. So, using this tactic is not a good idea. Only professionals know when and how to use this tactic. It’s better to leave this to the professionals.
Adopting an extremist attitude:
Adopting all or nothing attitude is a mistake when you’re trying to settle your bills. Some creditors are cooperative. Others are not so cooperative. You have to understand this fact. Some creditors may agree to reduce your outstanding balance by 50% or more, whereas others may agree to lower your payoff amount by only 20%. If you decide to not accept the 20% settlement offer, you will make a huge mistake. You can't expect to get the same level of success for all the accounts.
Creditors are not your slaves. So, what if they don't agree to settle your credit cards? What should you do?
Well, the only choice you've is to view the alternatives and these are:
Credit card debt consolidation wherein you get an alternative payment plan.
Credit card debt management wherein we'll prompt creditors to slash interest rates.
Credit card debt settlement online | Credit card settlement non-profit | Credit card debt settlement attorneys |
---|---|---|
You have to pay a settlement fee | You have to pay nominal fees. | You have to pay an hourly fee. |
You won’t get legal advice or help | You won't get legal advice or help | You will get legal advice and help |
You'll get credit card debt settlement services online. | You can get advice for settling credit card debt both online and offline. | You can get credit card debt settlement advice both online and offline. |
Ans: It is a debt relief method that helps to lower your total outstanding balance on your credit cards through a tough negotiation process. It involves proposing an offer to the credit card company to reduce the amount you owe. If the credit card company accepts the proposal, then you have to pay the agreed amount in one lump sum.
Ans: No. There are a few factors you need to check before accepting a credit card settlement offer. Some of them are mentioned below:
Consult an attorney before accepting the offer. He can tell you if the settlement offer is legally binding. If the offer is not good, then the attorney can negotiate and help you get a better deal.
Ans: When you settle a debt, your financial situation improves drastically. Your debts are negotiated for a lower payoff amount, and penalties are waived off.
You have to make only one big payment to get rid of multiple debts, and your credit report is updated as ‘paid as settled’ or ‘paid as agreed.'
Ans: Credit card companies have different types of policies. But usually, credit card companies don’t agree to reduce your payoff amount unless you’re lagging behind your payments or you’re in financial hardship. That’s because, when you settle credit card bills with a lump sum payment, the profit margin of creditors drops drastically. They are less likely to incur that loss when you’re current on your payments. Creditors assume that you can afford to pay the entire amount. Hence, they are more likely to reject your credit card debt reduction plan.
Ans: It completely depends on the amount that you and the creditor agree upon. Propose an attractive offer to the creditor. If you want to reduce your outstanding amount by 50%, then negotiate smartly with the creditor and also make a lump sum payment.
Ans: It depends on what is in your priority list. If you don’t want to hurt your FICO score, then pay debt in full. However, if your score is already tarnished and you wish to save money, then you can go for settlement on credit card. The decision is yours. Even when you go for credit card debt reduction, you can take steps to improve your FICO score gradually.
Ans: Settlement for credit card is possible when a lawsuit has been filed against you. In this scenario, an attorney can help to settle your accounts out of court. He knows how to negotiate with credit card companies to reduce the balance and stop legal proceedings.
An experienced attorney knows how to answer summons within a set time limit. He can make a quick analysis of your financial situation, propose a practical settlement offer to the credit card company, and also help you to defend the lawsuit.
Ans: Creditors prefer a lump sum. They are less likely to agree to a settlement plan which is spread over quite a few months.
Ans: Absolutely not. Credit card companies are not always trustworthy. Make sure that you get everything in writing. All kinds of communication should be made by registered mail. If possible even try to record the phone calls.
Ans:If you are planning for a credit card debt settlement, then try to take as long as possible to accumulate the required funds. Otherwise, you should act quickly because interest starts accumulating on the outstanding credit. Be confident and make a smart credit card debt negotiation by following the above points.
Hi,
Finding ways to manage your bill payments might be easier than you think by setting aside just a few hours for creating a smart budget plan.(pause) Budgeting helps you keep track of your multiple bills and cut down unnecessary expenses. It also helps you to save dollars, stay regular with your bill payments, avoid penalties and extra charges.
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Call 800-530-6854 if you want to get the best budget plan or bill consolidation plan in town. Just remember, pay attention to details of the plan when you’re attending a budget session or enrolling in a bill consolidation program. You’re all set to manage your monthly bill payments every month.
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Last Updated on: Tue, 18 Aug 2020