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 Credit card debt settlement process
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.
When is it good to settle credit card debt?
- When creditors are threatening to sue you.
- When you want to save money.
- When you can’t make minimum payments.
- When you’re receiving excessive collection calls
- When you have to borrow money to pay back creditors.
How to settle credit card debt with a collection agency and creditors
- 1. Calculate how much you owe: Go through your credit reports and make a list of how much you owe on each credit card. If you have any doubt, call the customer care and verify the amount you owe.
- 2. Calculate how much you can save: Use the calculator given above and figure out how much you can potentially save under 2 circumstances:
- When you settle credit cards yourself
- When you settle with credit card settlement companies
- 3. Check the SOL period: Look at the statute of limitations (SOL) period of your state even before you think of how to settle with credit card companies. It’s extremely important. If the SOL period has not expired, then take steps for settling credit card debt as soon as possible. If the SOL period has expired, you can avoid settling your accounts.
- 4. Verify or validate your debt: Contact your creditor and verify the debt if you have any doubt regarding the outstanding balance. If your accounts are in collections, then ask the CA to validate them in writing for avoiding scams.
- 5. Contact a settlement company: Once the debt is verified or validated, contact a good settlement company to initiate the negotiation process. Explain your condition and requirements to the company so that they can act accordingly.
The settlement company will negotiate with your creditors for a lower payoff amount owing to your financial hardship. They will continue the negotiation process until your creditors agree to reduce balance and waive off late fees. - 6. Pay as per the agreement: Once your creditors give their approval, the settlement company will send you the final agreement. Read it carefully and pay the negotiated amount within the deadline.
What to look for in credit card settlement companies
- 1. Affordable fee structure:This is important because if the fee stricture is high, then your savings will be less. The best credit card debt settlement company won’t have upfront fees or high fee structure or hidden fees.
- 2. Accreditation: Companies who have proper accreditation are the ones that have passed through a certification and training process. They learn negotiation techniques and the ways to communicate with creditors through this certification program. Needless to say, these companies have an edge over others.
- 3. Good reviews: Generally, clients give good reviews when they are satisfied with the performance of the settlement company. Check the online reviews to know what the existing clients are saying about the companies.
- 4. Privacy policy: You'll share confidential information with the settlement company. What will you do if the company shares your financial information with others? Check the privacy policy of the company you’re planning to work with. You need to be absolutely sure that there won’t be any data breach.
Why you must choose OVLG
- 1 It offers the best credit card debt settlement program online.
- 2 It helps you to save money on late fees and penalties.
- 3 It follows all the credit card debt settlement laws.
- 4 It gives you 100% no result refund policy.
- 5 It gives you sample debt settlement letters for free.
- 6 It gives you the perfect credit card settlement advice.
- 7 It has 84% satisfied clients and 400+ live reviews on settlement.
- 8 It's a CalBar registered law firm.
Credit card debt settlement pros and cons
- You'll get mental peace and respect.
- You can save a significant amount of money.
- You’ll receive less collection calls.
- You can avoid getting sued.
- Your credit score will drop by a few points.
- You've to pay tax (when savings is 600+).
Credit card debt settlement Act 2010
- 1 Debt negotiators must tell you how much to save before initiating the credit card settlement process.
- 2 They would explain the terms and conditions of the credit card debt settlement program
- 3 They need to give an idea on how long you have to wait to get results
- 4 If debt negotiators ask to stop making payments, then they need to explain the consequence of this action
- 5 They can't ask you to pay an upfront fee
- 6 They can charge only a part of the full fee for every settled account
- 7 You'll be the sole owner of the funds and interest earned in the trust account
- 8 The FDIC insured bank should not be affiliated with the debt relief company
Myths and facts of credit card settlements
Ready for settlement of credit card debt? Wait for a minute. Check out the myths and truth first to make a well-informed decision.
- Credit card debt settlement companies are scams.
- You can get rid of your credit cards today.
- You need to pay a fee in advance.
- It is the only option to get rid of debt.
- You can settle secured debts.
- You can't settle credit card debt online.
- No. Rather, they help you in settling credit card debt fast.
- Only a miracle can help you to do that.
- Credit card settlement companies can't do that.
- No there are other options as well.
- No. Secured debts can't be settled.
- Wrong. OVLG helps you settle debt online.
4 Secrets for settling credit cards for less
1
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.
2
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.
3
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.
4
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.
Credit card settlements and their impact on credit score
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:
- 1 How your account status is updated.
- 2 The current status of your FICO score.
- 3 The size of the debt you settled.
- 4 The condition of your settled debts.
- 5 How much less you’re paying to the creditor.
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.
Should you still opt for this debt relief option?
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.
Surprising credit card settlement facts
- 1 The credit card settlement agreement becomes null and void if you don't pay the negotiated amount.
- 2 You need to get your credit report updated as "paid as agreed" or "paid as settled" after making the lump-sum payment.
- 3 If you can convince your creditor to update your credit report as ‘paid in full', then it is best for your credit score.
- 4 Credit card debt settlement programs are not part of any government programs like HAMP in the mortgage industry.
- 5 The IRS will ask you to pay tax if you save more than $600 through credit card debt settlement plan.
- 6 Depending upon the convincing skill of debt negotiators and mood of creditors, you can save as much as 60% through credit card lump sum settlement.
3 Steps to settle credit card debts online
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
What if you can't settle credit cards?
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 settlement - Safety kit
- Credit card settlement letter
- Credit card settlement agreement
- Credit card debt collection laws
Why you should use attorneys for credit card settlement
- 1 They will help you to complete the credit card settlement process successfully.
- 2 Since they have good convincing powers, they can help to lower your outstanding balance.
- 3 Credit card settlement attorneys know how much to offer to creditors.
- 4 They can give you right legal guidance and help you avoid lawsuits.
- 5 They are aware of the state debt collection laws and credit card debt laws. They can make you aware of these laws as well.
- 6 Credit card debt settlement attorneys know the statute of limitation period in your state. This can help you decide whether or not to settle your credit cards.
- 7 They have the industry update on the overall credit card lump sum settlement percentages and recently passed laws. So, they can deal with creditors accordingly.
Best way to settle credit card debt - Compare and choose
| 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. |
FAQ
Q: What is credit card settlement?
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.
Q: Should I pay immediately after receiving a credit card settlement offer?
Ans: No. There are a few factors you need to check before accepting a credit card settlement offer. Some of them are mentioned below:
- How much you have to pay for settlement on credit card
- How much you have saved for settling credit card debt
- The validity of the debt
- The authenticity of the settlement offer
- The SOL period in your state
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.
Q: What happens when you settle a debt?
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.'
Q: Can you settle credit card debt if you are current?
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.
Q: How much can you settle credit card debt for?
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.
Q: How to negotiate credit card debt when a lawsuit has been filed
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.
Q: Should you pay debt in full or settle?
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.
Video transcript on: How Can You Settle Credit Card Debt?
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Last Updated on: Mon, 25 Feb 2019
