Negotiating With Credit Card Collection Agencies

There is no doubt that we are living in a trying financial period. Because of this collection agencies which are devoted to collecting ovedue credit card debt are flourishing. There is no doubt that this is because people are finding it harder & harder to make their monthly payments.

One missed payment alone can cause havoc with your credit card. Let’s say that you miss a payment & then are assessed a fee. This fee may mean that you now have exceeded your credit limit. Having exceeded your credit limit you are charged a penalty. You may now be $100 over your credit limit & you haven’t even paid your monthly minimum payment yet.

If you contact your credit card provider it may be willing to work with you to arrange a payment plan to get your account back on track. Credit card providers are normally willing to work with you if you show that you are being responsible by calling them & explaining your situation. It is always best to hammer things out at this point than to wind up dealing with a collection agency.

If the credit card provider decides to sell your debt to a collection agency normally at cents on the dollar the credit card collection agency will want to collect from you as much as possible since this is how they make their living. Because of this credit card collection agencies may be nasty with you & threaten court action.

It makes more sense for the credit card collection agency to work with you than to file a costly & time-consuming law suit. If you can acquire the funds try making an offer to the credit card collection agency to reduce the amount of the original debt & pay the negotiated amount in full. You will want to make sure that the agreement is in writing. Also be sure to keep copies of all documentation to & from credit card collection company & to mail all correspondence by certified mail return receipt requested.

If you decide to try to negotiate a settlement with the credit card collection company start by trying to reduce the original amount owed. Remember the credit card collection company purchased your debt at a reduced rate normally somewhere between 8 cents & 12 cents on the dollar. A good starting point would be around 25% of the original debt. The credit card collection agency will probably reject this amount but will counteroffer with a different higher amount. You might want to counter this counteroffer & the process continues in this manner until you reach a settlement or the negotiations fail.

Alternately the credit card collection agency may lose interest in your debt & decide to accept less than it had been hoping to receive. It could also be that the credit card collection agency will decide to sell your debt to another credit card collection agency. This debt will be sold again at a reduced rate. This new credit card collection agency will contact you & the process will begin all over again.

Keep in mind that all along this process you are running the risk that one of these companies may indeed decide to file a law suit against you & that your credit score will be decreasing at an alarming rate. Additionally a court judgment against you will devastate your credit score even further.

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