If you’ve been overloaded by credit card debt, then negotiation might seems to be a great idea. But if you do decide to negotiate, prepare yourself for any thing that comes along with it.  Probably you have to make numerous phone calls to your credit card company, you may have to talk to endless managers, and there are possibilities that you may have to agree to terms that are less than ideal.

It is never said by anyone that debt settlement is an easy task. But before you take any initiative for your Credit Card Debt Negotiation, there are some facts that you should know.

There could be more reduction in your Credit Score.

At first when you contact the credit card company for your debt settlement, it’s likely that they’ll freeze your credit limit immediately. That won’t matter so much in case if your cards are maxed out. But if you’re well below your maximum credit limit, then there could be a sudden fall in your credit score as a result of the lower limit.

Probably You might have to pay taxes.

If you have been succeeded in negotiating a lower sum for your debt repayment, then you might have to pay taxes on the portion of the debt that was forgiven. A lender file a 1099-C form with the IRS whenever they forgive $600 or more of the principal.

What it means is that if you arrange a nice lump-sum payment at a discount, then you’ll have to pay taxes on the difference. Here what you have to note is that this only applies to the principal, not to fees or interest rates that get waived.

Bad reports mean bad credit.

Are you aware of how your bank will report your repayment efforts to the credit bureaus? You must have to find this out before that you agree to any arrangement. A partial debt settlement have the same bad effect on your credit score as a total default do have.

Also, if partial payments are reported by the bank, then your credit score will suffer a lot due to this. As part of your deal, you have to make sure that the bank will report your payments as on-time and in full. This is the stickiest issue surrounding debt negotiation. It is due to the fact that you have very little influence over how the lender will handle the reporting.

What to do to Negotiate your Credit Card Debt?

Experts recommend that you should always be honest about your financial situation and your desire to pay. You should ask your lender to forgive some debt, or you may ask for a lower interest rate so that more of your monthly payments go toward the principal.

If you’re considering bankruptcy, then you should inform the lender about this, that could possibly convince them to work with you.The reason is that if a person opt bankruptcy then Credit card companies won’t get a single penny.

Most important thing that you have to keep in mind is that you should never make payments until you’ve got a written copy of the agreement. In this way, you’ll have the terms clearly spelled out, and if necessary you’ll be able to produce the document in court.

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