Life often throws us curveballs — and these unexpected occurrences often end up affecting our finances in turn. This is one of the reasons it can be very difficult to pay off debt, as even the most promising plans can be waylaid by an unforeseen expense cropping up or a life event siphoning all your extra funds.
If it’s starting to feel unlikely or even impossible to put a serious enough dent in your credit card debts to pay them off the traditional way, it’s only natural to wonder if debt settlement is a possibility for you.
You probably have questions like: Is credit card debt settlement something you pursue on your own? What’s the difference between settling on your own and working through a debt relief program? These are all important questions to explore before making a decision — here’s more.
Settling Credit Card Debt on Your Own
The downsides of defaulting on your credit card debt from your perspective are pretty clear — like long-lasting damage to your credit score and possible legal action if any of your creditors decide to take you to court for what you owe.
But defaulting on your credit card balances isn’t only detrimental to you; it also represents a financial loss for your creditors. So, they may be willing to negotiate with you if you’re able to offer up some of what you owe — even if it’s not the entire amount. This is what’s known as settling.
This brings us back to the question: Can you settle credit card debt on your own? The answer is yes, if you’re prepared to do the legwork — like saving up enough money to make an offer and picking up the phone to handle the actual negotiations when the time comes.
Here are a few tips from Bankrate if you decide to pursue this approach:
- Be prepared to explain your situation, including any financial hardships you’ve faced recently, and provide proof like bank statements or bills.
- Discuss potential other options, like if you’re considering filing for bankruptcy, but emphasize that you’d prefer to reach an agreement directly if possible.
- Know how much you’re realistically able to offer and in what timeframe.
- Take notes and follow up as needed. Always get a written version of the document.
It’s important to know going into negotiations that some creditors may decline to make any concessions, or that even if your creditor will settle to some degree, they may not accept your ideal offer.
Working Through a Debt Settlement Program
If dealing with debt settlement on your own sounds overwhelming, or you think you’d benefit from the accountability and structure of a regimented settlement program, there are debt relief companies who facilitate the negotiations on behalf of clients. Programs require you to make set monthly deposits until you have saved a certain amount; only then can negotiations begin.
There is, however, a fee for every successful account settled — this information, along with the terms and conditions of enrolling in such a program, should be disclosed to you and understood fully before signing up.
With so many programs out there, how should you choose? Working with American Fair Credit Council-certified agencies means you’re partnering with a firm that must uphold a set of standards and practices — which can help you avoid scams along the way.
Once you read up about the pros and cons of debt settlement and make an informed decision about whether it’s something you want to pursue, you have a choice: You can settle credit card debt on your own or you can sign up for debt relief through a company — it depends on your wants and needs.
