Settle Your Credit Card Debt with Your Creditors

Settling your outstanding, delinquent debts is the best thing you can do if you are in the market to buy a house.

The negative listing on your credit report is unfortunately what the creditors want you to keep since it gives them the legal right to recourse to collection.

Even if you delete a negative unpaid listing, that negative listing may still reappear when the creditor or collector sells the account, seeks a judgment, or turns over your account to collections.

A question often asked is this: "Can I just delete the negative listings on my credit report without paying the debt?"

The answer is both YES and NO.

Yes, you can have the negative debt listings deleted from your credit report even before paying your debt in full. However, did you know that such negative listings have a way of reappearing on the credit file, sooner or later?

There is a better alternative than running away from your financial obligations.

The BEST SOLUTION is this: you can create a true win-win situation by settling the debt with the creditor.

It is my experience that the average consumer settles a debt for about 75 cents on the dollar. It is also my experience that a professional negotiator will settle an average debt for about 60 cents on the dollar, including their fee. Thus, there is rarely a good reason trying to "settle" your debt on your own and run away from your obligations temporarily.

Creditors will not take you half as seriously as they will take your attorney or professional negotiator.

The consumer rarely has sufficient funds to repay a debt in full when a creditor demands payment.

In many cases, much of the debt represents interest and penalties accrued while the consumer was unable to pay. That's why it is in the best interest of both parties if a reasonable arrangement for settlement can be reached.

However, you cannot expect to reach an affordable settlement if the creditor thinks he has the upper hand. For example, if you tell a creditor that you really need to get this debt settled to get into your "dream home" the creditor may insist on the full balance.

Collection agencies may agree more readily to delete the negative listings than banks or credit card companies. But there are also times when you may have a real problem with collection agencies. This is when they represent a larger, institutionalized creditor. You have the natural advantage in debt settlement, because you have something the creditor wants. You must hold out for your terms until the creditor gives you what you want. Once you've written that settlement check, your advantage vanishes. Get your terms in writing before you even open your checkbook.

Fortunately, creditors make their profits by collecting from their customers, not reporting negative credit information. Many creditors will agree to delete a negative listing upon settlement of the debt, if handled correctly. Do not expect a creditor to honor an agreement that was made verbally.

Everything must be in writing and, even then, you will probably have to fight to make the creditor live up to his end of the bargain.