How to Negotiate or Settle Credit Card Debt
The main routes
Three common paths. A hardship program with your issuer temporarily eases terms. A debt management plan through a nonprofit credit counseling agency rolls your cards into one lower-rate payment they negotiate. Debt settlement means negotiating to pay a lump sum less than the full balance, usually only an option once you are seriously behind.
The trade-offs of settlement
Settlement can cut what you owe, but the costs are real: it severely damages your credit, the forgiven amount can be taxable income, and for-profit settlement companies charge high fees and tell you to stop paying (which wrecks your credit further). Negotiating directly with the issuer avoids the company fees. Treat settlement as a last resort.
Start with the least damage
Work down from least to most harmful: first a balance transfer or consolidation loan if you still qualify, then a nonprofit debt management plan, then settlement only if you truly cannot pay. Avoid for-profit debt relief firms that promise too much. See how to pay off credit card debt.
Frequently asked questions
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