Bargain Away Credit Card Debt

Jan 03, 09 Bargain Away Credit Card Debt
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Finally, the recession is producing tangible benefits for the average American.  Credit card lenders are so worried about huge numbers of people defaulting on their credit card payments that they are willing to negotiate debt settlements that are very favorable to the consumer.  Lenders are lowering interest charges, extending longer payment schedules, and even forgiving substantial amounts of the principal loan in an unprecedented effort to collect as much debt as they can.  Credit card lenders are aware that the recession will inhibit many borrowers from being able to dispose of their full debt amounts.  Industry analysts are predicting that lenders will have to write off as much as $400 billion dollars in debt.

With lenders’ backs against the wall, there has never been a better time for us to renegotiate better terms and begin to climb out from under this massive amount of consumer debt.  Some lenders are forgiving between 20-70% of debt.  However, unlike the government’s plan to buy toxic mortgage backed securities, you must negotiate directly with your lenders.

While each lender has variable criteria for bargaining credit card debt, some general rules apply.  You must be over ninety days delinquent in your payments.  In addition, lenders factor your income and credit history in determining how to restructure your credit debt.  Even with the renegotiated terms, expect your credit score to drop by approximately 100 points.  However, most people would agree that this is a small price to pay for the opportunity to be debt free.

Since credit card lenders are in a bad position, and consumers have more bargaining leverage than ever, heed the usual warnings about credit counselors and debt consolidators.  If possible, negotiate the terms yourself, directly with the lender.  For those able to capitalize, this presents one the best opportunities to put yourself in a better financial position post-recession.  Take advantage.

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1 Comment

  1. You really make it seem so easy with your presentation but I find this matter to be actually something that I think I would never understand. It seems too complex and extremely broad for me. I am looking forward for your next post, I’ll try to get the hang of it!

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