When thinking about negotiating settlement credit card debt you want to focus on how you can benefit from it. There are several ways to do so. Past interest and fees can be deducted from the current balance, and you can agree to a fixed monthly payment, with less or no future interest charges, until the account is cleared.
Negotiating means talking with a debt collectors usually working for the credit card company itself. They have some quality training like anyone in their respective fields. This training will have shown them how to talk and negotiate with debtors (that is you), how to manipulate your emotions to elicit the reaction they need in order to get the most money out of you. Sound a little over the top? You’d be surprised. Debt collectors often work partly on commission, with department bonuses for top collector. There are, however, some ways you can combat this.
To start with you will want to know as much as you can about your own situation. This means your wages and your spending. To do this you can monitor how you spend money from now on, but it is faster to go back in time by looking at past checking account and credit card statements to review past spending. From there you can construct a spending plan. See if you have some surplus to put toward debts each month. What if you don’t?
Living below your means has become quite popular, especially lately with the recent difficult economy. It means to spend less than your wages. Even if you don’t do this right now, you can start. You can cut costs at the supermarket by picking cheaper brands and reduce the little luxuries to be less frequent but still an enjoyable part of your week. This will free up some much needed cash.
Negotiating settlement credit card debt is pretty easy to do once you take the above steps one by one. Take the first step today.
Photo: Andres Rueda
Home equity loans are the second most popular type of loan next to mortgages. The thing about them is that they work well only if there is already debt owed on the house. Usually the best kind of debt is an already-existing mortgage. Since equity is calculated by taking the market value of the home minus any debts pending, this is the only way to get the value of a home’s equity.
A hypothetical example: say a particular home is priced at $200,000. The owners of the home owe $120,000 on their mortgage. Take the price of the home ($200,000) minus the amount of owed debt ($120,000) and the equity remaining is $80,000. There is a catch, however: lenders will only allow a certain percentage of the equity to be taken out as a loan. The common number is 70 – 80%. So, all you have to do is take 70 – 80% of $80,000. That leaves you with $56,000 – $64,000.
There are still hurdles to be jumped over before the money is yours. These hurdles are summed up in the word “creditworthiness.” In ordinary language, this breaks down into three categories: financial history, debt-to-income ratio, and credit score. This last item is the most important of the three from the borrower’s perspective. A borrower’s individual score is expressed as a number between 300 and 900. The demarcation numeral is 620, below which a borrower is considered untouchable and above which a borrower is looked upon more leniently.
If a borrower has a credit score below 620, they can rest assured that no lender will even negotiate with them. A bad credit home equity loan seems impossible to get. What is a homeowner in this position to do? Fortunately, there is still one option available to them that will get them the loan they want: mortgage insurance from the Federal Housing Administration. Loans backed in this way take lenders’ minds off the risk of advancing money to formerly taboo individuals. The FHA will definitely make the dream of a home equity loan for people with bad credit a reality.
Hiring a credit specialist can be a good way to help get out of debt if you are experiencing problems. The specialist can help to communicate between yourself and those who you owe the money to as well as any credit reporting agencies involved. The main goal of a professional credit specialist is to help minimize any damage that your credit history may suffer when you cannot pay for the money you borrowed. However, they cannot legally erase credit card debt but they can help you to solve other problems with credit debt.
A good credit counselor will help to put you back on the road towards getting a good score on your credit. If you have a bad credit score you cannot buy simple products like electronics or furniture. To buy most of these things you will need a reliable credit score otherwise you may not be allowed to purchase them through financing. This can be problematic especially if you don’t have a lot of initial money to work with.
By working with a specialist you will be able to build up your credit score again and start making regular payments toward your debt. They will be able to tell you what you are doing wrong and give you advice on some different processes of credit like budgeting and keeping track of the amount of credit you pay each month.
Even with a specialist helping, you will still have to change the way you make payments. Bad credit habits are likely what caused this situation in the first place so you have to do things differently. A specialist may be able to give you some advice on this but ultimately it is your decision whether or not to implement it. It is easy to buy finance multiple items at once, but later you may find that you cannot make all the payments on time, this is the type of thing that leads to a bad credit history. Buying items that you don’t need is also unnecessary and you may be spending money that you’ll need later.
Lots of people who’ve had debt problems in the past and decide they can’t live without a credit card look online specifically for credit cards for people with bad credit. The best advice, however, is to decide you don’t need credit cards and avoid them.
It’s not easy to live without credit cards today. With salaries seeming to get smaller and the price of everything going up, sometimes floating credit from month-to-month seems the only way a person can get by. But the best thing you can do for yourself and for your future is to avoid these types of credit cards at all costs.
Credit cards for people with bad credit might sound like a good idea because you can reestablish your credit and be able to afford things that you might not have the cash on hand to buy right now. The problem is you’ve already shown yourself that you have trouble with debt. While bad credit can come from circumstances beyond our control, very often we have it because we overspend and then have trouble keeping up with the payments. Have you mastered that problem? If you have any doubt then credit cards that are aimed at people like you who’ve had credit problems are only bound to get you in deeper.
Even if you’ve paid off all of your debt and you get one of these cards, you can run up a bill very quickly. Yes, many of them have low credit limits to start but they tack on monthly fees that you pay for the privilege of getting the card and they have extremely high interest rates. You can very quickly let the amount you owe spiral out of control. These cards, unless you can truly budget yourself and manage them well, will often just help you get back into debt problems and make your credit even worse.