What is settling and why should you consider it? 

It’s important to understand exactly what debt settlement entails versus other relief options. When you settle credit card debt, you’re making a formal agreement with creditors to pay back a lump-sum amount lower than your full outstanding balance owed. In exchange, creditors accept that one-time sum as full resolution and forgive remaining balances. 

The key benefit of settling is obviating those burdensome monthly payments and interest charges that perpetuate the debt cycle. However, settling debts still nukes your credit score and comes with potential tax implications on forgiven amounts. 

If you’ve carefully weighed those drawbacks against your ability to make progress paying debts as-is, here’s a step-by-step playbook for negotiating your own credit card settlements: 

Step 1: Assemble all debts/accounts 

Compile a full list of every credit card, name of issuer, account numbers, current balance, and delinquency status. This gives you a master blueprint of all debts requiring settlement. 

Step 2: Estimate settlement range 

For each card, research the debt balance and use typical settlement range calculators to estimate what 25%-50% lump sum amount could potentially settle that debt. 

Step 3: Prioritize debts for settlement 

Since you likely can’t afford to settle all debts immediately, decide which cards to negotiate first based on criteria like highest balance, highest delinquency, or highest interest rate. 

Step 4: Submit initial settlement offers 

Start contacting card issuers directly and initiating settlement negotiations in writing at the lowest possible amount calculated for each debt based on your prioritization. 

Step 5: Leverage settlement funds 

If issuers counter with higher settlement amounts you can’t afford immediately, explain your financial hardship and limited ability to pay. Offer to leverage available funds for partial lump sum payments if they’ll settle. 

Step 6: Lock in settlements properly 

For any agreement reached on settled amounts, demand written verification from issuers with specific instructions on how/where to remit funds by their accepted deadline. 

Step 7: Update credit reports 

After satisfying agreed settlements, aggressively pursue lenders to update reporting to credit bureaus as “Paid/Settled” rather than charge-offs to mitigate lasting damage. 

Don’t forget to keep records 

Of critical importance is documenting every settlement offer, counteroffer, and agreement reached meticulously throughout negotiations. Never remit payment without written confirmation of the settlement details, total payoff amount, and deadline. 

Consider JG Wentworth 

If negotiating credit card debt settlement on your own seems like an insurmountable task, give JG Wentworth a call to speak with one of our dedicated debt relief specialists. If you have $10,000 or more in unsecured debt, you may be eligible for our Debt Relief Program.* Some basic perks to consider: 

• One monthly payment 

• We negotiate on your behalf 

• Average debt resolution in as little as 48-60 months 

• 24/7 support 

• We only get paid if we settle your debt 

If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side, helping you accelerate your return to financial freedom?