Credit Card Debt Settlement Letters

Credit card debt settlement letters are those letters sent to your creditor or from your creditor during the process of settling debt. It is very important that if you are going to settle debt that you get all the details in writing.

What is Credit Card Debt Settlement?

Credit card debt settlement involves paying off your credit card for less than what you owe. Your credit card company, fearing that you will either declare bankruptcy or that you will simply default on the debt entirely, may agree to accept a settlement offer for less than the full balance if they believe that it is the best way for them to collect as much as possible on the account. They will usually take a one time lump sum payment for an agreed upon amount and then close your account.

Writing Debt Settlement Letters

If you want to settle your debt for less, you usually have to be somewhat behind on your payments. Once you have fallen a few months behind, consider sending a debt settlement letter. The letter should contain:

Details about you and your account balance so the person who receives the letter can look up any information they need
An explanation of why you need to settle debt or why you cannot pay your bills.
A proposed settlement amount and a proposed settlement date. For example, you may offer to pay back $500 of your $1000 balance by two weeks from Tuesday if they accept the settlement. While some credit card companies will allow you to work on a payment plan and still settle for less than what is owed, they are likely to be more receptive to debt settlement letters that promise the cash all at once.

Your credit card company may accept the settlement offer or may counter with an offer of their own. They may ask to see financial records such as pay stubs and tax returns so they can get proof that you really may not be able to pay more than you are offering.

Getting it In Writing

If a credit card company agrees to let you settle debt for less than what you owe, make sure they send you a debt settlement letter from their end specifying the terms of the deal. The debt settlement letter should make clear that they are accepting the payment is payment in full and that there will be no further collection efforts on the debt. Do not send in your payment or provide your bank account information until you have everything from the creditor in writing.

Getting Help

If you are trying to settle debt or interested in writing a debt settlement letter, consult with an experienced debt settlement attorney. He or she is experienced in writing debt settlement letters and can help you maximize your chances of coming to an agreement with the credit card company.

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