Credit lenders expect to be repaid the full amount of the debt you incur when you charge purchases to your account. This is the ideal situation and is what you intended when you began using your credit card.
The problems arise when you have a financial crisis. This may be caused by job loss or medical bills and for many consumers today the problem is simply a bad economy that challenges them at every turn.
If you miss one credit card payment, your lender will react by raising your APR until you have made six consecutive on time payments on your account.
This adds to your financial stress by raising the amount of payments required monthly and does little to reduce the debt on your card.
A personal financial crisis may be only a cash flow problem that is temporary so the lender will attempt to collect payments as long as it seems you have some ability to pay the full amount.
Loss of income can change that scenario. If your income is drastically reduced through loss of employment, you may be forced to pay only expenses necessary for living.
Your mortgage or rent and utilities are priority items. Feeding yourself and your family is understandably more important than paying your credit cards.
If you wonder how to convince your lender to actually accept a lesser payoff – the answer is that the lender must be convinced you have no ability to pay the full amount of your debt now or in the foreseeable future.
Lenders would prefer to have some debt repayment rather than have the entire debt written off through a default or bankruptcy.
Asking how to convince your lender to accept a lesser payoff is the same as requesting a debt settlement. Credit lenders do not like debt settlements but they accept this is the only alternative for some consumers.
It is better for a credit card company to accept a lesser payoff through a settlement of your debt than to receive no payment at all.
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Do You Qualify?
Debt settlement is not an option meant to make your life easier or provide you with more money to spend on other things. Your lender will be reluctant to accept a lesser payoff and you must be able to show you do not have the resources to satisfy the debt.
Lenders will look at your credit report. If your credit is bad and your reduced income relative to your debt is clearly not manageable, this is one factor in your favor. This may be the only time when a bad credit report serves you well.
When your credit lender can clearly see you have no ability to pay the monthly payment on your card and do not have the resources to pay the debt in full, it is likely the lender will negotiate with you.
How to get a credit card company to accept a lesser payoff is not the same as defaulting on your obligations to pay the debt. What you are offering is to pay a portion of the amount you owe. In exchange, the lender will then close the account as “paid” rather than pursue further payments from you in the future.
This will negatively impact your credit file. However, if you have reached the point where you are focused on how to get a credit card company to accept a lesser payoff, chances are your credit is already in tatters.
By paying a portion of the amount you own on your debt, you close that lender’s file and with time you can overcome the damage done to your credit.