Canadians are billions of dollars in credit card debt, in addition to the billions in auto loan debt, student loan debt, mortgage debt, and the list goes on. Is your life over? Nope, but it is difficult to survive in life knowing how indebted you are. Instead of just accepting your debt, you should find ways to eradicate it from your life. This begins by contacting your credit card company and coming up with a strategy.
Canadian consumers are barely keeping their heads above water. It is a tough racket out there as millions continue to live paycheque to paycheque. Occasionally, you’ll get temporary relief from borrowing emergency loans, although this may not be a sustainable long-term solution. But does this mean that you will forever be chained to a ball of debt? Not quite. You can fight the debt monster by taking it head-on, which could start by getting in touch with the credit card company or by speaking with a credit counselling service.
Remember, you have options. Just be sure you have the knowledge to properly and safely settle.
Here are nine things you need to know on how to settle credit card debt:
1. Creditors Will Help Struggling Consumers
One of the best ways on how to settle credit card debt is to talk to the lenders. A lot of lenders are willing to work with struggling consumers who are having a tough time keeping up.
On one hand, a credit card company may not help a family earning $500,000 a year but unwilling to pay the minimum balance because they do not feel like it. On the other, if the creditor sees that a household earning $45,000 a year and has trouble paying the minimum balance, especially as they repeatedly try, then the firm will offer some assistance.
What type of assistance? There are many things these companies could do:
- Suspend interest for an agreed period of time.
- Reduce a portion of the credit card bill.
- Come up with a reasonable repayment strategy.
It is all about meeting the company in the middle, not avoiding the company like the plague.
2. Do Not Lie About Your Situation
The worst thing you can do is lie about your situation. This is a bad idea because eventually you will be found out, whether it is an expensive purchase or a fib you accidentally tell a customer service representative who is recording your conversation. Remember, honesty is the best policy!
3. Save and Record Information
Telephone conservations, back and forth emails, or written letters – it would be a good idea to record all the information you give and receive and then save these communications. This is important should the credit card company renege on its commitments.
Indeed, it is imperative to get everything in writing, no matter how benign or unimportant it may be
4. Upfront Settlement Payments Are Unnecessary
When you negotiate a credit card settlement, there is a mistaken belief that you need to make an upfront settlement payment. This is incorrect.
Under federal law, debt settlement firms are prohibited from collecting advance fees, or upfront charges. This rule has been in effect for nearly a decade now. In fact, according to regulations, these organizations are required to set aside a portion of consumers’ payments at an insured financial institution, which is then administered accordingly.
One more thing: If you decide to withdraw from the process within seven business days, then you will not be subjected to a penalty and you can receive any money you may have paid.
5. Your Credit Score Will Hurt
Just because you are tackling your credit card debt, it does not mean that you will be rewarded with a sublime credit score. In fact, because you are negotiating a credit card settlement, your credit rating will take a hit. By how much really depends on your situation, the amount, and the length of time you agreed to pay off the debt.
6. Avoid Credit Card Collectors
Here is a bit of advice that will help you in the end: avoid credit card collectors and deal directly with the credit card company.
These debt collectors act as the middleman, which turns everything into a game of broken telephone. So, if you receive a telephone call, then inform the associate that you will be working directly with the credit card business.
7. Ask Plenty of Questions
When in doubt, ask questions.
For some reason, we are afraid to ask questions, but we should not. Or, a common problem today thanks to our busy lifestyles, we only come up with a relevant question until later. Hey, it happens.
That said, if you come up with a question, then be sure to contact the creditors immediately. You should never just guess or decide to contact the lender in a few days.
8. Magical Solutions
If something is too good to be true, then it probably is. Unfortunately, there is no magical solution to your pecuniary problems. Someone is not going to come from the sky and drop off a bag of money on your doorstep. You need to tackle the problem headfirst because that is the only way to solve your fiscal difficulties.
A lot of companies might prey on financially struggling households, offering them all sorts of ways to resolve your debts. But here is the thing: If somebody says that he or she can reach a debt settlement and eliminate all your debt, then that person is lying. You can’t do this.
You can gradually repay the debt or you can come to a settlement to cover a portion of the debt. There is get out of jail free card!
9. You Will Always Have Options
In the end, you always have plenty of options as long as you get in touch with the credit card company and explore them. Creditors want to recoup any of the money they lent to you because anything is better than nothing. So, rather than just hoping for the whole thing blows over, you should start understanding what your options are and what you can do to remove this noose around your neck.