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How to Negotiate Your Debt with Credit Card and Collection Companies

  • Debt
Negotiating Debt

Although credit card debt is frustrating, there are several steps you can take to deal with a debt collector or credit card company. First, it is important to realize that credit card debt will never go away, so hiding your “head in the sand” will not help. You have the power to take control of this process by negotiating with the credit card company. Compared to other types of debtors, credit card companies can be MUCH easier to negotiate with. They are publicly traded; therefore, they are mandated to collect something from you, even if it is only pennies on the dollar. Here are practical steps as well as additional resources to help you. You should be aware that forgiven debt may be considered taxable income.

Step 1: Understand How Much You Owe

Assess how much you owe and if it is with multiple credit cards. Gather the contact information for each credit company for which you have debt. Because your debt is frequently sold from one collection agency to another, they have a hard time keeping track of exactly how much you owe. In fact, the credit card company may have erroneous information about how much you owe. The credit card company has the burden to prove what you owe, so the more statements, cancelled checks, letters, etc. you have, may help your case. 

Step 2:  Explore Your Options

There are basic strategies for negotiating your credit card debt. For each of the following strategies, try to negotiate down and/or have the credit card company waive the interest on the debt plus any late charges.

(Explain your circumstances; In these economically stressful times, ascertain your ability to pay – have you lost your job, are you working part time or full time, illness, unexpected emergency bills, etc. Explain to Collector whey you are unable to pay the amount owed now. Offer these options:

  1. Lump-sum Payment: Offer a lump-sum payment of 10% to  25% of the amount owed or whatever you can afford. This is your best option as it is a one-time payment that is not the full amount of the debt but clears the debt. Your best strategy is to start low and let the credit card company make a counteroffer. You will always get a better deal by making a lump sum payment rather than make payments. It may be in your best interest to borrow money from friends or family to get a lump sum deal.
  2. Workout Agreement for Monthly Payments: If you cannot pay a lump sum, negotiate for monthly payments. Again, your best strategy is to start with a much lower monthly payment than you can make and allow the credit card company to negotiate from there.
  3. Hardship Agreement: Lower the interest rate, suspend late fees, or reduce the minimum payment on a temporary basis. Explain the nature of your hardship and present a plan when you will be able to make monthly payments or a lump sum payment in the future.

Step 3:  Call Your Credit Card Companies

Formulate a general script outlining your financial situation and request. Be clear and polite when calling.

Make it clear that you want to work with them to quickly resolve this matter in a way that satisfies both your interests.

Document every phone call, who you talked to and what their position is.

Be persistent. Representatives for the credit card companies handle tens of thousands of cases and are overworked so you need to be “the squeaky wheel.” You may not initially get “yes” but multiple calls and asking to speak to a supervisor can increase your chances.

Step 4:  Get Everything in Writing

Once any terms are negotiated, make sure that you get the agreement in writing. The agreement is not set unless it is in writing.

Step 5:  Ask if the Credit Collection Agency Will Agree to Mediation

If so contact the Mediation Center of Los Angeles at www.mediationla.org and submit a case only if the other party has agreed to mediate. If not, and you need a lawyer , contact one of the legal clinics set forth below.

If you need assistance to negotiate your debt or repair your credit, contact:


(800) 679-7172

Here are some names of free legal clinics named below. 

Please let us know which of these services was able to assist you so we can update our referral list.

1. Neighborhood Legal Services



2. Inner City Law Center


Downtown LA

1309 E. 7th Street

Los Angeles, CA 90017

(213) 891-2880

3. Legal Aid – Bet Tzedek


(323) 939-0506

4. Legal Aid Foundation


7000 S. Broadway, LA 90003