What is a credit card debt?
Credit card debt is an example of unsecured consumer debt, accessed through credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.

The results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies. Being late on a payment is sometimes referred to as being in "default". The late payment penalty itself increases the amount of debt the consumer has.

When a consumer has been late on a payment, it is possible that other creditors, even creditors the consumer was not late in paying, may increase the interest rates the consumer is paying. This practice is called universal default. To help you solve your credit card debts and save money from paying debt settlement companies, read the articles below to learn how you can settle your own credit card debts.

How to Settle Your Credit Card Debt

By Kenny Golde - eHow Community Member

"The Do-It-Yourself Bailout"
Negotiating settlements on credit card debt is one of the fastest ways to reduced large portions of your credit card debt permanently. Although there are many companies advertising on radio and television to work for you in settling your credit card debt, it is possible to do it yourself without paying additional fees or a percentage of the amount you save to a third party. Here are five major points to keep in mind when settling your credit card debt.

Step 1 - It will be necessary to stop making payments on your credit cards.

Generally, it seems that most banks, credit card issuers and other lending institutions are not interested in negotiating settlements with customers who are current on their payments. In my experience, most people who could save many thousands of dollars through debt settlement will not do so because they do not want to miss payments for two reasons.

a. First, they are worried about their credit score.
The fear of hurting our credit score is quite common. Though I do not suggest that you should toss all concern for your credit score to the wind, I do suggest that you include consideration of your credit score as one point in a larger context of your overall finances. Your credit score is a tool that lenders use to determine the risk in lending to you. In many cases, having a lower credit score does not mean that you cannot get credit, only that the credit will come at higher interest. If the amount you can save through debt settlement greatly exceeds the amount you will pay through higher interest on a future loan, than the benefit of settlement outweighs the drop in credit score. 

b. Second, they fell somehow "wrong" in missing a credit card payment.
This is because we, as individuals, are taught to attach a great deal of emotion to our finances general and negative emotion to debt and the inability to pay off debt. By separating all emotionality from debt, you will be more successful in your settlement negotiations, which brings us to point number 2.

Step 2 - Treat debt settlement like a business negotiation, because it is.

There is nothing wrong with you for being in debt. You are not a failure or a bad person. Our world runs on debt, every dollar in your pocket represents debt (the U.S. government owes the Federal Reserve $1 for borrowing that note). You are encouraged to borrow for school, cars, clothes, gasoline, homes and business. And in today's economy, many of us are turning to credit to meet the shortfall between our income and our monthly expenses.

This is the world we live in and the businesses that have chosen to lend money understand that life happens and some of their loans will not be repaid in full. The work those numbers into their business model they same way retailers know that November and December will be big and January will have a lot of returns. So when a collection's agent tries to intimidate you by calling into question your integrity because you are asking to settle the debt for less than is owed, remind yourself that this is a business deal and in business everyone is trying to negotiate the very best position for themselves or their company.

You are the C.E.O of your own corporation, the corporation of You, and You have the right to reach the best financial terms for the health of your company as any other C.E.O. of any other business. One of the primary functions of every corporate C.E.O is keeping an eye on the company's debt balances and negotiating out of debts, writing off debts, or selling debts in order to raise capital. You read about it every day in the Wall St. Journal. And they never take it personally or tell themselves they are bad people for doing it. If you're going to play the same game, put yourself on the same playing field.

Step 3 - Be patient.

In my experience, it takes three to four months from the time you stop making your payments before the banks or credit card companies will begin making settlement offers and their first offers will be very high. My own first offers ranged from 85% of the total debt to 92% of the total debt. One company offered to settle for my entire balance less the interest that had accrued from the time I stopped paying (no savings there). Usually, around the six month mark the bank will be getting ready to send the debt to a collection agency who will pay them far less for it, sometimes as little as 5%. Before that happens, they'll be motivated to settle with you for more than they'll get from collections. Generally, I hear about settlements in the 30-35% range as common after six to eight months of negotiating. I've heard as low as 15% but rarely. One of the biggest drawbacks to using a service agency to negotiate your debt (even one of the honest few) is that they don't have the same stamina as you. They are either working for a fee and what to put in as few hours as possible to up their hourly rate on that fee, or they are working on a commission and want to book it as quickly as possible. So when the first offers start coming in at 50-60%, they may tell you to take it because they book their fee and move onto the next client. You, on the other hand, will have the patience to wait two, three, four more months for a settlement in the 35%, maybe even 20% range because it means a greater savings to you.

Step 4 - I settled a card with a $76,000 balance for only $25,000. Get your settlement agreements in writing.

I cannot stress this enough. I had one bank offer me a settlement, which I accepted, then tell me to send them the money and afterward they would send me a statement saying the account was settled in full. I asked, "Would you pay for a house and then look at the loan agreement?" Of course not. I had another bank settle with me then send the balance (the amount written off) to a collection agency to try to collect on it. If I hadn't had a settlement agreement in writing I might have been stuck with that debt but with the agreement it went away.

Step 5 - Live your life.

Too often we allow serious debt and the stress associated with it to define our lives, our relationships, our moods and our actions. Along with giving up the emotion attached to debt, give up the sense that you have to stop enjoying life just because you are having financial troubles. Smile, walk in the park, go to a movie, eat ice cream, love you spouse, laugh with your children. You have the debt, live with it, don't let it live you.

Tips & Warnings
If you are considering debt settlement, please discuss the process with an attorney specializing in bankruptcy issues and your accountant.

Recommended Debt Guide - 01
My best recommended ebook guide on DIY debt settlement guide is the Ultimate Debt Guide, written by Scott Stephen. This ebook reveals all of the 'filthy lies' and nonsense going on with the so called "expert advice" from debt settlement companies. The ebook guide was written based on Scott Stephen's experience of going through the debt consolidation process many times in his life and eventually had to declare bankruptcy on three separate occasions.
For more details, visit the website at ===> www.ultimatedebtguide.com

Recommended Debt Guide - 02
If you'd like to improve your knowledge on DIY credit card debt settlement, I also recommend you to read an ebook guide on DIY credit card debt settlement written by Maria Martin, who exposes the complete tips and guide on how she settled up to 50%-80% of her credit card debt balance from 5 credit card companies!
Visit her website at ===> www.secrets2debtsettlement.com

Settle your own credit card debt

How to settle credit card debt yourself

If you’re facing problems making your credit card payments, you might find help in the most unlikely place – your credit card issuer. As more Americans fall behind on their bills, credit card companies are having to write off this debt. To cut their losses, issuers now appear to be more open to settling or negotiating a payment plan for your credit card debts. Here’s your best strategy for cutting a deal.

1) Get in touch with your lender

If you’ve lost a job or your monthly payments are just unmanageable, call your credit card company before you miss the first payment. Your lender may be more willing to work with you. Ask to have your interest rate lowered or try to negotiate a payment schedule. Banks are generally more willing to change the terms of your contract than to forgive your balance.

2) Getting your debt settled

Credit card companies don’t have hard and fast rules about who qualifies for debt settlement. In general however, if you’re 90 days or more delinquent on your credit card bill and there’s no hope of paying off your card, your lender may offer to settle, or forgive a portion of that debt.

Make sure you call your lender and ask about this option. But keep your expectations in check. It’s unlikely that all–or most– of your credit card debt will be wiped away. And beware that if you do settle some of your debt, it may be reported to the credit bureaus as a debt settlement. And that could hurt your credit score for years to come.

On the other hand, if the debt settlement is reported as “paid in full” on your report, it may not have a negative impact on your score. Make sure you ask exactly how it will be reported to the credit bureaus. In addition, if the portion of the forgiven debt is over $600, you will have to pay income taxes on that amount.

3) Forget third-party debt settlement companies

Don’t buy into ads from debt settlement companies that promise to cut your debt in half. They usually charge high fees for services you can perform yourself for free. If you aren’t able to negotiate at all with your credit card company, seek help from a non-profit accredited credit counseling agency like the National Foundation for Credit Counselors. Counselors can negotiate with credit card companies on your behalf and you may be put on a debt management plan to help you pay down your debt.

Thanks for visiting this blog and I hope that you'll succeed in settling your debts. Good luck!