Credit Card Debt Settlements – Why Credit Card Debt Will Be Easier to Negotiate in 2010

What are the essential requirements for any and every negotiating session to succeed? For starters, both parties should be prepared to compromise. If one party has absolutely no reason to make any changes to its stand, then it is obvious that the negotiations process will fail.

You should have something that the other party wants and the other party should have something that you want. This ruling is particularly true as far as debt relief negotiations are concerned. For very long time, debt settlement was never a worthwhile solution for debt problems because the credit card issuers saw no reason to negotiate. At the worst, you may opt for bankruptcy.

This was not a very big problem for the card issuers. They would simply write off the losses and want to recover more money from the other customers. This was one reason why debt settlement was a very less utilized solution.

So, what has changed today? Why is it that credit card issuers are prepared to negotiate? There are numerous reasons. For starters, the card issuers have discovered that a large number of their borrowers are either defaulting or close to default. This means that chances of recovery of money from the cardholders has become remote.

Bad debts that range from 1% -5% of the total assets can be written off without any difficulty. However, if this figure increases to 15% to 20% of the total assets, the card issuers will end up facing potential bankruptcy themselves. This is exactly what happened when the recession hit the economy.

A large number of persons opted for debt relief and debt solutions like bankruptcy. The end result is that credit card companies found themselves floundering. Today, they are prepared to negotiate for this reason alone.

Secondly, the stimulus package is making a huge difference to the attitudes of the card company. There was a time when even the government could not convince the card issuers to be lenient. The government had to step in when the housing bubble burst to prevent the millions of people from ending up on the street.

The government could not do so as far as credit card issuers were concerned. However, the request for stimulus package by the card issuers save the bargaining chip that the government needed. Today, the pressure from the government is also a factor that is helping individuals get debt relief.

Recovery is expected to begin by 2011. Here, it is just a matter of time before the credit card issuers start going back on the generous settlement deals that they are offering. This is the reason why this year is going to be very cruel for those who want to negotiate and reduce debts.

Source by Vikram Iyer

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