The debts have piled up and you can’t foresee crawling out from underneath of them.  The two options you can readily see are equally unattractive:  You can continue to fight month after month to pay your creditors or you can pursue an embarrassing, time-consuming bankruptcy, which will limit your financial options for years to come.  Then, an idea hits you.  “Can I negotiate credit card debt reduction?”

The answer is a qualified “yes”.  In many cases, it is possible to negotiate your debt load with credit card companies.  You may be able to do this by yourself with a few simple calls to your creditor or you could enlist the services of a reputable third party firm specializing in helping those who are overextended.

Credit card companies are willing to negotiate reductions because it’s often in their own best interests.  If a debtor opts for a Chapter VII bankruptcy, those who’ve extended unsecured credit will often walk away with nothing.  The credit card companies see a debt reduction as the lesser of two evils in these situations.  They’d rather get something than nothing.

However, there are a few things you should consider before attempting to lighten your debt load via negotiation.  Let’s look at three considerations.
First, there is an ethical aspect to the decision.  Whether you intended to do so or not, you are personally responsible for the debts you’ve accrued.  The credit card companies made funds available to you based on your promise to repay.  While negotiated reductions might not be as bad for the creditor as a bankruptcy, you are still failing to live up to your agreement.  The importance of that is a personal matter, based on one’s own sense of ethics and responsibilities, but it can’t be ignored.

Second, reducing your debt’s balance will have an impact on your perceived creditworthiness.  The change may very well be noted on your credit record.  This might not have the same negative impact as a bankruptcy, but when other lenders see balance reductions and charge-offs, they’re far less likely to extend credit.  If you’re worried about your future ability to secure loaned funds, reducing your debt burden via negotiation may not be the best options.

Third, you will be burning a bridge with the creditor who arranges a reduction.  In many (if not most) cases, you’ll be asked to close your account completely before becoming eligible for a downward adjustment.  In essence, reducing the debt will compel you to close off one potential source of future credit immediately.  A credit card company may be willing to work with you to create a payable balance, but it’s unlikely the company will want to continue to do business with you in the future.

Fourth, it may be possible to resolve your problems without resorting to this tactic or a bankruptcy filing.  Wise personal finance decision-making and planning have allowed many people who were once mired in debt to take control of their finances in ways that allowed them to fulfill their obligations.  While the idea of escaping your financial situation may seem impossible right now, you may change your mind after exploring other options.

There may be situations, however, in which negotiating a debt reduction can make sense.  If a full survey of your situation leads you to believe that you’d be better off suffering the potential negative consequences of a reduction in order to right your financial ship, it certainly is one option to consider.

So, if you’ve been wondering, “Can I negotiate credit card debt reduction?” you should know that it is a distinct possibility.  Consider the decision carefully and discuss the matter with your creditors if it looks like the best solution for you.  You may find yourself capable of chopping your debt burden down to a more manageable size.