Settling Debt

• Credit card companies are sometimes willing to settle your debt for less than you owe, though they may require that you cancel your account as well. If you call your credit card company and they refuse to work with you, consider working with a credit counselor who may have better luck negotiating a settlement or payment plan.
  
  

Consequences

• When a credit card company settles your debt for less than the amount you owe, this arrangement may be reported to credit bureaus and could hurt your credit. You may also be responsible for paying taxes on the forgiven debt.
  
  

Alternatives

• If your financial situation isn't desperate, consider negotiating for a lowered interest rate rather than a reduction of your total debt. You could also ask that the card company remove any over-the-limit or late fees that are making it difficult for you to pay the minimum amount due on your account. If your current problems are temporary, ask if the credit card company can lower or suspend your payments for a few months while you try to get your finances sorted out.