Outstanding debt is not a matter to be ignored, and the stress that stems from it can be utterly debilitating.
If you have any outstanding debt on your Citibank credit cards and are unable to make your monthly credit card payments, the uncertainty of what to do about it, what your options are, or where to even begin surely may be keeping you up at night—understandably.
Though it may take a lengthy series of negotiations, the goal of settling your debt can be achieved once you understand the basics of debt settlement and the steps you need to take to relinquish yourself from your daunting credit card debt.
What is a Debt Settlement?
To rid yourself of your outstanding debt and late fees, it’s essential that you first understand precisely what a debt settlement is.
A debt settlement is a relief option offered by banks and credit card companies wherein they forgive a percentage of your debt so long as you comply with the terms of the settlement agreed upon.
This simply means that rather than paying back full amount, the credit card company to which you are indebted will eliminate your debt as long as you pay back the reduced amount in a timely, agreed-upon fashion.
The amount of time allotted for you to pay back the reduced amount can vary depending on your unique situation and negotiation. Still, generally, you will be required to pay it back in a lump sum payment or over a short-term payment plan.
You might be scratching your head, wondering why credit issuers would allow for this—what’s the catch?!
It will impact your credit score. The impact of debt settlement on your credit score can vary depending on many factors, including each credit card issuers current condition and reporting practices. The amount you owe in total and what kind (if any) will also play into this decision-making process. It’s important to review your credit report and decide if a settlement is best for your situation. That said, the impact would be far less than a charge-off.
However, Credit card companies, such as Citibank, would rather you pay back a percentage of the total debt you owe versus declare bankruptcy and pay them nothing at all.
If debt settlement for your Citibank credit card debt sounds like your right of passage, the first step is doing your homework and gather all the necessary data before diving in.
Steps to Settle a Credit Card Debt with CitiBank
1. Understand your finances
Get familiar with your funds by answering the following questions:
- How much income do you expect to generate every month? Take the time to create a detailed list comprised of all your monthly income, including salaries, interest, pension, etc.
- What is the total amount of money you put toward your monthly bills?
- Tracking all of your expenses is not as difficult as it once was. Utilize tracking tools available to you, such as credit and/or debit statements, or expense tracker apps such as Mint, Goodbudget, etc.
- Distinguish which of your monthly payments are fixed costs (such as your rent or mortgage, insurance payments, student loans, personal loans, medical bills and any other unsecured debt.) and which are flexible expenses (those that vary each month, like food, entertainment, travel, etc.). If you notice that some of your flexible expenses vary quite drastically from month to month, a good rule of thumb is to estimate those expenses with a 3-month average of each category’s total.
- How much total debt do you have?
- It is essential to be aware of your other debts if you owe more than your Citibank credit card debt alone, as this will determine how much you can afford for your debt settlement.
2. Determine how much you can pay for the debt settlement
As far as the funding of the settlement, you should certainly try to raise the necessary funds as soon as possible to be prepared if Citibank does decide to accept your offer. Citibank creditors often request payment within a relatively short time frame once a settlement is agreed upon.
This might sound intimidating, but once you have a firm grip on your average monthly cash flow, you will be rewarded with not only a solid understanding of how much money you can realistically afford to pay for your Citibank debt settlement, but also the capacity to budget accordingly so that you can increase your disposable income to save for your settlement.
Attaining this information will empower you by way of knowing the amount that you can afford, which is critical because if Citibank accepts an offer you made in which you cannot afford to pay, it could damage your ability to negotiate with them in the future, throwing a major wrench in your debt dissolvement destination.
It’s important to note that when you do make your offer, it should be a reasonable amount—ideally, 40-60% of your total debt.
Do not make the mistake of going in blind or throwing out low-ball offers, as Citibank creditors will inevitably reject them without hesitation.
3. Stash some cash
After you determine how much you can afford to pay for your Citibank debt settlement (and hopefully that amount is 40-60% of your total debt), you will need to raise the necessary funds as soon as possible BEFORE contacting your Citibank creditor.
Remember that having the funds at your disposal BEFORE contacting your creditor is crucial because if Citibank does decide to accept your offer, they likely will request payment within a relatively short time frame once a settlement is agreed upon.
Don’t put yourself in a worse-off position by making offers before you have enough cash on hand. Instead, stockpile your necessary funds, then contact your creditor.
4. Negotiating the Debt Settlement
When it comes to negotiating your Citibank debt settlement, you have a couple of options.
You certainly can negotiate with your Citibank creditor to settle your debts yourself—this option is better suited for individuals whose debt is that of a smaller amount.
Below are a few tips for if you choose to try a do-it-yourself negotiation process:
- When contacting your Citibank creditor, be sure to keep your composure and remain unemotional when explaining your financial situation. The creditor does not have to negotiate or comply, so keep in mind that being rude or highly emotional will not get you any closer to your goal of erasing your debt.
- Be persistent and convincing. If, at first, your Citibank creditor rejects your offer, be prepared to back up your offer with an explanation that demonstrates why settling would be beneficial for them.
- Deliver a concise, professional negotiation letter that clearly states your arguments and hardship plan. Keep copies of every document organized and stashed away in a safe place along the process.
The other option available to you is hiring one of many professional debt settlement companies. If you owe a significant amount of money, this option will likely serve you best.
A debt settlement service will take on the burden of negotiating with your Citibank creditor for you, as they have the knowledge and experience to do so with their debt management program.
The main benefit of using a professional debt settlement service is that they have the leverage to negotiate on your behalf and can often get creditors to agree to settlements that are more favorable than what the debtor could achieve on their own.
One such company is CuraDebt. CuraDebt is a national debt settlement company that has been in business for over 20 years and has helped thousands of people settle their debts.
CuraDebt’s credit counselor will work tirelessly to get you the best possible settlement agreement with your Citibank creditor.
Determining what defines a ‘good settlement’ can be extremely difficult and will bring up the following issues:
- Should you disclose your financials?
- Should you agree to the offer your representative suggests? Or is there a possibility you could get a better one?
- How is this offer validated? How can I seek out validation?
- Do I need to have the offer in writing?
- Is the written offer legitimate? And is it binding on all parties?
- Am I covering all legalities?
If you do owe a significant amount of money and you feel totally overwhelmed just thinking about the above questions, perhaps hiring a debt settlement service is the answer for you. Doing so will help relieve you of the stress and anxiety that comes with the territory of handling this situation on your own.
You might find it odd to pay someone to save you money and negotiate on your behalf, but experienced debt negotiators are highly likely to save you far more than the fee they charge.
These professionals have experience and a network of connections that the average person does not and can therefore settle debts that you could not reconcile on your own.
5. Get Everything in Writing
The final step to take after negotiating a debt settlement agreement with your Citibank creditor is to formalize your agreement in writing.
You can have your creditor write a workout agreement and send it to you or write the agreement yourself.
Note that if you do choose to write the letter yourself, you should send two copies of said agreement to your creditor so that they can send a signed copy back to you to keep for your files.
Regardless of which route you choose to take, your Citibank debt settlement agreement must enclose the following:
- The name of your creditor company (Citibank)
- Your full name
- Your applicable account number
- The debt that is owed and the settlement amount that was agreed upon by both parties
- All settlement offer terms, including the number of payments to be made and due dates (unless you are paying a lump-sum; then all that is needed is the lump-sum settlement amount and due date)
- Confirmation that once your settlement is paid in full, your debt will be forgiven, and your creditor will stop all collection efforts
- Any necessary disclosures required by your state of residence
Wrapping it Up
Now that you understand the steps it takes to erase your outstanding debt and bring you peace of mind, all that is left to do is put practice into play and begin your credit card debt settlement.
if you are experiencing financial hardship and are looking for debt relief from your Citibank credit card, take it one step at a time—gather all the facts, become an expert of your own finances, and determine how to go about negotiating your Citibank debt settlement before it goes to debt collectors.
When you make the initial phone calls to your Citibank creditor, keep in mind that they are in business and are simply doing their job. Unfortunately, it is not uncommon for them to employ intimidating language and tactics to cause you to panic and make a rapid decision on paying your credit card bill that may not be in your best interest.
Remain calm and unemotional. Explain your situation to the customer service agent in a composed manner, and once you reach an agreement, design your plan of attack so that you can make your lump sum settlement or minimum payment on time and ultimately achieve your goal of settling your debt.
