The business of credit-card debt

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Advertisers know that you’re more likely to buy a product if it will make you feel good. Well, debt collectors know that you’re more likely to pay off your debt if it will make you stop feeling bad. So, debt collectors go to great lengths to throttle up your depression and anxiety by threatening to garnish your wages, place a lien on your home or sue you.

The key is to take the emotions out of the equation and treat debt negotiations as you would any other business deal, advises Kenny Golde, who runs SettleYourCreditCards.com and is the author of “The Do-It-Yourself Bailout.”

Golde, who is an independent filmmaker, found himself with credit-card debt that totaled $212,000 when the sole investor that he had for a movie that he was directing in 2007 died and production of the film went over budget. He was paying $4,000 monthly in interest on his credit cards with only just enough cash remaining to hold out 6 months, at best, he says. Golde took on his creditors and reduced his debt to $30,000 in 6 months by getting $115,000 written off and paying $67,000.

Here’s what he learned:

  • Hold out if a creditor’s first offers aren’t affordable.
  • Don’t fear the prospect of being turned over to a debt collector; settlement offers become more affordable when this happens.
  • Remember that lawsuits don’t necessarily lead to court. Creditors still are willing to negotiate at this point.