Let’s face it—credit cards are convenient until the bill arrives and you’re neck-deep in debt.
With rising inflation and unpredictable incomes, it’s easy to rely on credit cards for daily expenses. But soon, the snowball effect kicks in—minimum payments, late fees, interest, and before you know it, you’re stuck.
Example: Raj, a marketing executive in Delhi, lost his job during the pandemic. He survived for a few months using his credit card. Now he owes ₹3 lakhs and can’t even afford the minimum due. What are his options?
Credit card settlement is a mutual agreement between you and your bank where you pay a part of your outstanding debt in a lump sum, and the bank agrees to waive off the rest.
Yes, your credit score takes a hit—but it saves you from lawsuits, harassment, and lifelong debt. It’s legal, and it’s often the most practical route for genuine defaulters.
You should consider settlement when:
Step 1: Assessing Your Financial Situation
First, get real with your numbers. What’s your total outstanding? Can you arrange a one-time payment (say 40-60%)? If yes, move forward.
Step 2: Contacting the Credit Card Issuer
Call the bank’s recovery or customer service team. Let them know you’re financially distressed and want to explore a settlement.
Tip: Don’t panic. Be honest and firm.
Step 3: Negotiating and Receiving the Offer
The bank might initially resist, but will usually offer a settlement amount after checking your payment history and delinquency status.
Example: For a ₹1,00,000 bill, they may offer settlement at ₹50,000.
Step 4: Getting a Settlement Letter
Never pay a rupee without a written settlement letter. This document is your protection against future claims.
Step 5: Finalizing the Settlement
Make the lump sum payment within the stipulated time, and your account will be marked as “Settled.”
✅ Benefits of Settlement
❌ Disadvantages of Settlement
If you tick one or more of the boxes below, settlement may be for you:
✔ You’re unemployed
✔ Your monthly income can’t cover minimum dues
✔ You’ve maxed out multiple credit cards
✔ You’ve already defaulted and the bank is threatening legal action
| Debt Relief Option | Definition | Impact on Credit Score |
|---|
| Credit Card Settlement | Pay a reduced amount in lump sum | Negative |
| Debt Consolidation Loan | New loan to pay off old ones | Neutral to Positive |
| Balance Transfer | Transfer dues to lower-interest card | Positive (if managed well) |
| Credit Counseling | Financial advice and restructuring | Neutral |
| Bankruptcy | Legal discharge of all debts | Severely Negative |
Once settled, your account is marked as “Settled” instead of “Closed.” This tells future lenders you didn’t repay the full amount.
Expect a drop of 75–150 points on your CIBIL or Experian score.
Technically, yes. Realistically? It’s tough.
Ways to attempt removal:
Keep your settlement letter safe in all cases.
Technically, yes. Realistically? It’s tough.
Ways to attempt removal:
Keep your settlement letter safe in all cases.
Going solo in a financial jungle? Risky.
LoanRelief offers:
✅ Expert negotiation with banks
✅ Legal protection from harassment
✅ End-to-end support
✅ High success rate and lower settlements
Thousands of Indians have restarted their financial journey with us.
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