"I am doing it. Worst case I just flat write them a check for 13k but I'm aware there might be better options - I am having trouble getting clear results when searching online though.": I'm helping a friend with $12,500 in credit card debt. How can I navigate tax repercussions and negotiate a lump sum payment with the credit card company?

Hey Money Minder, I just wanna get straight to the point – I’m set on helping out a buddy with $12,500 in credit card debt. They’ve hit a rough patch and I wanna give them a one-time boost.

I know I can just cut a check for 13k, but I’m wondering if there’s a smarter move out there. Problem is, I’m struggling to find clear answers online.

I’ve heard there might be tax implications for giving over $5,000 in one go. Plus, I’ve heard rumors about negotiating with credit card companies to lower the debt. But I’m not sure if it’s legit or risky.

I’m not related to this friend, but I’m ready to go to bat for them. Any advice on how to handle this sticky situation? I don’t mind getting on the phone and being a bit assertive with the credit card company.

Cheers!

Response from THE MONEY MINDER:

Hello There,

No personalized empathetic greeting is needed in this case.

I understand that you are in a financially stable position and are willing to help your friend with their credit card debt. Firstly, addressing the tax repercussions issue for gifting over $5,000, you can consider gifting the amount gradually over a couple of years to avoid triggering any gift tax implications. Consult with a tax professional for personalized advice based on your specific financial situation.

In terms of negotiating with the credit card company, reaching out to them on behalf of your friend to explore options such as a lump sum settlement could be beneficial. Be prepared to negotiate and present your case clearly and assertively. It’s essential to have all the details of the debt, including the outstanding balance, interest rates, and payment history, to support your negotiation efforts. Remember that each credit card company may have different policies, so be prepared for various outcomes.

Additionally, it might be helpful to evaluate other financial assistance options available to your friend, such as debt consolidation or credit counseling services, to provide them with a holistic approach to managing their debt. Ensure that your friend is involved in the decision-making process and understands the implications of any action taken to resolve the debt.

Overall, taking a systematic and strategic approach to addressing the credit card debt issue will provide a solid foundation for finding a solution that works best for both you and your friend. Remember to maintain open communication and transparency throughout the process to support your friend effectively.

Best of luck with helping your friend navigate this challenging situation.

Farewell,
THE MONEY MINDER