Credit card debt settlement is an effective way of avoiding bankruptcy and getting out from under your debt load in a relatively short time - just 12 to 36 months depending on your particular situation. While it is not the perfect debt relief solution for everyone, it may be right for you if paying off your debt while avoiding bankruptcy is a priority.
If you have never heard of credit card debt settlement before, it is important that you understand all the facts so that you can choose the debt relief strategy that is most appropriate for you.
Understanding Debt Settlement:
Pros and Cons
What is credit card debt settlement? This form of debt relief is an option for avoiding bankruptcy that involves using an experienced professional to negotiate directly with your creditors in an effort to help you get debt-free as quickly as possible. Using a knowledgeable credit card debt settlement specialist can give you the following advantages:
- Reduce your total debt amount by 40%-60%, allowing you to
get out of debt more easily
- End harassing creditor phone calls at work, at home and on
the weekends
- Debt settlement negotiators handle all future communications with creditors, sparing you the stress and heartache
While credit card debt settlement is attractive to those avoiding bankruptcy, it is not without its downsides.
How Debt Settlement Works
This debt relief strategy requires that you stop making payments to creditors entirely. Instead, you save your “payments“ in a special account. When that amount approaches 40%-60% of one of your account balances, your debt settlement negotiator contacts your creditor and offers to settle for that lump sum on the spot.
While this debt relief option is effective, there are challenges you have to face when using this bankruptcy alternative strategy:
- Credit card debt settlement involves stopping payments to creditors completely.
This results in late and delinquent payments on your credit report.
However, your negotiator can request the creditor remove these
black marks as part of the terms of the settlement.
- There is a potential that you will be sued during the nonpayment
period. However, many people who choose credit card debt settlement as a
way of avoiding bankruptcy are already missing payments and
risk this anyway.
- If the portion of your balance your creditor writes off as unpaid is greater
than a certain amount, the IRS may treat that “savings“ as income and
require you to pay taxes – but only if you are financially solvent at the
time of the settlement (which many people are not when they get to the
point that credit card debt settlement is a necessity).
While credit card debt settlement has short-term negative effects, it is an acceptable option for those set on avoiding bankruptcy as a means to get out from the load of their heavy debt burden.
Credit Card Debt Relief Through Settlement – What Qualifies?
The following types of debts can be resolved using a debt settlement
negotiator:
- Credit Cards
- Unsecured Loans
- Unsecured Personal Loans
- Unsecured Personal Lines of Credit
- Collections and Autos in Repossession
- Medical Bills
However, not every type of debt is eligible for debt relief. These types
of debts must be resolved in a different way:
- Lawsuits, IRS Debt and Unpaid Taxes
- Utility Bills and Auto Loans
- Government Loans
- Student Loans
- Secured Debts
- Home Loans / Mortgages
Evaluate All Debt Relief Options Before Choosing Debt Settlement
Credit card debt settlement is not for everyone. It is typically for people who are experiencing a “hardship“, or a situation where someone cannot continue to pay on his obligations but is set on avoiding bankruptcy and protecting his or her assets.
There is no easy way out, but there are easier ways than bankruptcy. Credit card debt settlement may be the option that best meets your particular long-term needs. Contact one of our debt settlement negotiators now at 1-877-956-1500, and discover if this form of debt relief is the right choice for you.
