Credit Card Debt Settlement

For many people credit card debt settlement can offer a real light at the end of the tunnel and a lifeline when they are drowning in credit card debt.

It is remarkably easy to get into trouble over credit card debt, in fact, it is a subject which you can bring up in company anywhere, in a bar, a restaurant, a night at the bowling, a dinner party and it’s almost guaranteed that somebody in your party has allowed credit card spending to get out of control. These days it’s almost regarded as part of growing up, but it doesn’t make it any easier for the people who are now, right this minute, drowning in a sea of credit card debt.

Important Differences between Credit Card Debt Consolidation and Settlement

• Consolidation – when you consolidate all of your debts you still pay off the whole amount. It’s usual to come to some arrangement about the fees and extra interest which has been added, but generally you consolidate all of your outstanding debts into one affordable monthly payment. This can often mean that you are actually paying off your debts over a much longer period, but the monthly repayment amount is within reach.
• Settlement – If you enter into an agreement of credit card debt settlement, then you only pay off a portion of what you actually owe, for example, if you have an outstanding balance on your visa card of say $7,500, you can approach visa and ask them to settle the account for a payment of only $5,000, and if they agree they will write off the rest of the debt, i.e. $2,500. The percentage that they will agree to does vary from company to company, with some willing to settle for around 50% of the outstanding debt and others asking for nearer to 80%.

Credit Card Debt Settlement – Who is Eligible?

Sound good? Well, in some cases it can really help you out of a tight spot, but you do have to go into a little more detail than you may have first imagined. They’ll need to know about your personal financial situation, and will probably need to take a look at your monthly income and expenditure sheets. The criteria for those eligible for credit card debt settlement does vary between companies, but if you find yourself in credit card debt which is spiralling out of control it’s certainly worth a try, whether or not you try it yourself and get in touch with a consumer credit counseling service to try to arrange it for you.

If you can successfully arrange for credit card debt settlement it can wipe the sheet clean and help you to start again with a clean slate. Once payments are complete, however, it’s extremely important that you mend your ways and don’t fall into the same traps again.

• It generally won’t be necessary to cancel your credit cards, but only use them responsibly. Never charge more than you can afford to pay outright at the end of the month unless it is an absolute emergency (not a bargain shoe sale, a real emergency)
• Never pay off the minimum payment, that’s probably how you got into bother in the first place. Always strive to pay off the whole balance immediately, before the interest starts to add up.
• If you do get into trouble again, act quickly before it’s too late and seek help. Cut up your cards and try using that old fashioned method of buying stuff – cash, it still works you know, and if you don’t have it you can’t spend it.