Debt Settlement as an Option

If you find yourself mired in credit card debt there are many options available to you to resolve your financial problems. One option is working with a debt settlement company.

Reducing Your Credit Card Debt Amount

Debt settlement companies work on your behalf to reach an agreement with your credit card companies to determine a payment amount that is reasonable for your needs. In many cases, a debt relief counselor can negotiate your credit card debt downward and save you a great deal of money in the process.

Often, consumers find it tempting to try to negotiate with their credit card companies on their own. However, they quickly discover that customer service representatives usually do not have the authority to make changes on their account balance.

Negotiating with a credit card company on your own takes a great deal of patience and many, many telephone calls and is often an exercise in frustration. Credit counselors and debt relief specialists have specialized training in working with credit card companies and are often able to reach a satisfactory settlement agreement much more efficiently. This can be especially beneficial if you, like so many Americans, have multiple credit accounts you are struggling to pay each month.

Impact on Credit Reports

Working with a debt relief agency can have a tremendous positive impact on your credit report in the long run. Debt settlement companies are able to help you get out from under debts that may be strangling you every month. Once you have settled your debts with a one-time lump sum payment, your account will be shown as resolved on your credit report. With your account resolved, you will eliminate the chance of having further late or missed payments on that account.

When your make your resolution payment, your credit card account will be closed and you may not use it again in the future. Initially, this may have a negative impact on your credit score. However, if you maintain positive and healthy financial behaviors with other accounts, then your credit score will quickly recover and improve accordingly.

You are not alone if you are struggling with making payments to credit cards. Literally millions of people are having this same problem in today’s economy. If you need help and want to get out from under your financial problems, there are options and help available. Working with a qualified debt relief counselor can provide you with unbiased guidance and help you get back on the road to financial health.

The Debt Settlement

Credit is more important nowadays than ever before. Your credit score is taken into account for everything from car financing to job applications. Unfortunately, it has been common practice for people to misuse and abuse credit, leaving them with less than ideal credit scores.

The misuse of credit often results in debt. In this sense, credit can be anything like credit cards, medical bills, and advanced payday loans. When you have an unpaid or revolving balance on any of these things, you could have an unnecessary debt on your hands. Depending on the interest rates you have, your debt can snowball out of control in little to no time. Once the debt seems out of reach, many people tend to leave it alone, unpaid and festering on the back burner of their financial priorities.

Eventually, the debt will have to be taken care of, and it's always better to do it sooner than later. This is where debt settlement companies come into the equation, reconstructing the burned bridge between you and a good credit score. However, before you choose how to settle your debts, make sure you learn about your options and how different companies work.

Researching debt consolidation companies is the most important step in your quest to becoming debt free. You want to find a company that will cater to your situation and not just set you up with some cookie cutter plan that may not fit your financial life correctly and could set you back even further.

After you have chosen a company for your debt consolidation, they will establish a plan to settle with your debtor a percentage of the amount owed. It is best to have a good portion, if not all, of this percentage saved up already. If you don't, your debt consolidation company will set up a trust account where you can accumulate the funds for your debt settlement process. Be ready to change your financial habits if you haven't already. Half of debt settlement plans end up in the person dropping out before the debt is settled if the plan is 36 months or longer. With plans shorter than 36 months, the completion rate is 85%. It is important to remember that the amount of debt forgiven, or the difference in the amount you settle at and the amount owed, must be reported as income when you file taxes for that year.

Once you have armed yourself with the right knowledge, debt consolidation can be a handy tool in reestablishing your credit and becoming debt free.