Why Is Credit Card Debt Settlement a Better Option?

Are you splurging your hard earned money each time you go out for shopping? If you fail to manage your finances then it might result in credit card debt. By the time we realize the effect of these overwhelming debts, it’s too late. Usually, in such a situation people rely on credit card debt settlement. So, let’s see how it works.

Here are a few things that you need to remember before you think of settling your credit card debt:

You might find it difficult to settle your credit card debt as the lender will only agree to settle debt on your current account. You must default on your payments for three months before settling the debt. You need to convince the creditors to settle the debt by giving a valid reason for not being able to pay.

You cannot eliminate your entire debt amount with the help of debt settlement. The creditor will approve the reduced amount with your consent. The amount discharged will be contingent upon your financial state and on your negotiation skills.

Your credit card settlement will partially affect your credit report. Your credit report will display “settled for smaller amount” or something similar. Such statement might create impediment for future loans. Therefore, think about your decision before taking debt settlement service.

Is credit card debt settlement beneficial?

If you settle your credit card debt then you can save a considerable part of the outstanding amount. In certain cases, you can save 50% or more on your principal balance. Unfortunately, your debt relief program cannot save such a huge percentage. Bankruptcy can discharge a large amount of debt but it will not be a feasible option for you.

The effect of credit card settlement does not remain on your credit report for long as it can be repaired gradually.  But bankruptcy completely blemishes your credit report and remains on your credit history for 7 to 10 years.

The negotiation process takes a minimum of 180 days and within a few months you can settle your credit card debt. If you can pay in a lump sum, then you can free yourself from the clutches of debt within a year.

So, settlement can help you to regain your financial independence. But next time use your credit card wisely so that you do not fall behind in credit card payments.

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