The risks and rewards of credit card debt settlement.
When you feel overwhelmed by mounting credit card debt and you can’t see a good way out, credit card debt settlement plans may begin to look very attractive. But before you sign any credit settlement agreement, you need to understand both the risk and rewards.
How does debt settlement work? Under a credit card debt settlement plan, a consumer stops making payments on their credit card bills and sends payment to a debt settlement company instead. After a number of months when the accounts are seriously delinquent, the debt settlement company will begin negotiating credit card settlement arrangements by asking creditors to settle the debt for a portion of what is owed. Sometimes this approach works, but sometimes it can backfire and leave consumers in legal jeopardy and deeper in debt. Almost always, it ruins a consumer’s credit rating. That’s why it’s smart to talk to a financial professional before entering any credit card debt settlement agreement.
Get credit card debt settlement advice from ACCC counselors.
At American Consumer Credit Counseling (ACCC), we provide free credit counseling aimed at helping consumers just like you to find their way out of debt and to live debt-free in the future. As a nonprofit agency, we also offer a variety of additional financial services with fees that are among the lowest in the industry.
When you come for a free credit counseling session, our professionally trained and certified counselors will help you take stock of your situation and explore the options for getting out of debt, including credit card debt settlement. We’ll explain the pros and cons of each approach, and help you identify which solution makes the most financial sense for you. We can also direct you to a variety of resources for people in debt, and to educational material and financial tools on our website that can help you to manage money more effectively, and to learn more about credit card debt settlement.
Debt management: a helpful alternative to credit card debt settlement.
Lots of consumers come to ACCC to learn how to settle with credit card companies most effectively. After considering the advantages and disadvantages of credit card debt settlement and comparing bankruptcy vs settlement options, many individuals opt for a debt management plan instead.
Debt management is different than credit card settlement in that you won’t stop paying your creditors. Rather, you’ll make one payment each month to an account at ACCC, and our team will pay your bills on your behalf, making sure they’re paid on time each month. We’ll also attempt to secure lower interest rates and to have finance charges, late fees and over-limit fees waived, saving you money and enabling you to pay your debt off faster. And because you’ll continue paying your creditors all along, a debt management program will leave you with a better credit rating than credit card debt settlement.