Does credit card settlement work?
When you can’t see any way of paying off your credit card debt, credit card settlement may seem to offer a way out of your financial troubles. But for many consumers, credit card debt settlement only adds to their financial woes and makes life more difficult for years to come.
What is credit card settlement? Credit card settlement is a way of getting credit card companies to settle your debt for a lump sum payment, rather than paying off the total amount you owe. During the credit card settlement process, you’ll stop paying your monthly credit card bills and put money into a savings account instead. When the amount of your overdue payments becomes alarmingly high and the credit card companies are worried you might not be able to pay anything, you’ll approach them to make a debt settlement offer. Settlement companies often advertise that you can secure a credit card lump sum settlement for a small fraction of what you owe, but credit card settlement may be anywhere from 25% to 90% of your total debt – if your creditors agree to settle your debt at all.
The problem with credit card settlement is that it will trash your credit rating – you likely won’t be able to apply for a loan or rebuild your credit for as many as seven years. And if your credit card company takes you to court instead of settling your debt, you may end up owing more money after the credit card settlement process is done.
Advice on credit card settlement from ACCC.
Before jumping into credit card settlement, it’s smart to get objective advice about all the different ways you can pay off your debt. That’s where American Consumer Credit Counseling (ACCC) can help. We’re a nonprofit organization that offers free credit counseling and low-cost debt services to help consumers just like you find the best path out of debt – and learn to live debt-free in the future.
When you come to ACCC for free credit counseling, our certified and highly trained counselors will help you document your financial situation and explore all the options for becoming debt-free. We can answer questions about how to settle with credit card companies most effectively and direct you to alternative debt relief programs that may be more successful.
Debt management vs credit card settlement.
Depending on your financial situation, our credit counselors may recommend a debt management plan over credit card settlement as a way of resolving your financial troubles. With a debt management program, you’ll work with our counselors to create a budget that will let you pay down your debt without stopping payments or ruining your credit. And you’ll get help from our team every step of the way, helping you stay on track and showing you financial management skills that will let you avoid debt in the future.
Contact us today for your free credit counseling session.