Should you settle credit card debt?
When your credit card balances are more than you can handle, you may be wondering whether you should try to settle credit card debt with a debt collection settlement agency or find some other way to resolve your financial troubles.
What is credit card settlement? As a form of debt settlement, credit card settlement is a debt relief strategy that seeks to get creditors to settle credit card debt by offering a one-time payment that is less than the total amount you owe. When you begin credit card debt settlement process, you will stop making your monthly payments to credit card companies and will instead put money in a savings account with a debt settlement agency. As your back-owed payments begin to add up, credit card companies may fear that you won’t be able to pay anything on your debt, making them potentially more willing to accept a settlement offer. After several months, your settlement agency will approach your creditors to offer to settle credit card debt with a lump sum payment from the money you have been putting in your savings account.
The disadvantages when you settle credit card debt.
The credit card companies may or may not accept your offer – they’re not obligated to settle your debt and may choose instead to pursue legal action against you. And while it may be possible to settle credit card debt for less than what you owe, your credit rating will take a hit. It may take as long as seven years before you can successfully apply for loans, credit cards, a mortgage, or a rental agreement. Also, when you settle credit card debt, you may not save as much money as you think. You’ll have to pay a sizable fee to your settlement company, and the IRS may take a significant amount in taxes as well.
Advice on how to settle credit card debt from ACCC.
Given the potential downsides of debt settlement, it’s important to understand how to settle credit card debt most effectively. That’s where American Consumer Credit Counseling (ACCC) can help. We’re a non-profit organization that provides free credit counseling to consumers looking for the best way to get out of debt. Our certified credit counselors can help you take stock of your finances, explore all your options for paying down your debt, and explain how to settle with credit card companies or eliminate your credit card debt in ways that won’t damage your credit rating.
Start your journey out of debt – call for a free credit counseling session with ACCC today to learn how to settle credit card debt most successfully.