Credit Debt Settlement
Credit debt settlement, which is often referred to as credit card debt settlement and debt negotiation, is a debt relief option for those who are seeking to avoid bankruptcy. Through this form of debt relief, creditors will usually agree to accept less than the full balance of your account, as negotiation in full. For instance, if you owe $10,000.00 to a particular creditor, there’s a very good chance that they will accept $3,500.00 (and sometimes less), and no further balance will be owed.
But, do you qualify for credit debt negotiation? Here are a few factors to consider:
Are you experiencing difficulty paying your monthly bills? – Credit debt settlement is not for persons who are simply trying to cheat their creditors out of money. If you are experiencing legitimate hardship (reduced income, divorce, health problems), this may be a good choice for you. Most creditors are not willing to reduce your balance simply because you have decided that you’d rather not pay your bills; rather, they are looking for a reason that makes you unable to continue your monthly payments. When I negotiate with creditors to reach a credit debt arbitration, I typically provide hardship information for our clients.
Are you willing to trade a reduced credit score for debt relief? Most persons who are considering credit debt settlement are already delinquent on their accounts, but there are some who have been borrowing from one credit card to pay another in an attempt to keep their credit score intact. Unfortunately, a good credit score is not an option if you would like to enter a credit debt settlement program. You see, most creditors will simply not consider settling accounts for less than the full balance if an account is current. Credit accounts must be delinquent before negotiations for a arbitration agreement can commence.
Do you have access to funds to offer your creditors? Many people simply do not have access to the necessary funds to offer creditors for settlement, and must instead result to bankruptcy. But, there are also a good number of individuals who are indeed able to offer their creditors funds to settle their accounts, as they have access to funds through monthly savings, loans from family members and/or friends and 401K accounts. The majority of my clients have no choice but to set funds aside on a monthly basis, but some are fortunate enough to have immediate access to funds through 401K loans or family members or friends. If none of these options is available to you, credit debt arbitration is not the best route for your debt relief.
I’ve touched briefly on some things you should consider before deciding if credit debt negotiation is a good choice for you, but there are many other factors to think about. To learn more about this form of debt relief,
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