There is a certain truth in the claim that credit cards are a core reason for mounting debts and worsening financial situations. As convenient as they may be, these cards must be responsibly managed if trouble is to be avoided. But if the level of debt is already too high, then a structured credit card debt settlement is needed.
The number of people who require help in clearing just the debt created by credit cards is staggering, but the variety of loans and expenses that households face, clearing existing debts is not easy.
By opting for a debt settlement scheme, credit card debt can at least be paid off without having to resort to declaring bankruptcy – and at a fraction of the cost of using consolidation loans.
What is Debt Settlement?
Simply put, a debt settlement is where the card issuer agrees to lower the amount of existing debt in return for the cardholder paying the lowered sum. For the cardholder, credit card debt settlement makes the debt much easier to repay.
Many people will seek a consolidation loan as a way of clearing existing debts. This is perfectly fine, but it is worth noting that a debt settlement reduces the amount of funds needed to clear that section of the debt. Therefore, some serious savings can be made.
In fact, the amount of credit card debt can be reduced by as much as 50%. But to do so, there are some careful steps to follow, tricks that can lead to the maximum amount of savings that can be secured.
Securing the Biggest Reduction
The best way to secure the biggest repayment reduction through a credit card debt settlement scheme is to simply refuse to make any payments. Of course, it is imperative that the card is not used either, since this indicates a lack of honesty when claiming an inability to pay.
Understand too that the card issuer will threaten to take the matter to the courts, but securing the biggest reduction depends on convincing the issuer that there is no chance of getting any more. Clearing existing debts is a matter of juggling, so what can be saved in this area can be used to clear debts elsewhere.
It is important to secure the services of a good debt settlement negotiator, who has the skills needed to convince a lender to reduce the credit card debt. It could mean the difference between reducing the debt from $5,000 to $2,000, and from $5,000 to $3,500.
Further Terms to Consider
There are some other factors that need to be considered in order to secure the best credit card debt settlement deal. The period of non-payment on the card will need to be at least 6 months, while the pressure from the issuers to get payments will grow.
Secondly, it is necessary to have a lump sum available from which to send the agreed payment when the time comes. Clearing existing debts in this way is pretty much like a now-or-never deal. So, check out what savings or funds are available.
Finally, while it is a good way to avoid the bankruptcy courts, remember that any agreement to clear credit card debt will go on your credit report. This means that it may affect the terms of any future loans – though, not to the degree that clearing the debt in this way is not worth it.
by Gemma Maddock