Credit cards can be a trap, especially when multiple cards are used. The interest can amount quickly and the credit limits on the cards grown even quicker.

Debt settlement of credit cards is an option if you have difficulty in paying the minimum monthly balance or have missed payments. The credit company may ascertain they will not get the full amount owing to them. Sometimes they will send out a discounted debt settlement offer. This will be in writing along with the discount of up to 80% of the total amount owing. They will want the payment as soon as you have accepted the offer in full, and with very large amounts it may be negotiated in 3 or more installments. The letter sent to you may not come from the original lender. It may come from a debt collection company. The lender has signed over your debt to this company and they will then get a fee for recovering the money that has been settled on.

The reason for them offering debt settlement is because they can see you are having difficulty paying the debt. Their other option is to take you to court to get the whole amount of money and if this process is not successful they will incur huge legal bills and you may declare bankruptcy. If this is the case, they may never see any of the money that is owing to them. Therefore, the debt settlement company will get anywhere from 20-60 % back which is better than nothing if you go bankrupt. What about your case?

By accepting the debt settlement offer your credit rating will be lowered dramatically because your debts are not fully paid. This is better to do than waiting for the lender to take legal action against you.You will have to find a solution to raising the money to pay the debt settlement company in full. Other debts may go unpaid for a couple of months while trying to have enough money for the settlement. So remember, find a solution and do not think like a victim.If you are really under financial stress and cannot pay the amount the debt settlement company desires, contact them and negotiate a smaller amount. Give it a go and it may just be the break you need to save your dollars.

When doing business on the phone its best to write everything down from the name of the person, to whom you spoke to, date, and time etc. If they accept a smaller amount get them to put it in writing and wait till you get the letter with the settlement agreement including the amount you have to pay. You should write a letter back to the company stating that this is the final payment for the settlement of your account and then enclose your check. It is also best to get them to write to you and give you confirmation that the final settlement has been paid for.
If you go to court you will have a much larger financial burden with court cost and will have to pay the full amount. On any documents you receive from the company make sure you read everything and also make sure it is the final payment and all the other debts will be dissolved as well. Therefore, the company cannot come back to you and demand more payments.

Once the settlement is completed check your credit record. Mistakes have been known to happen, and if there is something not correct, you should get it fixed; to do this you will need all the documentation. It is best to keep a detailed written record of all correspondence and copy anything you have to sign so you can keep record if you decide to pursue a credit card debt settlement.

© copyright Wing Family Trust. All rights reserved worldwide October 2009.

We have helped many people to obtain debt relief successfully by providing information to our potential clients that they can act on to provide a solution to their debt problem. We at Debt Relief Professional believe every person has the right to resolve their financial situation with the least amount of stress.

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