Credit Card Debt Settlement: What is It, How Does It Work

Credit Card Debt Settlement: What is It, How Does It Work

Get credit card debt relief. Learn your options from pros

Settling your credit card might seem like an insurmountable step. If you owe a lot of money, you might need to seek out professional help. That’s where experts come in. Some companies provide much-needed advice on which debt settlement option is right for you. Here's what you need to know about credit card debt relief options before you proceed.

You Might Not Resolve All Your Debts

Before you consider debt settlement, make sure you’re well aware of the risks that you’ll be taking on. For one, your creditors might not agree to negotiate with you on the amount you owe. So, if you hire a debt management firm to help you, there’s a chance that the company might not be able to help you resolve all your debts.

You Need to Have Enough Funds

Debt settlement programs require that you put money in a special account for about 36 months or more before all your debts are resolved. But it’s not always easy to make these payments. If you keep missing the payments, you might get dropped from the program. If that happens, though, you’ll get saddled with even more problems. Make sure you review your budget carefully before you commit.

Your Credit Report Will Suffer

The debt settlement programs will ask you to stop sending payments to your creditors. That move has a negative impact on your credit report, though, especially since stopping the payments will get your late fees and penalties. You might also get calls from your creditors, hounding you for payment. Talk to the debt settlement firm so you’ll have a clear idea of what to expect before you go this route.

You Need to Do Your Homework

You’ll want to make sure you hire the right team to help you through this, though. One way to make that happen is to do your homework. Study your options carefully. Research the firms that provide the services you need. Some companies help you get in touch with lawyers so you have a better idea of what your choices are, what the possible legal consequences will be with the option you choose, and which one will be right for you.

You Need to Watch Out for Red Flags

Make sure you watch out for red flags. For instance, does the firm charge any fees before it settles your debts? How much are the charges? If the cost seems unreasonable, walk away. Also, does the firm make any unrealistic guarantees, telling you that it can make your unsecured debt go away? That’s obviously a lie. Also, if the firm is confident that it can stop the debt collection calls and lawsuits without providing you with a good reason, then that’s a likely indication that you’re dealing with a dodgy service provider. Look elsewhere for help.

You Need to Know the Disclosure Requirements

Make sure you know the essentials. What are the price and terms? How long will it take to see the results? What happens if you stop making payments?

Also, Read- Tips and tricks for paying off your Credit card debt fast

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