Credit Card Debt Articles

Credit Card Debt Settlement Options

Overdue payment notices are being sent out by credit card companies everyday to millions of cardholders who have outstanding balances on their credit bills. Oftentimes, when a cardholder does not have sufficient funds to make the payment, he simply ignores these notices in the hopes that his problems will go away. Obviously, this will not happen. If you want your debt to disappear, what you have to do is contact your credit card company and have a discussion with them regarding your possible credit card debt settlement options.

Let's say that you have an outstanding balance of $5,000 in credit card debt right now. You can approach your credit card company and tell them that you are willing to make a lump sum payment of $2500 if they consider the rest of the debt to be paid off. Believe it or not, they will be more than happy to accept your offer. The truth is that they are not really expecting to receive the full payment anymore especially if they see that you are in a deep financial hole. Getting a partial payment will certainly be a better option than getting nothing.

You have to note though that card companies will not typically offer you any credit card debt settlement if your credit is still active. You can voluntarily request for the cancellation of your credit in order to avail of credit card debt settlement options. Alternatively, you can wait until your account has been delinquent for more than three months, by which time the card company themselves will approach you regarding possible credit card debt settlement choices.

Although credit card debt settlement can indeed help with alleviating your financial situation, this does not mean that your debt will disappear just like that. Usually, they will waive a portion of your debt while the remaining balance is simply transferred to a collection agency who will discuss further payment plans with you. Also, if this remaining balance is more than $600, it will be taxable under the regulations of the Internal Revenue Service.

Once you opt for any credit card debt settlement method, this will be indicated in your permanent credit record with the phrase "settled for a lesser amount". This mark may have some negative effects when you are negotiating for credit card interest rates or mortgage rates in the future, but the damage is not nearly as huge as when you choose to do nothing about your unpaid debt.

Some people feel they donít have the necessary negotiation skills to discuss a good credit card debt settlement plan with their creditors. In this case, you can enlist the help of an agency for a minimal fee. Once your creditors agree to a credit card debt settlement, you should receive a certification stating the fact. The only thing left to do is to examine everything that has happened to you in terms of finances and try to identify the problems that have led you to this situation. You may even avail of professional financial management counseling services so that you can learn how to avoid getting into the same kind of predicament in the future.