Credit Card Debt Relief Program - Why Some Debt Settlement Organizations Encourage Credit Card Users

Credit Card Debt Relief Program - Why Some Debt Settlement Organizations Encourage Credit Card Users

Most of the people feel that they cannot get out of a financial condition where he has too much debt and does not have enough cash to make payments more than the minimum due on the bill. This can be a very stressful condition. As paying the minimum only prolongs the agony of debt but does little to get rid of it. The minimum due amount is generally only 2% to 3% of the total outstanding balance. With interest rates as high as 20%, paying off 2% of the debt comes down to nothing.

Debt settlement is an effective way of walking out into a debt free life without filing for a bankruptcy. Most of the creditors agree to settle the account of debtors who are close to bankruptcy. A customer can use this threat to get a settlement amount from the creditors.

If the debtor, who has being missing out on his payments for the last few months, calls up his credit card company and tells them that the only other way out for him is filing for bankruptcy can convince the creditor of his financial problem. It generally helps to hire a debt settlement company to convince the creditors of the urgency of the situation.

The settlement company can negotiate with the card company to reduce the balance amount by 40% to 60% of the current amount. The creditors agree to this only if the customer is ready to make a down payment of certain amount to the company. If the customer does not have that kind of cash, he can open an account to save up that money within a certain period of time. This money can then be used for negotiation.

Debt settlement is a legitimate alternative to filing bankruptcy. If consumers are experiencing a financial hardship and have at least $10k in unsecured debt then debt settlement can be a legitimate way to eliminate up to 70% of that balance.

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