Credit Card Settlement – A Legitimate Way To Overcome A Heavy Debt Load

Credit Card Settlement A Legitimate Way To Overcome A Heavy Debt Load

There is no magic solution to get out from under heavy credit card debt. Every consumer has to work out the right way that enables payment and moving on with one's life. Fortunately, there are ways to work through credit card settlement, and it is a much safer and quicker way than many understand.

Statistics show that most consumers have more than one credit card, whether they have the ability to use them and subsequently pay for the debt. The temptation is too great to buy groceries and other necessities when money is tight. Then, the debt mounts up and becomes too overwhelming. While bankruptcy can be an easy enough option, no one wants to go through the process and certainly the lenders do not want to see consumers do this.

It is precisely the reason that credit card settlement has become a popular option. For the consumer, it provides a way to pay off debt with lowered principle amounts, and for lenders, they get a portion of the debt repaid rather than none in the case of bankruptcy. For every consumer who is in debt, it seems like a very personal issue to deal with, but the reality is that bankruptcy puts everyone involved in a worse financial predicament. Lending institutions suffer huge losses when people declare bankruptcy, and they would far rather settle on a lesser amount to prevent their own snowball effect of losses.

The current Presidential administration developed a stimulus package, which many Americans misunderstand. The bailout, as it was commonly called, was given to large financial institutions rather than directly to consumers. Consumers, who are also taxpayers, resented this, but, in fact, it was a move to help lenders recover from losses that resulted from bankruptcies. The package also gave them incentive to work with consumers for alternatives.

Credit card settlement is now thought of as an excellent solution to bankruptcy. One great option is to work with a debt resolution company. They, essentially, take over with a consumer's creditors to negotiate a new principle amount, and then work through an insured bank account to pay off the bills. Having a professional negotiator represent a consumer is proving very effective in lowering amounts, and it can provide a certain peace of mind for him too.

This type of credit card settlement does affect a credit rating, but only until the negotiated amount is paid off. At that point, the consumer can get back to building a good credit rating, and this is not the case in bankruptcy. Most credit card settlements are completed in 12 to 36 months, and that's much better than the ten year notation that bankruptcy puts on credit reports.

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