subject: Credit Card Debt Settlement - A Legal Way to Only Pay Back Half of Your Credit Card Balance [print this page] Credit Card Debt Settlement - A Legal Way to Only Pay Back Half of Your Credit Card Balance
For a person struggling with debt, debt settlement is clearly the best options available. Earlier people used to opt for bankruptcy but that is no longer the best option for several reasons. One of the biggest reasons is the changes that have been made in the bankruptcy laws. It is no longer easy to qualify for bankruptcy under chapter 7 which wipes out all the debts of a person and liquidates all his assets. Most of the customers can now only qualify for bankruptcy under chapter 13 which is nothing more than a repayment plan. Hence bankruptcy does not really solve most o the problems.
Credit card debt settlement however is a legal way in which a customer can get his debts reduced. This debt reduction is available to anyone whose unsecured debts are over ten thousand dollars. Creditors try to settle debt accounts for two reasons. The first reason is if the customer is on the verge of bankruptcy. Creditors do not want to lose the money that they can recover through settlement. Another reason is the account is about to be sold to some collection agency. The money which is recovered through these collection agencies are majorly kept by these collection companies.
The customer can call up his creditors and inform them that he is nearly bankrupt and hence would like to settle his account. He would require a certain amount of cash in order to negotiate this deal. A customer has to offer certain amount of money to settle his account. This agreed amount of money can either be paid in one single down payment or through monthly installments.
It has been generally observed that a good negotiation can get the debtor a debt reduction of about 40% to 60% of the total debt amount.
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.
