subject: Debt Settlement For Your Credit Cards - Why Credit Card Companies Will Negotiate [print this page] Debt Settlement For Your Credit Cards - Why Credit Card Companies Will Negotiate
Credit cards are very popular but not many are familiar with the risks that a credit card loan presents. When getting a credit card you sign a contract in which are listed some terms and agreements, here you will find interest rates, fees and other penalties. Initially you sing them without giving it a second thought, but when debt occurs you start to see what high interest rates can do to your financial state. This is known as "the snowball effect" due to the similarities in the growing debt with a snowball which gradually increases in size as it goes down a hill.
To get rid of some of this credit card debt you can try to settle with the creditors for a smaller amount, the process is known as debt settlement and the benefits can be great if used accordingly. You will have to hire a debt settlement company to take care of the negotiations with the creditors; when these are over you will be most likely happy of your new amount of debt, this is usually half of the total amount you used to owe.
You might be wondering why the creditors would accept to reduce your debt so much; it is true that they don't do it because they are merciful but the final result is the same. The alternatives look worse for the creditors than reducing your debt. If they let you file for bankruptcy they will not get anything back due to the unsecured nature of credit card loans. Debt settlement looks better for the creditors now as well. Even if you don't file for bankruptcy but just don't pay them for a few months, the creditor will be forced to give your debt to collection agencies; they will get just a percentage of your debt back from these collectors.
The government is also helping the creditors; if they settle a debt they will receive stimulus money to cover some of the expenses and minimize the loss. As you can see there is no reason why the creditors won't accept negotiations. You should take advantage of these minor but crucial details and reduce your debt and also the interest rates for the rest of the payments.
Debt settlement is a viable alternative to filing bankruptcy. Most consumers are able to eliminate at least 60% of their unsecured debt while avoiding many of the negative consequences with filing bankruptcy. If you are over $10k in unsecured debt you will be eligible for debt settlement.
