subject: Credit Card Debt Bankruptcy - Do Debt Settlement Programs Actually Work? [print this page] Credit Card Debt Bankruptcy - Do Debt Settlement Programs Actually Work?
The credit card debt is one such debt which can go out of hand within no time. Since the interest rates on these loans is very high, if the customer just makes a minimum payment every month then his balance will take a long time to get paid off.
A customer needs to be regular with his payments. All missed payments earn you a late fee which is a huge amount. A penalty is also charged if the customer goes over the spending limit. Such charges can easily make the debt amount get out of hand. At such times companies offering debt relief to consumers come in very handy.
These debt relief companies offer the customers various relief options depending upon their current financial conditions. One of the programs that has given effective relief to many customers is debt settlement.
With this method a debtor can reduce is total debt amount. Once the debt amount gets reduced paying off the debt becomes easier for the debtor. The reason why a creditor agrees to settle the account is that if a debtor files for bankruptcy the entire loan amount is lost and cannot be recovered. Hence most of the debt settlement programs encourage their customers to tell their creditor that they are on the verge of filing for bankruptcy. This way the credit card companies agree to a debt settlement.
An effective negotiation can get a debt reduction of at least 40 % of the total debt amount. Many professional companies can even negotiate a settlement of 60% of the total balance. Hence any consumer who has unsecured debt of ten thousand dollars or more can use this method to come out of debt. One must remember that this does have a negative impact on credit report.
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.
