subject: Debt Settlement Programs: Advantages And Disadvantages [print this page] In 2010, the number of American plastic card holders was counted to be about 181 million, up by almost 20 million within 3 years. The average cardholder owned 3.5 cards. The common credit card debt per household was more than $15,000, bringing about a nationwide personal credit card debt of just about one billion dollars by the end of the year.
These are generally staggering numbers, plus they are only likely to increase with the future years to come. As unfathomable as the problem with debt could be, it remains a reality that bank card holders must face. Millions of Americans are experiencing unpaid credit bills, plus some might even be buried so deep with debt that they have to declare themselves bankrupt. In case you have your personal difficulty with debts, but don't want to take such drastic steps at this time, then you certainly should look into debt settlement programs to effectively cope with your money.
Debt settlement, which is also called debt arbitration, credit card debt negotiation or credit settlement, is the act of negotiation from a debtor as well as a creditor where each party concur with decreased balance which will be thought to be full payment for the debt. This kind of debt relief may seem to be beneficial to the debtor, but don't forget a creditor will be more willing to accept a smaller payment than not be paid in any way.
Having less debt is one of the primary advantages of credit card debt settlement. Actually, debt settlement programs will help reduce debts by as much as 50 per cent, which makes it easier for debtors to make a payment. In addition to overall debt reduction, you can also negotiate together with your creditor to lessen or eliminate interest rates applied to your debt, which further lowers the monthly payments that you must make.
Besides lowering of the total amount that you owe, debt settlement programs allow you to consult with your creditor a payment scheme that can work best for both side. It is possible to propose to pay smaller fees on a longer period of time if this is what you can best afford.
However, such benefits are not proposed without certain setbacks. For example, while enlisting for a debt settlement program may reduce your debt to some manageable amount, doing so may drastically hurt your credit scores. Defaulting on the credit agreements will likely be reported to credit reference agencies. You will definately get less credit score and this will make it harder for you to acquire loans down the road. Moreover, debts eliminated in a settlement program will probably be treated as taxable income. Therefore, instead of owing your creditor, you will owe the Internal Revenue Service (IRS) a substantial amount.
Debt settlement programs give you a quick method to deal with your finances. It is possible to pay your debts completely in two to three years with this form of assistance, but remember the potential risks that are included with this method. If you are careful and disciplined, however, you'll find yourself totally free from the burden of debt eventually.
