subject: Debt Settlement for Credit Card Debts [print this page] Credit card has become indispensable nowadaysCredit card has become indispensable nowadays. With the rising costs of basic commodities and worsening financial crisis, more and more people love to shop with credit cards. Increasing interest in the outstanding balance of credit card bill is caused by the late payments or missed payments. Many individuals ended up accumulating huge amount of credit card debts. Statistics show that the average credit card debt per household is as high as $15,788.
Credit card debt settlement is a good option if one is stuck in the credit card debt problem. It will clear your credit card debts and give you a peace of mind. And it is a perfectly legal process where the creditor, credit card companies, and the debtor agreed to a reduced balance as payment in full (the legal terminology for this process is "offer in compromise"). As a result, the credit company agrees to waive part of existing balance and usually debt settlement companies give 30-70% as final payment. The payment is often paid by lump sum cash or pre-determined accumulated fund. This can be done directly by the debtor himself or through a debt settlement company or attorney's assistance. The range of credit card debt settlement is within 3-9 months or more depending on debtor's different financial situation.
Credit card debt settlement risks the debtor, who is prone to debts with other companies, tax problems, a tarnished credit standing or even lawsuits. The higher the range of time, the higher the risk for lawsuit. Debtors should only approach the creditor if there is danger of bankruptcy, since bankruptcy will stay in their credit history for 10 years or more. It will also affect their chances of obtaining loan with other lending companies in the future.
Credit card debt settlement usually risks not just the debtor, but also the credit card company. For credit institutions, the risk is having a hard time collecting the actual charges if the debtor is on the verge of bankruptcy due to accumulated debts from other credit companies. This usually happens if the debt settlement is done through debt settlement companies, where there is an additional 40% fees or more.
