Getting out of Credit Card Debt, what is the best solution?
So what are your options for managing credit card debt.
If you are unable to make your regular monthly payments on your credit card then there are options to help you settle your debt. A credit card debt solution will come in various forms and some are better than others. One such way to Erase Credit Card Debt is by having a discounted debt settlement arrangement set up. If a company finds that you have not made any payments to your account for a while and they feel that they will be unable to get the full amount that is owed by you then they may well set up a discounted debt settlement offer. What this means is that instead of paying the full amount of the debt back, the credit card company will agree for you to pay a percentage of the debt and then write the rest of the debt off. The only problem with this is that they will usually request the agreed amount back in one payment.
Do not be surprised or alarmed if the discounted debt settlement offer letter comes from a debt collection agency. This is due to the fact that most original lenders sign over your debt to these agencies, who then get paid a percentage of the amount that they recover.
So why do companies offer debt settlement plans?
Once the finance companies have looked at your account and found that you can not keep up the payments they then have to decide whether to pursue you through the courts or try to get as much money from you as they possibly can. If they pursue you through the courts not only do they incur court costs but there is still no guarantee that they will get anything from you. They therefore figure that it is better to accept a lower figure from you instead of going through the courts to try and get the full amount.
What should you do if you receive an offer letter?
There are many factors to consider before you accept this offer though. The first thing that you need to be aware of is that by accepting this offer your credit rating will be affected in a negative way because you have not paid back all of what is owed. That said, accepting the offer is probably a better option than being taken to court and having them take action against you. Another thing to consider is how you are going to make the payment that they request. Will you have to forfeit the payments on other debts that you have and if you do what will be the consequences of that. The last thing you want to do is end up having to try and arrange settlement payments on other debts that you may have.
If you decide to go down the route of the settlement offer, it is always a good idea to try and negotiate a lower payment. Call them saying that you cannot meet their demands and offer to make a lower payment, quite often you will find that this will be accepted. Whenever you speak to somebody on the phone regarding this always take the persons name and make a note of the time and date of the call. If your offer is accepted make sure that you ask for a copy in writing, and never send any payment until you receive it. When you send your payment always send a letter stating that this is full and final settlement of the debt and ask for written acknowledgement of this.
You must be aware that if you decide not to accept any offer given, you may then be taken to court. It may be judged that you need to pay the full amount of the debt and court costs. This would obviously mean that you could end up paying a lot more than you owed in the first place. When accepting any type of offer always make sure that you read and understand the small print. You need to make sure that what you are paying is the full settlement of the debt and any extra is to be written off. This will ensure that they cannot come back to you at a later date demanding more money from you.
When you have made your payment and everything is completed, you then need to check your credit record file. If you find a mistake on your file, you must ask for a correction to be made as soon as possible. You will probably be asked to send a copy of all of the letters relating to the agreement that you have just made. It is therefore advisable to keep all of the paperwork safe that relates to any settlement of your credit card debt.
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