Debt Relief Hotline

The facts behind credit card debt settlement

What You Need to Know About Credit Card Debt Settlement

If you find yourself overwhelmed with credit card debt and unable to make your payments, the first thing you need to know is that you are not alone.  Right now during this recession, there are millions of people in your shoes. 

If your situation isn’t dire and you could pay your entire credit card debt off with the right payment structure, you might consider a debt consolidation loan. A good place to start is writing out your financial obligations on a personal budget worksheet.  Click here to get a free budget worksheet.

However, if your debt has grown to the point where you are unable to make the minimum payments or have even fallen behind on your credit cards, then you should look into enrolling your credit cards into a debt settlement plan.

There are various ways you can climb out of your debt obligations without filing bankruptcy; in fact bankruptcy should only be considered as an absolute last option.

Some of the forms of debt relief include consumer credit counseling, debt consolidation, and debt settlement. 

Debt Settlement has become the leading option for dealing with credit card debt because your payment is about half of your current minimum payments, it does not destroy your credit like bankruptcy, and the payment plan can be completed in less than 3 years.

Debt settlement is not for everyone though, it is a hard-shipped based program designed for people that are struggling to pay their bills.  There is no credit check involved and you do not have to be a homeowner to qualify.

To qualify, you must first must have either fallen behind on your payments or will not be able to make your payments in the immediate future.  If you have been laid off or lost your job, suffered from a medical problem, had an accident, a family death, or number of other reasons then you qualify for a debt settlement program.

Once you contact a debt settlement company, they will sit down with you and begin to review all your accounts. If you do not know the amount you owe or the account numbers, then you can get that information from your credit report.

FH Financial has partnered with a company that will give you a free credit report and a trial offer of free credit monitoring.  Click here to get your credit report.

Once your credit card debt is enrolled into the settlement program, the negotiator will then start to contact each of your creditors in an attempt to negotiate a settlement. The best debt settlement companies have already established working relationships with your creditors and are even able to group your debt together with their other clients. 

By grouping your accounts with others, the negotiator is able to obtain even better settlements because the creditor is more motivated to settle the debt.  It is basically buying power.  Instead of negotiating just one credit card debt for a few thousand dollars, they are now dealing with hundreds of accounts and millions of dollars.

Settlement percentages vary from creditor to creditor and many other variables.  They include your specific hardship, time of delinquency, and state of residence just to name a few.  The best thing you can do is get a consultation about your credit card debt with a Debt Counselor. FH Financial offers free consultations by scheduling an appointment in their office or a more convenient way via the telephone.

A debt settlement company that’s reputable will never give you a guaranteed percentage of reduction, because it depends on the amount owed, how old the debt is, how much it is, and of course the creditor themselves. They should be able to give you an estimate that is based off of previous client’s results.  Another important factor when looking into a debt settlement program is the money back guarantee; make sure the company offers this in writing.

You can expect to be debt free somewhere between 18 months and 36 months depending on your situation. The savings will be in the range of 40 to 60 % off the balance; again, this depends on your situation and that is why it is important to get a consultation.

Debt settlement can have either a positive or a negative affect on your credit rating and this greatly depends on whether or not your payments are current, delinquent, or charged off.  Once the credit card debt has been settled, the account will show on your credit report that it has been paid off.

Many people think that it is a negative when the settled debt has a comment that states “account settled” or “settled in full.”  The comment has no effect on your credit score.  What is important is that the balance reflects $0 and the code of 9 has been removed.

To get more information about your credit and how debt settlement will affect it, you need to speak with a Debt Counselor and ask your specific questions.  The counselor will be able to give you a realistic picture of where you will stand now, in the future, and long term.

While credit card creditors are under no obligation to settle any debt, all recognize that receiving a portion of what is owed far exceeds receiving nothing from the debtor. As a result in most cases the credit card companies choose to work with debt settlement companies.

There are situations where there is no other option other than bankruptcy, but that’s actually a very small portion of all individuals who find themselves facing financial challenges.

Credit card settlement can reduce the amount you owe, provide a single payment, eliminate the interest rate, stop bill collectors from harassing you, and significantly reduced debt load with real savings of 40-60%. To qualify, complete the form below and a Debt Counselor from FH Financial will call you.

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