Settling Credit Card Debt for Less than you Owe |
By Ashley Russell on July 11, 2011
.jpg.aspx?width=75&height=75) With the economy in turmoil, it is no surprise that many people are struggling to make ends meet. Some people resort to credit cards to help them manage. Consequently, these people oftentimes can fall behind on payments and begin to accrue credit card debts. Luckily for them, there are a few ways that they can settle their credit card debt.
The most common option is to use a debt settlement company. Debt settlement companies offer to negotiate with your creditor to try to have your balance reduced. Sometimes these companies can convince creditors to allow you to pay less than the overall price that you owe, but there is no guarantee about this. These companies can take years to sort out your debts, while you still have to make your payments. If you decide to use a debt settlement company, be sure to explore more than one. You should take into consideration whether the price you will end up paying the company is worth the help that they will be able to give you.
Instead of paying a debt settlement company, you could always try to talk to your creditor by yourself to work out some sort of deal. The key to talking to your creditor is to be persistent and maintain good records so that you will be able to answer any questions they have for you. All you want to do is get your payments lowered to a more manageable rate. Many companies would rather have you paying a lower payment then nothing at all. It is in your best interest to exhaust this method before you turn to any other method because this one only costs time, rather than money, and can possibly lower your rates.
If you are not sure what you want to do about your debts, you could always consult a credit counselor. A credit counselor can advise you about how you should deal with your debts. They can help you learn to manage your money when it comes to saving and paying bills and debts. These companies can also point you to free workshops that will also teach you how to manage your money and budget yourself. If you decide to use a credit counselor, look into non-profit companies. Although they will still charge you for your counseling, it is typically cheaper than a private company whose aim is to make money.
The final solution to your debt problems is to declare bankruptcy. This is a solution that you should avoid at all costs. By declaring bankruptcy you are forgiven your debts, but your credit score will be drastically lowered. There are two types of bankruptcy: Chapter 7 and Chapter 13 each are associated with their own consequences. Bankruptcy should be a last resort because there are many costs that come with filing bankruptcy. However, some people are so far in the whole that bankruptcy may be the right option. Before choosing bankruptcy, seek the advice of a credit counselor before you ruin your credit score.
There are many options for settling credit card debts. Be sure to explore every option before you decide what to do. You could always start off trying to work out your debts yourself, and if you fail, go from there to figure out which other option you should try next. Everyone has different needs; just figure out what you need and then chose the option that is best for you. |
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