How to Arrange Credit Card Debt Settlement: Avoid Bankruptcy with the Best Plan for Consumer Debt Settlement

How to Arrange Credit Card Debt Settlement: Avoid Bankruptcy with the Best Plan for Consumer Debt Settlement

Debt settlement might seem like a miracle solution to the millions of Americans who are deeply in debt. Credit settlement enables consumers to pay off part of their debt while credit card companies write off the remainder as “settled.” But credit settlement is not without its pitfalls, and debtors who turn to a debt settlement program for help should keep their eyes open and educate themselves as thoroughly as they can to avoid a scam.

Debt Settlement Scams

Debt settlement has become a booming business in the USA, with thousands of people turning to services for assistance with their financial problems. Although many of the debt settlement services available in the USA are reputable and do help people, the credit counseling industry is rife with cheats and scams that prey on the people who need real financial help the most.

Any debt settlement program that demands an upfront fee before doing any work, or that offers to settle credit card debt for a guaranteed low rate, is almost certainly a scam. Other red flags may be harder to spot, which is why a referral to a reputable firm is the best way to find a debt settlement program.

Best Credit Card Debt Settlement Options

There are two possible ways to achieve a debt negotiation: either consumers have to take on the negotiation themselves, or they can defer the task to a debt settlement service, program, or an attorney. Read on for details on choosing to negotiate directly with credit card companies versus employing a credit settlement service.

Debt Settlement Without Help

It’s possible to negotiate a settlement without professional help, but it can be a trying process. Most credit card companies will only deal with a service, or refuse to speak to the consumer about credit settlement until the account is 3 to 6 months delinquent, by which point serious harm has been done to the cardholder’s credit score. Finally, it may be difficult to get the same low rates that credit settlement services are able to achieve.

Working with a Debt Settlement Program

Debt settlement services, on the other hand, come with their own hazards. Debt settlement programs can be costly, and they may not be able to estimate the cost with any degree of accuracy in advance. They are usually able to settle credit card debt for anywhere from 20-50% of the original amount, but mark up the price so their customers pay 35-75% – that’s a very substantial cut!

In addition, the ever-present risk of a scam is very real, and even reputable companies sometimes fail their customers through simple mismanagement of an account. No one is going to care as much about a particular credit negotiation as the cardholder, so it’s a good idea to learn as much as possible and stay involved in the debt settlement process.

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