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Credit Card Debt Settlement:


If you’re struggling financially, the thought of making a credit card debt settlement may seem like a good idea. Before you do, however, there are some things that you should know.

Is it often the case that your mailbox is filled with a number of credit card debt settlement or late notices? Or you may be constantly plagued by collection calls. If such is the case and you are finding it difficult to pay off your credit card debts, and the problem has been going on for some time, you may discover that your creditor is willing to settle for less than the outstanding amount. Especially if your credit card is badly out of whack or was written off, then you will have found a reasonable credit card debt settlement solution.

Why would a creditor be willing to settle for a single payment for a less than the full amount? For one, in many cases it means that they will get paid almost immediately. But also, it is simple economics because rather than lose the entire outstanding amount, it is better for the creditor to recover part of the losses.

However, to be sure, creditors will usually not enter into such credit card debt settlement if your account is ongoing, because the norm is that only when your account has gone delinquent for a period of more than ninety days that such credit card debt settlement is offered to you by the creditor. Still, as a debtor who is entering into such credit card debt settlement, you still need to know a few things and mind what you are getting into.

You should also be aware that, although this is rare, a  credit card debt settlement payment may not be able to fully clear off the entire outstanding amount, because the unpaid amount may be transferred to another collection agency. Secondly, the Internal Revenue Service (IRS) will treat the unpaid amount of debt as your income and if it exceeds six hundred dollars, it will be reported by the creditor to the IRS on a 1099 and is thus taxable.

Credit Card Debt Management Tip

Finally, you need to know your own credit report, and if your debt is shown as “charged off” will be treated as a red mark on the credit report, though by settling the debt, it will be changed to “settled for a lesser amount” that is also considered a somewhat reddish mark though not as bad as not having done anything to pay off the debt.

Your best bet as far as credit card debt settlement goes is to make contact directly with your creditor, or deal with a collection agency and negotiate a plan for repaying the debts to the best of your ability. Having released your debt, you then need a “release of debt” notation which will prove that the company had agreed to have its debt settled by you. Also, you should take a close look at what got you into a position of having debts that you were not able to pay off, and then formulate a plan to prevent repeat occurrences.


Erase Credit Card Debt
If you are overwhelmed with debt issues, you can erase your credit card debt by following a few true and tried solutions to your problem.

Debt Settlement Attorney
A debt settlement attorney is an attorney who can negotiate, on your behalf, with one or more creditors, to lessen the balance of what you owe that creditor.



 

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