Credit Card Debt Settlement

With the economy still being a challenge for many people and unemployment rates still high, credit card debt is compiling quickly. If you find yourself having problems paying your monthly bills, then you might want to look into credit card debt settlement plans.

When you are trying to settle your credit card debt the first place you should go is your credit card company. Talk with them about any credit card debt settlement options or hardship programs. They are more willing to work with you to avoid writing off the debt. Perhaps they will cut you a deal or set up a payment plan.

Most companies will work with you to help you pay off the balance. Some might close your account temporarily until you pay it off completely, while others will permanently close it. Some credit card companies won’t work with you, while others will lower your percentage rate, waive late fees and lower your monthly minimum payment. Be aware that credit card companies will not talk to you about any settlement options without already being late. This is to ensure the people who really need the help will get it.

If you are already a few months behind on your credit card payments, you may have a percentage of your debt forgiven. This is when the credit card company lets you pay back a smaller amount than you owe and cuts their losses. They will sometimes do this as something is better than nothing.

Personal finance producer Jen Haley mentions on the CNN blog that “It’s unlikely that all–or most– of your credit card debt will be wiped away.” You’ll want to be aware that sometimes settling your debt will be reported to the credit bureaus. If it’s reported as “paid in full” your credit will probably avoid any negative repercussions. However, if it’s reported as “settled” then it may hurt your credit score. Haley also says, “If the portion of the forgiven debt is over $600, you will have to pay income taxes on that amount.”

Another option is to have a third-party help settle your debt. There are several debt settlement companies that may be able to help you settle your debts. This is not limited to credit card debt. They typically charge a very high fee to consolidate your debt into a smaller balance and then you pay them interest payments as well. Keep in mind that many provide services that you can do yourself. If you choose this approach you’ll want to shop around and research the different companies.

Credit card debt is a burden to many Americans with the present economy. If you have found difficulty in making your payments and need help, talk to your credit card companies. Find out if they offer a hardship program or settlement services to help you pay off your debt.