Tuesday, August 21, 2012

The Truth About Credit Card Debt Settlement That Every Borrower Needs To Know

Do you have an entire wallet full of credit cards that you cannot afford any longer? Oftentimes, getting just one credit card established leads to numerous offers that seem too good to refuse, and before you know it, consumers are up to their ears in credit card debt without enough income to pay their monthly charges. It is circumstances like these that call for credit card debt settlement.

Regaining Your Financial Freedom

Credit card debt settlement is a big step to take and must be given much consideration before you decide to go this route. It is important during credit card debt settlement that you focus on how you are going to get out of debt once and for all in order to continue living a good life, free from harassment by debt collector.

For most folks, this means that getting rid of the credit card debt that is holding them back will allow them to regain the financial freedom that they have lost to a mountain of credit card debt. One thing is for certain, credit card debt settlement is much better than bankruptcy because bankruptcy can leave an indelible mark upon your credit record for an entire decade.

Credit Card Debt Settlement Differs From Consolidation

Credit card debt settlement is not to be confused with credit card debt consolidation; the two are not the same. Credit card debt settlement allows you to pay only a portion of the amount that you owe to become debt free.

As an example, if you have a balance of ,000 on your Visa card, you, or a credit card debt settlement company can negotiate with the bank that issued the Visa card to settle the account for a lesser amount, often as low as 40% of what is owed to the bank. In this instance, your credit card debt settlement would be ,000. A debt settlement involves a formal agreement between you and the card issuer, with you agreeing to pay a certain amount of the debt while the bank writes the rest off.

Settling Your Credit Card Debt

There are many folks who can work out a settlement with the credit card company. In some instances the card company will not agree, but approval or denial of your credit card debt settlement will be based on the credit card company's policy regarding such matters, and your personal financial situation. The credit card company may ask you to provide proof of your hardship, such as evidenced through income statements and information regarding other obligations that you pay each month. That is part of the credit card debt settlement process.

Managing Your Finances after Credit Card Debt Settlement

But credit card debt settlement is not where your plan of action should come to an end. Once you have been able to get your credit card debt under control through credit card settlement, it is time to focus on creating a livable and reasonable budget. A realistically created budget should be followed once you have settled your credit card debt that takes a bit of discipline on your behalf so that you do not find yourself back into the same situation in a few years, with more debt accumulated beyond your means to pay. Use your credit card debt settlement to mark the beginning of a new era of responsibility in your financial future.

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