If you are drowning in debt, an agency specializing in credit card debt settlement might be the lifesaver you need. Debt settlement agencies offer debt solutions that can help you pay off your creditors for pennies on the dollar.
Typically, agencies help you eliminate debt by working directly with credit card companies to negotiate lower rates or reduce the payoff amount of your credit debt. Often, you will be advised you to stop communication with credit card companies as the agency acts as a mediator.
Since you are relinquishing control of your debt negotiation to a third party, it is very important that you fully understand how agencies are able to reduce debt payments. Many credit card settlement agencies will have you pay a monthly payment directly to them instead of to your creditors. However, they then hold that money instead of making your monthly minimum payments.
Once your account has become delinquent, the agency begins its negotiations. After your credit card company has agreed to a lower payoff amount, the debt settlement company uses the money they have held from your monthly payments to pay off your balance.
Although many debt settlement companies are for-profit businesses, you can also find Christian debt settlement agencies that are non-profits. In addition, you can also find a debt settlement lawyer to help eliminate your credit card debt. Before signing a contract with any for-profit agency or debt settlement attorney, make sure you have reviewed their fee schedule.
Since your credit card accounts must become delinquent before credit card companies will agree to a reduced pay off amount, you can expect that your credit score will take a hit. If you are planning any major purchases, such as buying a house, agency credit card debt settlement might not be your best option. But for others, a limited time credit score decrease is well worth the opportunity to become debt-free.
Disclaimer
The content on this page is not a substitute for professional legal advice. Please consult a lawyer before taking any action suggested on this page.
References
Fast Facts
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Other names for this term
Debt Counseling, Credit Counseling, Debt Arbitration
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Fact 3
You may be liable for taxes on the amount of debt forgiven by your creditor.
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Fact 4
Debt settlement is an unregulated industry in the United States.
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Fact 5
However, The Association of Settlement Companies maintains standards for its members.
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Fact 6
The average debt settlement process takes two years to complete.
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Fact 7
Credit card debt settlement fees typically run from 15-25% of the total debt amount you owe.
