Debt Settlement on Credit Cards: Who To Talk With

Debt settlement on credit cards can be a life saver for those buried in debt. Today, at least 1 in 7 Americans have 10 or more credit cards, and many people find that they have trouble meeting even the minimum payments.

How Debt Settlement Works

Debt settlement firms negotiate with your credit card companies to reduce the amount you owe and get you a lower interest rate on your remaining balance. Once enrolled, you will turn your credit card bills over to the debt settlement reduction company. They will contact each of your creditors and negotiate a settlement amount that is typically a percentage of the amount you actually owe. They will also likely negotiate a lower interest rate for your remaining balance. Your accounts will be closed and you'll have no further credit with these companies.

Once Enrolled In Debt Settlement

From here forward, you'll make one monthly payment to the debt settlement company, who will distribute it to your creditors. The program allows you to spend less money each month and pay off your debt faster.

The debt settlement company will charge you a fee for their services. It is typically a percentage of your debt and it is collected each month right along with your payment to your creditors. This fee is usually nominal compared to the fees and interest you were paying on your credit cards.

Getting Help

Choose your debt settlement company wisely. Most who advertise are legitimate, but there are some scams, too. Check with the Better Business Bureau before you make any commitments and look for "not for profit" debt settlement companies, such as those run by the United Way. Once enrolled, verify with each of your creditors that they show you as enrolled in the program and that payments are being received as agreed.