Outcome of Debt Settlement on Credit Cards

If you are struggling to pay your debt, you may be wondering about the outcome of debt settlement on credit cards. Some debt settlement companies or debt settlement attorneys may promise you that you can end up paying a fraction of your debts, or settle your credit cards for much less than the full amount owed. These promises may sound too good to be true, but are they? What is the actual outcome of debt settlement on credit cards?

How Does Debt Settlement Work?

Debt settlement involves negotiating with your creditors to pay back less than the total balance remaining on your account. Most credit card companies will not even discuss the possibility of debt settlement until you are behind on your payments... after all, why would they be willing to accept less money when you are paying each and every month?

The specific time frame in which a creditor will be willing to discuss settlement varies depending on the creditor, but in most cases, the best time to settle debt is when you are between three and six months behind on payments. If you become six or more months behind, many credit card companies will send you to collections and then you will no longer be negotiating with the credit card company.

Be aware that this will hurt your credit. You will have a record of late payments. The debt will also show up as "settled" instead of as "paid in full." During the time period when you are not paying your bills, you will also be getting calls from collectors so you need to know your rights under the Fair Debt Collection Practices Act. For example, you can request that creditors stop contacting you or that they contact someone else- such as your attorney or debt collection company- will correspondence instead.

What is the Outcome of Debt Settlement on Credit Cards?

The specific outcome of debt settlement on credit cards varies depending on a number of factors including the balance owed and the deal offered. In most cases, you may be able to settle your debt for between 30-60 percent of the total value you owed. Creditors will be more willing to settle if you can pay the total settlement amount in one lump sum than if you need to work out a payment plan. A lot will also depend on whether your credit card company believes you have more assets or believes you are in danger of bankruptcy.

Getting Help

Working with a qualified debt settlement attorney can help you achieve the best possible outcome of debt settlement on credit cards. Your attorney may have a relationship with your credit card company, and will have the knowledge and skill to make the best possible debt settlement deal for you.