If you have credit card debt and you do not want it to have an adverse effect on your credit score, then you must pay at least your minimum amount due by the due date each month. While having too much debt (in relation to your income) can also adversely affect your score, making prompt payments on all credit cards is very important! Even one late payment can have a negative effect on your credit rating and even your other interest rates. When you cannot or do not pay your credit card bills on time, two things can happen from the perspective of the credit card company, even as they pursue you for back payments. These two occurrences are debt settlements and debt charge-offs. Both can provide you with some measure of debt relief, but both can hurt your credit.
A debt charge-off occurs when a credit card company eliminates an unpaid debt from its books and claims that debt as a tax loss:
A settlement occurs when a credit card company (or subsequently a collection agency) accepts less money to consider the debt paid then what you actually owe. For example, you how $12,000 to your credit card company, but you settle that debt with them for $10,000 instead, and they consider the debt paid in full. This arrangement can be negotiated at any time, either with the original credit card company or later with the collection agency.
When dealing with settlements, charge-offs, and late credit card bill payments, remember:
When you begin to face problems with debt, a phone call to a debt relief attorney may be in order. Your attorney can assist you in negotiating with your creditors and helping you to figure out the best solution to your debt issues.