Macco Law Group, LLP

Credit card debt settlement may be an option for some debtors

Credit card debt settlement may be an option for some debtors

Some residents of Long Island may find that using a credit card is very tempting. After all, not only do credit cards allow individuals to purchase goods that they may not be able to afford outright, but they often come with rewards, such as airline miles, that credit card holders can accumulate the more often they use their credit cards. However, paying with a credit card can leave some people with a credit card bill that they simply cannot manage.

One option that those struggling with credit card debt may want to look into is debt settlement. Individuals can enter into negotiations directly with the credit card company. It is possible that the credit card company will agree to settle the individual’s credit card debt for less than what the individual owes. It is important for individuals to get the agreed-upon settlement in writing before beginning to make payments.

In many cases a settlement must be paid as a one-time single payment. Sometimes a creditor will let the cardholder enter into a payment plan, but such plans may only last for a limited amount of time and the payments required on the plan could potentially be very high. If an individual has engaged the services of a for profit debt settlement company, the individual may make monthly payments that will be placed into a savings account until the individual can afford to make a lump-sum payment to settle his or her debt. However, until the lump-sum payment is made, the individual’s credit card debt will remain in default.

Once an individual’s debt has been settled, it is important to obtain a confirmation in writing that the settlement is complete, and there is no longer a balance owed. This ensures that if a debt collector tries to collect on a settled debt, the individual has evidence that the debt no longer exists.

Of course, there are consequences that come along with debt settlement. Settling a debt could have a negative affect on a person’s credit score. It could even affect a person’s ability to obtain credit through other sources after settlement. Therefore, it is important to consider both the plusses and the minuses of debt settlement before making a decision. Fortunately, help is available to those who have questions about whether or not they should enter into a debt settlement agreement.