When you get your first credit card, the plan is to pay off your balance every billing cycle but sometimes emergencies happen and before you realize, you end up in credit card debt. No one sets out to rack up credit card debt but there are options and help to relieve your debt.
You may feel you can handle the credit card companies on your own and some people can but depending on the amount of credit cards you are wanting to pay off can make this task difficult. It’s not impossible but there are companies to help you manage this and gather all the debt into one monthly payment.
While debt settlement isn’t for everyone, National Debt Relief’s program is a great choice for people with high levels of credit card debt who are struggling due to financial hardship such as the loss of a job or a divorce. If you’re barely keeping up with your minimum payments and balances on your accounts, and the credit card debt keeps growing, then you’re a good candidate for debt settlement. In fact, if your income doesn’t accommodate paying down debts, and your credit rating makes it impossible to obtain a debt consolidation loan, then the National Debt Relief program may be your best chance to address your debts and avoid bankruptcy.
Negotiating all or a portion of your credit card debt through a settlement can seem like a daunting task when you feel overwhelmed. Remember, in business everything is negotiable. Getting a discount can be as easy as knowing whom to ask and how to ask for it. For example, balances owed on your credit cards could be an opportunity to lessen what you actually owe, sometimes by as much as 50% to 70%.
How to settle credit card debt
Enrolling in a debt settlement program to lessen credit card balances can be helpful, but make sure to do your research. You are hoping to settle debt and this involves spending your money to pay down your debt and companies will also need to get paid for their time and negotiations. If you are concerned with a debt settlement company, check out the company with your state Attorney General and local consumer protection agency. National Debt Relief is in good standing with the BBB and our customers have positive experiences they have shared on Trustpilot.
Debt settlement is an agreement between a lender and a borrower for a large, one-time payment toward an existing balance in return for the forgiveness of the remaining debt. Someone who owes $10,000 on a single credit card, for example, may approach the credit card company and offer to pay $5,000. In return for this one-time payment, the credit card company agrees to forgive or erase the remaining $5,000 still owed.
Some options when you want to settle your credit card debt are:
Settling credit card debt is an agreement between the bank and you to pay back a portion of a loan balance, while the remainder of the debt is forgiven.
Sometimes a one time payment is used to settle your debt.
Be careful of debt professionals who claim to be able to negotiate a better deal than you.
If you want to negotiate your own credit card debt, we suggest speaking with a manager in the debt settlement department and start by offering a small percentage of your outstanding balance.
What debt settlement options are available
Getting help with your credit card debt settlement isn’t free. Consider the time and frustration you could endure with trying to fix your credit issues on your own.
When you do business with a debt settlement company, you will have to show that you have the money to pay down the debt. Some companies may ask for a dedicated bank account, which the money then will be sent by an independent third party. The funds are still yours and if it’s an interest bearing account, you will be entitled to this.
A reasonable fee for account maintenance may be added on. This could include transferring the funds from your account to pay your creditors and the debt settlement company when settlements occur.
A credit card debt settlement company can charge you only a portion of its full fee for each debt it settles. For example, you owe money to three creditors and the settlement negotiation is only successful with one of your creditors. For every successful debt settlement, the company can charge you another portion of its full fee.
A common approach is if the company’s fees are based on a percentage of the amount you save through the settlement, then the company must tell you both the percentage it charges and the estimated dollar amount it represents. This may be called a “contingency” fee.
Don’t try and sugar coat the financial situation you are in. You got behind in paying the credit card bills and there could be many reasons this happens. A family emergency, a job loss or illness could cause a strain on your finances. One of the key points in negotiations is to make it clear that you’re in a bad position financially.
For example, a lender could call you and ask why you fell behind in your payments. An honest answer of, “I was diagnosed with a rare disease where I had no diagnosis for a year” is a shocking statement but catches the lender on the other end of the phone by surprise. Instead of going through the back and forth of trying to get into a program, many will agree to a third of what is owed and put you on a payment plan. This doesn’t happen with all lenders but being honest about what life circumstances you are experiencing could help in a credit card debt settlement.
Some tips when you are showing hardship is to not go out to expensive restaurants or on shopping sprees. The lender can review your spending habits and may not be open to negotiating a settlement. Get into the habit now of not spending for at least six months before asking for a credit card debt settlement.
Are you looking for credit card debt relief in 2022? You’re not alone. Each year the average credit card balance increases along with interest rates. This makes it harder to pay off what you owe and you waste more money each month on increasing interest charges. Paying the minimum, low monthly credit card payments make it easy to stay in debt for 5, 10, 15, even 20 years or more.
Let National Debt Relief help you with your credit card debt settlement so you can focus on the important things and not be distracted with creditor phone calls.
Credit cards aren’t a bad thing and sometimes they are needed in situations where cash isn’t readily available. When you are consistently paying off your debts, you get to build up your credit score, which will eventually help you get credit when you need it in the future. Building up your credit can help you obtain a mortgage or a car loan but how you manage your debt is what the challenge can be for some people.
Credit card debt becomes bad and damaging when you borrow more than what you can afford to pay back.
However, when you use credit cards sensibly, they can be a very good thing. For example, carrying credit cards is certainly easier than carrying cash. You could use a credit card to buy an expensive item where you want to have a record of it or when you don’t have the money in your wallet or not enough cash in your checking account.
Credit cards can be very helpful in the event of an emergency. They can also be useful tools for budgeting as the receipts you get when using your credit cards can make it easier for you to track your spending. And if your cards were stolen or you were the victim of identity theft your financial responsibility would probably be limited to $50.
Credit card debt settlement could be a positive or negative, depending on your situation. Below are some potential risks associated with different types of debt settlement.
Problems with negotiation
Not all creditors will be open to a settlement offer. Whether you try to negotiate on your own or with a settlement company, the creditor may reject the settlement offer. However you try to settle your debt, you can submit a counteroffer. Reaching out to the original creditor to see whether you can work out a payment plan may be needed. The worst-case scenario, you may owe more than you did initially, and a rejected settlement offer may push you toward bankruptcy.
Some debt settlement companies will charge you to work on your credit card settlement. Those fees paid to the company or the interest charged by the original creditor could add hundreds or even thousands of dollars to your debt. When reviewing your options, create a spreadsheet to see the best approach that will work for you, creating a pros and cons list.
Negative impact on credit score
By the time you feel you can enter into a credit card debt settlement agreement, your debt may be in the hands of a collection company. The positive side of this is that the creditors may be motivated to settle your debt when they think it’s the only way they’ll get paid. A debt settlement will cause your credit score to drop, perhaps by more than 100 points, and the damage could last for a while. Either way if you enter into a debt settlement or if your debt is sent to collections without payment, the situation remains on your credit report for at least seven years. Showing you went into a payment settlement is better than not paying.
Debt can weigh heavy on your mind and it’s not always easy to make a decision on which approach you want to take. Several options are available that are less risky than credit card debt settlement; whether that means working with a debt settlement company or trying your hand at DIY debt settlement negotiations. Below are four alternatives to debt settlement.
If you have available credit on your credit cards, moving your debt through a balance transfer option to a credit card that offers a 0% APR for an introductory period, sometimes as long as 18 months, could be an alternative approach. Paying off the balance before the 0% interest rate expires, can help with not increasing more interest on the debt.
Debt consolidation loan
Banks, credit unions, and other lenders often offer loans that are especially for debt consolidation. These are generally unsecured loans with lower interest rates that compare favorably to credit card interest rates.
Nonprofit credit counseling
Making an appointment with a counselor at a nonprofit credit counseling agency can help you get back on the right direction financially. Credit counselors can help you create a budget, make recommendations about debt consolidation, advise you about closing at least some of your credit card accounts or counsel you regarding bankruptcy. Closing credit cards isn’t always advised so speaking to a counselor about your specific situation will be helpful.
Debt management program
Debt management plans are a tool offered by nonprofit credit counseling agencies as a means to help get you back in the right direction to have a financially stable, debt-free life. Your credit counselor can also help you determine if entering into a debt management plan (DMP) is the right approach for your debt and if not lay out all your available options.
Rather than trying to settle your debts yourself, which isn’t always easy and can take up time, a better option would be to hire National Debt Relief. We have already helped more than 100,000 families and individuals achieve freedom from their debts since the company was founded in 2008. We have achieved this by helping pay off more than $1 billion in unsecured debts.
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National Debt Relief helps people nationwide resolve $10k or more in unsecured debt. Our debt coaches negotiate with creditors on your behalf so that you pay a fraction of what you owe and can become debt free in as little as 24-48 months.