If you are struggling to pay your credit card bills, you may be contemplating the options you have for dealing with your situation. The best thing to do is work out a budget that allows you to deal with your debts over time. The reality is that this may not be possible if you are in way over your head. One option that you may be considering is debt settlement.
When you settle your debts, you and the credit card company reach an agreement where you pay them an amount that is less than what you owe and they agree to consider the debt satisfied. While your creditors obviously would prefer that you pay off your debts in full, they realize that this may not happen. Worse, if you file for bankruptcy they will get nothing. While they may consider taking you to court and getting a judgment against you, this is expensive and there is still no guarantee that they will collect. Because of this, if you are able to convince them that you may file for bankruptcy, there is a good chance that you will be able to reach a fairly decent settlement. Debt settlement is simply a method that creditors use to limit the amount that they stand to lose.
Because you have probably never settled a debt before, you may be wondering if you should hire a debt settlement attorney, a debt settlement company or simply contact your creditors directly.
You want to stay away from debt settlement companies if you can. As the number of consumers in credit card debt trouble has increased, so has the number of debt settlement companies. Sadly, the primary goal of many of these companies is to get as much money as they can from their clients. Many will charge large upfront fees which they keep regardless of whether they settle the debt or not. Sometimes these fees are upwards of 20% of the total amount that you owe. Most people are left with credit that is worse than what they started with and debts that are not settled.
A far better solution is settling directly with your credit card company or hiring an attorney to represent you in debt settlement negotiations. If you settle you debts by yourself you will obviously save a lot of money. If this makes you uncomfortable, hiring an attorney is the way to go.
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