Credit Card Settlement
Consumers seeking to settle credit card debt should consult a professional debt management firm. Delinquent credit card charges don't accumulate overnight and there's no quick fix for making them disappear. Debtors need qualified financial management agencies to help reduce or pay off outstanding accounts and satisfy creditors. Such agencies help debtors formulate a workout plan and negotiate with card issuers to come to favorable terms. The goal of the negotiator is to convince the creditor to settle for less money than the debtor owes in order to clear up accounts. But, debtors shouldn't try negotiating on their own. Irate bill collectors and emotionally stressed consumers generally don't mix. Dealing with delinquent obligations can present a powder keg of emotions: the creditor needs to be paid in order to stay in business, but the near-bankrupt debtor doesn't have the cash. A qualified credit card settlement negotiator can serve as a mediator between the two. But debtors and creditors are not the only ones in need of a mediator; all mankind needs someone who can negotiate with God to grant a pardon from the overwhelming debt of sin. That mediator and advocate is Jesus Christ: "For there is one God, and one mediator between God and men, the man Christ Jesus; Who gave himself a ransom for all, to be testified in due time." (I Timothy 2:5-6).
Professional negotiators are debtors' advocates, highly skilled in bartering the best settlement for distressed consumers. Knowledgeable of the tricks of the trade and the legalities of collection, negotiators know how to approach creditors to elicit positive outcomes. Counselors can help borrower/debtors develop and implement a master plan to pay off credit cards, one at a time, within a specific period. Most creditors will gladly accept a reasonable plan because they recognize that half of something is better than all of nothing. In most cases, an average adjustment of 30% to 50% of the original unpaid balance is acceptable. Occasionally, creditors will accept less, especially if it appears that the debtor is on the verge of bankruptcy; in which case, creditors could easily end up with nothing. If debtors are forced to file Chapter 7 or Chapter 13 bankruptcy, unsecured credit card claims will likely be discharged. Negotiators can appeal to creditors on behalf of clients to avoid litigation and keep delinquent borrowers out of the courtroom. Once credit card settlement proceedings begin, creditors must cease all collection efforts and communicate only through the debtor's agent.
The counselor's method of handling a case depends on several factors: the amount of delinquency, the debtor's financial balance sheet, the creditor's policy regarding charge account adjustments, and the length of time it takes to work out payments. While small amounts of outstanding obligations usually require debtors to pay a lump sum, larger accounts can take nearly six months to resolve. Tens of thousands of dollars in delinquent accounts may require the negotiator to devise an installment plan over several years before settlement can be reached. The borrower's income and ability to make regular payments will largely determine the amount of time needed to reach a zero balance. The negotiator will review the debtor's complete financial statement to determine how much disposable income is available. In addition, debt relief counselors must comply with the creditor's charge account adjustment policies. An extended period of time may be required for debtors to accumulate enough funds to settle credit card debt. Remember: credit card settlement requires payment of delinquent charges -- one obligation at a time. Distressed borrower/debtors may have as many as five to ten revolving accounts; and a savvy financial manager must deal with each issuer to negotiate a favorable resolution. To amass funds, debtors may choose to regularly deposit money into an escrow account held by the debt management firm, or into a separate savings account earmarked for settlement.
In addition to determining when and what amount creditors should be paid, financial management firms charge debtors a professional fee. Most credit card settlement plans will incorporate the fee into a debtor's master plan. Payment options include: a flat rate, a percentage of the debtor's overall indebtedness, or a fee based on the amount of money debtor's save through negotiations. If a professional negotiator can save a debtor 50% to 70% of a delinquent account, the fee would have been spent. Without the debt management firm's expert intervention, borrower/debtors would have to face harassing creditors, defend themselves against lawsuits and wage garnishments, or declare bankruptcy. The services of such firms are invaluable safeguards against undue emotional stress and potential financial ruin.
Depending on the debtor's credit report prior to negotiating, credit card settlement can have a negative or positive affect on ratings. A documented effort to settle credit card debt may reflect favorably on debtors who previously had numerous charge offs and unpaid delinquent balances. But for someone whose payment history has been exemplary, settlement may mar an otherwise blemish-free report. Before making a decision to proceed to settle, borrower/debtors should seriously consider if creditor payments can be made consistently for the duration of a proposed plan. The decision to settle credit card debt is a good one if the plan can be followed through to completion. Debtors may need to find additional sources of income, take on a second job, or deplete savings to complete a long-term plan. But a second chance at financial stability and relief from the burden of credit card indebtedness may be well worth the sacrifice!
Credit Card Debt SettlementCredit card debt settlement involves reducing and sometimes erasing bills and payments accrued from charge accounts and other lending devices through a professional company. Obtaining credit is typically very easy for people as young adults. Unfortunately, too many of these individuals are not well-schooled in how to wisely use their charge accounts. Or perhaps they do understand the basics of money management but they experience an unexpected period of unemployment or a medical emergency. While charge accounts do offer a convenient solution for what is hopefully a short-term problem, many people quickly find themselves overextended. Next week's paycheck is spent before they even cash it, and bill collectors are contacting them at every turn. These people could seek refuge through a settlement program.
Settling is a good option for many individuals and families as it offers an alternative to filing for bankruptcy. If a person is weighed down by bills, specifically when it comes to charge accounts, they may want to research how a person can benefit from a credit card debt settlement. Many agencies offer these services. The counselors work with creditors to reduce or eliminate payments and/or interest rates so that the debtor pays a fraction of what is owed. Consumers can call or email one of the financial companies, answer a few questions, and a representative may be able to stop the harassing collection calls and letters within minutes. With their help, the loans will get paid off and the debtor can once again experience financial freedom.
Although this sounds extremely heartening to people struggling with their bills, they should be aware that there are some potential drawbacks to using such a program. The creditors will tell the bureaus that the debts have been settled; this adversely affects the debtor's score, which means the consumer will have a difficult time getting competitive rates for automobiles loans, home mortgages, or any other kind of credit that may legitimately be needed in the future. In the long run, this could cost thousands upon thousands of dollars. Also, some people raise ethical concerns about credit card debt settlement as it means debtors are not paying back the full amount that was originally borrowed.
Most companies offer a free, no-obligation consultation so the initial conversation can be an opportunity for the consumer to ask questions to make sure the financial plan is appropriate. Also, debtors do not need to make a decision right away. They probably did not accumulate their debts overnight; likewise, consumers don't need to make quick decisions about how to resolve financial problems. It's better to first seek godly counsel, and pray about the situation. God wants His people to steward his resources wisely. Credit card debt settlement may offer the chance to begin doing so. "My soul followeth hard after thee: thy right hand upholdeth me" (Psalm 63:8).
Debt credit cards settlement is a way to eliminate overdue balances quicker than paying the whole amount in payments every month. There are some things to consider, however, when deciding on this approach. Debt credit cards settlement means paying off the amount faster and without interest growing while paying...in most cases. Here are some keys to successful negotiations.
People considering hiring someone else to do the work for their debt credit cards settlements need to be very careful who they hire. These people are putting the fate of their credit and financial future in someone else's hands when giving such a responsibility. Even if this person is a family friend or a reputable company, debtors need to understand everything that will be going on during the negotiations. Things to know about their debt credit cards settlement are the fees, a person or company's success rate, and how much they will be able to settle for. Debtors could find a company that has a great success rate, but is only able to lower the amount by 10%. It is important to shop around some more for debt credit cards settlements.
Anyone who wants to tackle their debt credit cards settlements on their own will have to organize a filing system to keep settlements straight. Also, debtors need to understand the art of negotiating with creditors. Settlements can be tough. Creditors don't want to let people get away with not paying them the whole amount. They might try to make debtors feel bad or even threaten them. Those trying to negotiate should be prepared to offer them what they can offer them, but also be willing to be work towards their benefit as well. Having said that, debtors shouldn't offer the creditor the highest debt credit cards settlement they can afford to offer them. Rather, negotiators should offer lower so there's room to negotiate. Once the debtor has set up a plan with each creditor, it's best to create a monthly plan on paper to keep in check with negotiated amounts and simply for financial records.
Debt credit cards settlements can be tricky, but by tackling them with a confident positive attitude, the debtor will succeed. God wants us to pay all our debts back and debt negotiation is a way to do that. Pray for His guidance toward the right path and for the Christian attitude to deal with creditors. "Let, I pray thee, thy merciful kindness be for my comfort, according to thy word unto thy servant" (Psalm 119:76). He knows when we are trying to do well and will bless that effort if we listen to Him and trust in what He says.