Commonly Asked Questions about Credit Card Debt Settlement
Is there a legal basis to settle credit card debt?
Contrary to debt settlement firms advertising the SECRET credit card companies do not want you to know, there is no secret to legally settling credit card debt.
A credit card account is a contract between two parties. That contract can be changed if there is agreement between the consumer and the credit card bank. In this context, the most important part of LEGAL is for the consumer to get the negotiated debt reduction and its terms in writing, according to the Credit Card Debt Survival Guide.
Can I settle my credit card debt while my payments are still current?
Credit card companies will only settle with those consumers who have missed monthly payments. If the banks negotiated debts with current account holders, most consumers would want to settle for less than the full amount.
As far as credit card accounts go, consumers fall in to two categories; those who can pay the monthly minimum, and those who cannot. For those who can pay and who want to settle for less than their full balance, they must risk not making their monthly payments and then banking that money for a lump sum settlement.
How much of a balance reduction do credit card companies usually settle for?
On Internet consumer forums you can read of individuals negotiating credit card debt down to 20 to 70 percent of the current balance. Credit card banks prefer dealing directly with consumers rather than going through debt settlement companies, according to Charles Phelan, a debt settlement trainer. He also says consumers who negotiate on their own get the best settlements.
When approaching a bank for a debt settlement, a consumer must present a convincing case with low income, damaged credit and legitimate hardship issues. According to the Credit Card Debt Survival Guide, credit banks are mostly likely to settle for the lowest amount of money and may offer to settle right before the account charges off, which is usually around six months of arrears.
Matt Highlander spent months researching strategies for credit card debt relief. Read his complete 230-page Credit Card Debt Survival Guide
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