Three FAQ on Credit Card Debt Settlement

Is there a legal basis to settle credit card debt?

There is no SECRET, despite debt settlement firms’ claims, to legally settling credit card debt.

Unsigned, credit card agreements are contracts between the credit card bank and the applying consumer. Like any contract, these contracts can be lawfully edited with the agreement of both sides. The most important legal aspect of negotiating credit card debt for the consumer, according to the Credit Card Debt Survival Guide, is getting the settlement and its terms in writing.

Can you settle a credit card debt without being late in your payments?

The short answer is NO. Banks will not settle with consumers who are not late in their payments. If they did, they would open up the floodgates to every credit card account holder seeking credit card debt relief.

In most cases the reality is only those consumers, who can make their monthly credit card payments, can afford to settle. To negotiate their credit card debt with the bank, they must first take the risk of not making monthly payments to get the bank’s attention. Then they have to save those payments for the lump sum payment they hope the bank will take.

What percentage of the balance will a credit card company settle for?

Online consumer forums have stories of consumers settling for as little as 20 and as much as 70 percent of their credit card account’s original balance. According to credit card debt settlement expert Charles Phelan, consumers who settle on their own get the best settlements. Phelan also says credit card companies would rather deal directly with a consumer, rather than go through a debt settlement firm.

For a debt reduction agreement initiated by a consumer to work, credit card debt banks want consumers with real hardship issues like low income, job loss, family death, medical catastrophe, etc. The best time to settle, according to the Credit Card Debt Survival Guide, is right before the bank charges off the account. This usually happens six months after payments stopped. During this period, banks sometimes contact the consumer and offer to reduce the balance.

Popularity: 35% [?]