Four Misconceptions About Settling Credit Card Debt

Posted by Rebekkah On January - 23 - 2013 0 Comment

Have you amassed enormous credit card debt?  Are the bill payments becoming unmanageable?  If this is the case, then you may consider settling credit card debt.  However, it is not always that easy to settle my debt.  You may decide to use a debt settlement company which can help you restructure your credit card debt to pay the balances off sooner.  Of course, you will have to pay fees to the settlement company for their help solving debt problems.  Before you go through that trouble, take a look at the four misconceptions of settling credit card debt.

  1. Anyone Can Opt For Debt Settlement:  You need to know that all individuals cannot opt for the debt settlement benefit.  This financial advantage is possible only for people who cannot afford to make credit card payments but have the overall income to settle their debts.  If you make a very good income, your creditor will not agree to settle because you can afford to pay back the debt on a regular basis.  However, if your income is low, no settlement company will agree to solve your debt problems because they fear that you will wind up defaulting the debt anyway.
  2. You Can Solve Debt Problems On Your Own:  If you want to settle your debt problems without seeking the help of a settlement company, then you will certainly face big obstacles.  First, you’ll have to come up with cash to pay the settlement company.  Also, as an individual, you have no relationship with the lender and, as such are not able to request a settlement.  A settlement company can help you reduce debt problems by negotiating with your lender.
  3. Your Credit Score Will Remain Safe:  When you accumulate credit card debt, it will definitely affect your credit score.  When you make credit inquiries to your score, take out new loans, and pay off several debts at once, it will have a negative impact on your credit score.  Further, the process of settling debt will also hurt your credit score.  Although the loan may be marked as closed, your credit report will reflect that the loan was closed in an unsatisfactory manner to the lender.  As such, this may notify the future lenders that you’ve settled the debt rather than paying it in full.
  4. You Can Save Dollars With A Balance Transfer:  You may feel enticed to transfer the balance from one card to the other.  You can easily fall into this trap when the new credit card offers you suitable opportunity to make no payment or have a zero percent interest rate for a certain time period.  Although you may save yourself from default if you choose this option, you may actually lose money in the long run.  Your balance transfer may incur very high fees, a considerable drop in your credit score, and incurring more debt in the long run.

It is advisable that you know about the entire debt settlement process before you may choose this option to eliminate credit card bills. These are some misconceptions that you should keep in mind while settling credit card debt.

 

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