Credit Card Debt Settlement Program Benefits

What is a credit card debt program settlement and why should you care about it? A credit card debt settlement is essentially a way to reduce your credit card debt without filing bankruptcy.

One of the great attributes of settling your credit card debt through a program is that you do not need to file bankruptcy. Filing bankruptcy can permanently damage your credit score, making it more difficult to secure financing for something such as real estate, a business, or a car. One of the more common types of credit solutions involves negotiating or settling your debt with the creditor. When you reach a credit card debt settlement with your creditor, the creditor is essentially reducing the balance that you owe to them. While this may seem counter intuitive, it actually makes sense. If a creditor thinks you may file for bankruptcy due to your extreme debt, they would rather collect a reduced credit card debt settlement than no money at all.

Typically, a caveat to a credit card debt settlement programs is that you may have to pay the reduced amount in a pre-defined amount of time. Thus, it is important to have those funds available for payment. Additionally, the difference between the original balance and the credit card debt settlement amount is usually treated as taxable income and thus will increase the amount of taxes that you owe that year. For this reason and other similar ones, it is often advisable to work out a debt settlement via a getting a debt settlement vary and range from writing a debt settlement letter to calling the creditor, either personally or through an attorney. Sometimes, a creditor may not approve the settlement at all because they think you are capable of paying the full amount of credit card debt. For those that qualify, reaching a credit card debt program settlement can greatly reduce the debt they carry and put them on the path to financial freedom.