Understand Credit Card Debt and When to Settle

We can agree on this. Credit cards are a great way to purchase items when ready cash in not available. However, it becomes far too easy to whip out a credit card for routine and spontaneous purchases and be surprised when balances are far more than expected. Cash is simply easier to manage and when it’s gone, it’s gone. Credit cards allow individuals to spend more than what is practical for their budget and can negatively impact finances and more. When massive balances loom overhead and it’s a struggle to make minimum payments, it may be time to take matters firmly in hand and settle. Learn more about credit card debt and if debt settlement is the right choice for you. Call 866-703-4945  for help today!

What to Know about Credit Cards

Credit cards are a convenient method of payment and debt can be managed with larger and faster payments. Be aware that:

  • Credit cards are useful for essential items or emergencies but make sure to adhere to a short repayment time plan. Be willing to pay down the balance quickly and on time. Credit cards interest rates can be 18 percent or more and quickly add to your balance. Miss a payment and incur penalty fees or see a rise in your rate. Only buy what you can afford to pay off in a short time frame.
  • Credit card debt can be a blessing and a curse. Credit card debt that is less than 35 percent of the available credit limit and is paid consistently on time, can build and maintain a positive credit history and establish high credit scores over time. Skipped payments can result in creditors reporting 30-day delinquencies to major credit agencies with a noticeable ding to your credit score. Poor credit scores and skipped payments are an issue and can be a problem when individuals want to apply for a home mortgage loan or personal loans.
  • You can ask for help. Many credit card companies are willing to work out new payment arrangements but it is not obligatory. You can speak to a lender directly and if that fails you can work with a credit counselor that will intervene on your behalf and develop a feasible repayment plan.
  • Creditors can sue for non-payment of credit card debt and if they are successful, you can be powerless against garnished wages or the removal of your nonexempt property and assets.

If you are having difficulty managing spending and paying down outstanding debt, and contacting lenders directly has not helped, look to a credit counseling team to work with you to develop a repayment plan for your unique situation.

Is It Time to Settle

It is possible to settle outstanding debt with lump sum payments. Borrowers need to:

  • Be a few months behind in payments;
  • Have tried and failed other repayment options;
  • Know that settlement can lower credit scores;
  • Understand that forgiven debt can be reported as taxable income and those that settle may have to pay taxes on it;
  • Realize that creditors do not have an obligation to settle;
  • Stop making direct payments to creditors. This can lower credit scores and add fees and penalties.

Research repayment options and debt settle companies. Credit counseling is one way to avert a financial crisis. Call 866-703-4945  for help today!

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Last modified: January 4, 2018

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