How to avoid bankruptcy with credit card debt settlement

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How to avoid bankruptcy with credit card debt settlement

How to avoid bankruptcy with credit card debt settlement

Debt settlement is just one of the multiple ways to climb out of debt. It is always advisable that one should go for debt settlement when all the other options are exhausted. In other words, debt settlement should be best considered when you’re on the verge of filing bankruptcy. Since bankruptcy hurts your credit score for the next seven years, you can go in for settling your debts through a debt settlement company. Read on to know how you would avoid bankruptcy with credit card debt settlement.

1. Single and convenient monthly payment: Debt settlement can come as a respite for those who have become tired making multiple payments towards multiple credit card accounts. It is a process in which the debt consultant of the debt settlement company will negotiate with your creditors and reduce your debt amount. In exchange of their services, you’re required to make single monthly payments to the debt settlement company that will be distributed among your creditors with due time.

2. Drastically reduces debt: Among all the debt relief options, debt settlement is the only option that drastically reduces your debt amount. Though after FTC has passed a new set of rules where debt consultants cannot make grandiose promises of reducing your debt burden to its half, yet your debt amount reduces to a certain extent. This may not be possible with the other debt relief options as you may extend the term of repayment, but it will cost you more than what you owed.

How to avoid bankruptcy with credit card debt settlement

3. You become debt free sooner: By settling your debts with a debt settlement company you can get rid of your debt burden within 36 months. As your debt amount is drastically reduced, it becomes easier for you to repay the amount in single affordable monthly payments. As you start making your payments to the debt settlement company, you start reducing your debts and ultimately become debt-free and avoid filing for bankruptcy.

4. May stop collection calls: As you settle your debts, your debt consultant is supposed to disburse your monthly payments to the creditors so that they do not report negatively to the credit bureaus. This will prevent them from turning your account to a collection agency and thus you will not receive collection calls.

Thus, if you’re not being able to pay the minimum amounts on your multiple credit cards, you can settle your debts through a debt settlement company. You should be aware of the adverse effect that debt settlement has on your credit score. Therefore, try to avoid this by negotiating with your creditors.

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