What you don’t know about Credit Card Debt Settlement Services can Hurt you

Have you ever been tempted to take advantage of those commercials or ads that promise to eliminate or greatly reduce your debt? Because of the sour economy and the credit problems so many individuals are facing, these types of companies are popping up at astounding rates. Some of the companies are quite helpful; others are merely looking to make money off your unfortunate situation – and leave you in worse condition when they are done with you than when you started.

So, the question is: can you settle your credit card debt for less than you owe? Can you settle with your credit card company for a fraction of your balance and make more realistic payments?

Here’s what you need to know when considering a credit card debt settlement company:

• Not everyone can negotiate a lower payoff amount for their debt. In other words, your overspending may not qualify you for debt settlement. Instead, reputable debt settlement agencies work specifically with people who are in hardship situations, like a loss of a job, divorce or medical situations. In other words, if you are still making money the credit card company will expect you to pay back your debt – so don’t expect a “get out of jail free” card if you simply overspent beyond your means.
• You may be better off trying to negotiate a deal with your credit card company. Because so many people are turning to debt settlement companies many credit card companies simply won’t deal with them. Simply, if you are experiencing financial hardships and are having a difficult time paying your credit card debt, the best course of action may be to simply contact the credit card company yourself and forgo the debt settlement company.
• Don’t approach the debt settlement business the same way. Simply put, not all debt settlement companies are the same. There are unscrupulous, even dangerous, companies that are out to take your money and there are non-profit organizations that may prove to be quite helpful. In other words, do your homework before choosing a debt settlement agency.
• Understand that using a debt settlement company will adversely affect your credit score. There is no way to avoid this, as any time a credit card company is willing to settle for less than you owe them your credit score will take a hard hit.

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