Credit Card Debt Settlement Isn’t the Only Alternative to Bankruptcy

Carrying a high balance on your credit cards can be disastrous to your credit and your state of mind. Each month you go without paying off your balance, you’re assessed finance charges – as well as late fees, if you’re unable to make your payments on time. This revolving cycle of debt can be extremely overwhelming, but there are plenty of options to get you out of debt and back on track financially. One of these options – credit card debt settlement – is something consumers often consider as an alternative to declaring bankruptcy, which most financial experts view as a last resort.

However, credit card settlement isn’t your only choice when it comes to managing credit card bills and getting out of debt. If you’ve missed several payments, you can’t see a way to pay off your balance, or you’re on the brink of declaring bankruptcy, you should consider these credit card debt settlement tips and alternatives, which can bring you debt relief and peace of mind.

Understanding credit card settlement

Credit card settlement involves negotiating with your creditors to pay back a portion of your balance. It’s not a tactic to use to simply get out of paying your monthly bill or to indulge in extra spending. Rather, credit card debt settlement is something to consider when you simply cannot make your monthly payments and you’ve exhausted all other options.

There are two ways to go about credit card debt settlement: you can contact your creditors directly to discuss payment arrangements, or you can work with a debt relief company, such as CareOne, to help you through the process. The providers of CareOne Debt Relief Services have relationships with more than 250,000 creditors and have helped more than 4.5 million consumers with credit card settlement and other debt management solutions.  Because CareOne handles the negotiation for you and manages the account from which you’ll pay your creditors, you can simply focus on getting out of debt and working toward a strong financial future.

On the other hand, if you choose to manage the process on your own, here are a few credit card debt settlement tips:

• Contact your creditors as soon as you realize you have a problem and can’t pay your balance.
• When negotiating to pay back part of your balance, you’ll want to explain to your creditors that you’re having trouble making payments and can’t afford to cover your entire balance now or in the future.
• You also should have a dollar amount in mind that you are willing to pay to your creditors to cover a portion of your balance, and it should be an amount that is fair and reasonable. As part of your credit card debt settlement, many creditors will accept either a lump-sum payment or allow you to spread payments over a few months to settle your debts.

Weigh your debt relief options

While some debt relief plans may not have a tremendous impact on your credit, that’s not true of credit card settlement. Perhaps the only thing worse for your credit is declaring bankruptcy. So before going down that road, consider the following alternatives:

• Interest Rate Negotiation: Did you know you can call your creditors and negotiate lower interest rates right now? If you’re like most consumers, you receive numerous credit card offers every month, often with low, promotional interest rates. Call your existing creditors and let them know you’ve received lower rate offers, and ask them to match or beat those offers. Alternatively, explain that you’ve had trouble making payments recently, and a lower interest rate would really help you make the minimum payment every month. Explain you’re not looking for a credit card settlement; you want to pay back your balance and just need some help from them in the form of a lower interest rate.
   
• Debt Consolidation Loan: With a debt consolidation loan, you enter into an agreement with a lender whereby the lender will pay off your existing bills, and you’ll pay back the balance to the lender. If you have high balances or several credit cards, this option can make things easier simply by reducing your number of monthly payments – from several to just one. Different from a credit card debt settlement, a debt consolidation loan assumes that you pay back the sum of your balances – but you’ll now pay the new lender instead of your creditors. There’s a lot to know and a lot of questions to ask before taking out a loan to pay off your credit cards, so be sure to read more before making a decision.
   
• Debt Management Plan: Another alternative to credit card debt settlementis a Debt Management Plan (DMP). A DMP – such as that offered by the providers of CareOne Debt Relief Services – works differently from a debt consolidation loan. We take the guesswork out of getting out of debt by working with you and your creditors and designing a customized plan to help you repay your debts in full in five years or less. In addition, a DMP from CareOne may offer significant savings in both interest and repayment terms. Because we have relationships with thousands of creditors and a strong track record of helping consumers get out of debt, CareOne offers significant advantages over managing credit card debt settlement on your own. Read more about DMPs and the benefits they offer over credit card settlement and loans. 

If, after reviewing your options, you’re still thinking that credit card debt settlement is the best choice for you, consider working with a debt relief company to help you with your negotiations. Contacting your creditors directly to work out payment arrangements can be an uncomfortable experience, especially if you’re not sure how much you can afford to pay back to settle your debts. A debt relief company will work with you and your creditors to come up with a reasonable settlement amount and repayment plan, based on your individual financial situation.

A Debt Settlement Plan (DSP) is one of the options offered by providers of CareOne Debt Relief Serivces to help you payoff your unsecured debt and become debt-free. CareOne will partner with you and reach out to your creditors to arrange your credit card debt settlement. In addition, CareOne offers financial education and ongoing support to ensure you make smart financial choices in the future.

Visit www.careonecredit.com for more information on credit card debt settlement and alternative debt relief options. Or contact us directly with your debt relief questions and concerns. 

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