Credit Card Debt SettlementIn a New York Times article, Cyndi Geerdes - an associate professor at the University of Illinois law school, stated "Done correctly, (debt settlement) can absolutely help people". Credit card debt settlement has since become increasingly popular these days as a means to lower and get out of credit card debt on a fast track basis. Credit card debt settlement is highly effective and ethical, as it benefits both creditor and debtor alike. Credit card debt settlement is typically used by debtors who have large amounts of credit card debt ($10,000 and above) as a way to reduce this debt without the need to file bankruptcy. Credit card debt settlement in fact is often a last ditch effort to avoid bankruptcy.
Yet what exactly is credit card debt settlement, and how does it work? A debt settlement is when you negotiate with creditors in order to settle the account(s) for an amount that is typically significantly less than the original amount owed, and typically has to be paid back in one lump-sum. The question has been asked - Why would a creditor consider an amount that is less than what is owed them? The answer is simple - When you are having extreme financial difficulties, a creditor realizes that your next step could likely be bankruptcy. When a creditor’s client files for bankruptcy, they typically end up receiving no money owed them at all. Therefore, it is better for the creditor to receive an amount that is less than the original amount owed than to receive nothing at all for the account, and very often, creditors will agree to a credit card debt settlement as it is in their best interest to obtain some money even if it is not the full amount owed.