You have very high credit card debt and just can't seem to get it paid off. You know that you have the option to declare bankruptcy or look into debt settlements. You are not sure, however, exactly what debt settlements are or the debt settlements effect on credit report.
A debt settlement is working a negotiation out with the credit card company. If your payments have been on time, then the best negotiation that you may be able to make with them is a lower interest rate. However, if you are behind by several months, then a negotiation of a lump-sum settlement may be possible. In other words, the credit card company might be willing to let you pay part of the total amount that you owe all at once. They would then write off the rest of your debt.
This might sound like the best option, however, there are a couple of things you may want to consider before you decide to negotiate a debt settlement. One consideration you should make is the amount of cash you have to pay on a settlement. If you have not been able to make your minimum payments, then do you have the cash to pay a lump sum? The second thing you should consider is debt settlements effect on credit report.
Rather than the settlement helping you repair your credit, the debt that is written off by the credit card company will show up as bad debt. The debt settlements effect on credit report, therefore, can be devastating as it will show up on your credit reports for seven years.
In sum, a debt settlement is an option you have to help you out of financial strain. The positive aspect is that once you settle with the credit card company, you no longer have to worry about paying them any more money. The negative aspect is that the debt settlements effect on credit report is devastating for seven years.
Artice Source: http://www.articlesphere.com
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