Settling Credit Card Debt

Confirm the amount you owe.

Settling credit card debt. Debt settlement can hurt your credit score almost as much as bankruptcy. Asking for a steep reduction of your debt as well as a payment plan is not likely to work in your favor. Debt settlement will not combine your loans into one.

Instead ask that they report it as paid as agreed upon. A debt settlement is basically an agreement that you would make with your creditor says Katie Bossler a. For help in crafting a settlement offer get Nolos eForm Offer to Settle Debt With a Reduced Lump Sum Payment.

Debt settlement also aims to shorten the term of a loan by making a lump sum payment to creditors that clears you of all financial obligations. Debt settlement is for consumers experiencing a legitimate financial hardship. How does settling credit card debt affect credit score.

You dont need to hire someone to help settle your debts but it may help just watch out for scams. Settling a Credit Card Debt Can Lower Your Credit Score Debt settlement affects your credit score. Eligible debt Freedom Financials debt relief program helps settle unsecured debts including those from credit cards outstanding medical bills and personal loans.

Start with a phone call to your credit provider and confirm the amount. If youre at the stage of considering settling debt then youve already missed several payments probably months worth which takes a toll on your credit. Depending on how your credit card company reports the debt to the major credit bureaus a lump-sum settlement can affect your credit scores.

Debt settlement involves making an offer to the credit card company to settle the amount you owe for a lesser amount. If the total debt forgiven is 600 or more the lender is going to give you a Form 1099-C Cancellation of Debt to use in your personal tax filing. For credit card debt that means the credit card company or a debt collection company signs an agreement stating that you can pay back a smaller percentage of your debt.