Credit card debt settlement is a choice that you might be able to take if you have long overdue credit card debts where you are not making the monthly payments.
What Is Discounted Debt Settlement?
In some cases, the bank personnel will offer to an individual a discounted debt settlement if they have found out that you have not paid your debt for a long duration, and if they think that it’s impossible for them to let you pay the whole amount and its interest.
This indicates that they will write with a proposal where you can pay maybe 50% of the debt and they will write off the rest. Typically they will need this all in one payment, but if it is a big amount they possibly could accept it in two or three instalments.
The debt collection bureau is the one that often sends this correspondence. This can indicate that your original lender has signed over the debt to the debt collectors, or it may simply entail that the agency is working for a percentage of whatever they can reclaim from you.
Why Would They Do This?
The basis why they do this is that they plausibly have sensed that you are incapable of paying your debts, and if they will litigate you, they can’t even obtain a single cent since you perhaps would announce bankruptcy.
So they have an alternative between incurring the cost of court proceedings and maybe still getting nothing from you, or granting you this deal where you pay 50% or whatever. They figure they will be better off accepting half of what you owe than trying to obtain the full amount through the courts.
What Can A Person Do?
Before deciding to accept the discounted debt settlement offered to you, you have to analyze first various relevant things.
First, you should be familiar that accepting this will influence your credit score in a disconfirming way, because you will not have paid off your whole debt. If possible, take care of the full amount of your debt so that your credit score won’t be threatened. But, since you have received a discounted debt settlement offer, it only entails that you have difficulty in paying your debts. And on the debtor’s part, paying the 50% of your entire debt is undoubtedly better than going to the court for the settlement.
Second, you will need to study how you can have the payment that they want. Does it evoke that you have to prioritize this and just ignore your other debts for months? What will be the results of that? Would it mean skipping the rental which might lead to losing of your home? Strategize how and where you will get the amount needed.
Then, if you contemplate to accept the settlement, ask for a lower settlement, one that is much lower than what they are offering. This suggests that you inform them that it is impossible for you to pay the 50% and you can only afford to pay 40% or lower than that. If you could persuade them, you are able to save several amount of money with no extra penalties at all.
If you call, get the person’s name that you speak to. And once they agree to your suggestion, ask a written document stating your agreement and wait to obtain a copy of it before paying . After that, hand them a letter together with your check denoting that this is your full and final debt payment, and request them to give you an acknowledgment letter stating that your debt has been resolved.
But be reminded that declining their discounted debt settlement would trigger them to take the concern to the court. The possible thing is that you will be forced to pay the total amount of your debt aside from the costs, and this implies you will pay more than what you owe them.
If you decide to accept, always read the little print on any offer. Find out if it is obviously stated that the amount you will be paying them is good as full and final payment of your debts and that the other debts would be ignored after you pay them so as to be sure that they won’t have any basis of going back to you in the future.
After you have done the essential things, scrutinize if everything is indicated in your credit record. If there is any mistake you must ask for it to be corrected right away and you will need to dispatch copies of all of your correspondence. So keep all of the paperwork when you agree to any credit card debt settlement.
For more information in case credit card settlement doesn’t work out check out chapter 13 and to find it go to memphis bankruptcy lawyer .