Debt Settlement – the right time to settle your credit card debts

Whatever reservations people may have about the Debt Settlement program, it certainly offers credit card debt help at the time of financial hardship. Credit card debt is the problem of the day. A lot of people suffer from credit card debt; the problem is worst with students and teens who do not have adequate knowledge on how to use credit cards.

Debt settlement program is different from credit card debt consolidation or debt consolidation loan. In this program, the debtors hire debt settlement companies who, on behalf of the debtors, deal with the credit card companies to lower the total amount of debt. Simply put, settlement companies bargain with the creditors and settle the debts at a lower amount.

A lot of people think that debt settlement is not good for credit. It’s true. Debt settlement leaves a negative impact on your credit report. But that is much much better than leaving a debt unpaid! By going with debt settlement program you give your future creditors an indication that you tried to pay your bills even when you had hard times.

In a typical debt settlement program, the total amount of debt is brought down to an amount that is quite affordable to the debtor. In the mean time the debt settlement companies start collecting monthly installments from the debtor and the amounts are stored in a trust account.

Once the deal is finalized with the creditors, the total amount is paid to them and you get rid of your debt problems.

Not only credit card debts, but personal loan, medical expenses, utility bills or any other kind of unsecured debts can be paid off through settlement process.

Expert debt settlement companies negotiate with the creditors in such a way that they report the accounts as ‘paid’ rather than ‘settled’. This way the negative impact of the process is also avoided. However, the best time to go with settlement is when the account is already reported as default in your credit record.