Credit Card Debt Consolidation

The post recession U.S economy has compelled millions of consumers to file for bankruptcy. However, many people rely on credit card debt settlement which is certainly and a better alternative than filing for bankruptcy. If you are carrying a high balance on your credit cards, and paying back the entire amount is a faded dream right now, you can consider credit card debt settlement as a viable option. Read on to know the gradual steps to opt for a debt settlement program.

Credit card debt settlement act

You must be aware of a few details before settling your debts. The Credit Card Reform Act of 2009 diminishes the high rate of interest charged by the credit card companies to some extent. This act also impedes the lenders right to change the terms of credit agreement without notifying the consumer at least forty-five days in advance. In addition, the lenders should take the responsibility of explaining terms like ‘fixed rate’ and ‘prime rate’ to the lenders and must not use them in a misleading way for their own benefits. This act also put some restrictions the double circuit billing procedures used by card companies and gives the lenders the liberty to set their credit limit at their own convenience.

Follow the effective steps to settle your debts.

* Evade making regular payments on your credit card bills

The credit card companies won’t take your settlement proposal seriously, unless and until you start default on your payments and your credit cad bill starts piling up. The Credit Card Company needs to be convinced that you are keen to settle your credit cad debts but are incapable of making any payments further.

* Close the eyes to the collection agency’s threatening calls

The moment you start missing your payments credit card companies would turn to collection agencies. The collection agency will start calling you repeatedly to recoup the debt amount. While doing so, they will threaten you that they can sue you or will garnish your wages if you don’t pay off the debt amount. No need to be paranoid over this as no agency has such power or intention to put you behind bars.

* Propose a settlement offer

Put up your proposal of debt settlement to the credit card creditors before its too late and the creditors sell the account to collection agencies. Make sure your offer is lucrative to both the parties and wipe out at least 25% of your outstanding balance. Don’t go for a settlement proposal that you can afford to pay back in future.

* Make the best of a bad bargain

To convince the creditors to approve your settlement offer you can use the threat of bankruptcy. It might go in your favor as the creditors are aware of the fact that once you declare bankruptcy they won’t be able to receive much. They will certainly find settlement proposal a better choice as here they will receive something rather than nothing.

* Always get the agreement in writing

After your negotiation and acceptance of the repayment plan, ask for a written copy of the entire deal and the verbal commitments the creditors make. The preset settlement amount should be clearly mentioned on the fine print. Don’t forget to make the official dealings with a person of authority and ensure you a debt free life sooner or later.

About the author:

Shannen Doherty is a financial writer associated with Oakview law group, she has completed her post graduation in finance. She writes on various topics on debt relief programs like debt settlement, debt consolidation as well as on personal bankruptcy.