Credit Card Debt: 6 Myths About Settling
Millions of Americans struggle with debt on a daily basis. The burden of having to pay off a heavy debt load can become overwhelming as that debt increases. Not to mention, this can put strain on other parts of life like bills and personal relationships.
However, there are a number of ways that a person can resolve their debt, most notably through debt relief methods. These methods are lengthy but in the end are successful in settling debt.
As a result, some people have come to believe that some of these debt relief strategies can offer more than is actually possible when it comes to debt. Here are the truths when it comes to settling any of your debts.
1. I can get any credit card debt settled.
This is a very common misconception when it comes to settling debt. One of the aspects of debt relief is that you must meet certain requirements in order to even be eligible. Most debts above $7,500 can usually be settled.
However, lower amounts of debt, especially in the hundreds are usually not able to be settled no matter what. That is because the debt is too small for your creditors to want to settle. Additionally, reducing that amount of debt wouldn’t be possible because it already is so low, that getting it any lower would be reducing it to nothing. And creditors will not accept that.
Also each person who applies to a debt relief program is screened and evaluated to ensure they are meeting the conditions for debt relief.
2. Instead of paying my credit card debt, I can just settle it
This is completely false. When you choose to settle your debt, you will still be liable for paying off a portion of the principle amount. In fact, settling your debt, means you are just reducing the amount of debt you will eventually pay off.
Settling debts will not enable you to avoid paying off any debts that you have incurred at any point and any form of debt relief involving such a claim, is usually false.
3. I have to pay to get my credit card debts settled.
Any reputable debt settlement company is not going to ask for any payment upfront. Debt relief programs that do ask for upfront fees, are probably scams and should not be considered.
A debt settlement company will only get paid once your debts are settled. They do not make anything if you don’t complete the debt settlement program. You should make sure to do your research and make sure you are finding an accredited company.
4. Debt settlement is my only option for credit card debt.
You do have other options when it comes to settling your debts but they usually don’t involve reducing your debt. That’s the benefit of debt settlement, you get an opportunity to lower the debt that you will eventually pay off.
Other debt relief options will only be able to eliminate interest fees and any late fees that you have incurred from not paying off your debt. Which can be a significant savings but not as big as debt settlement can potentially give you.
5. When I do settle my credit card debt, I will completely be out of debt.
As mentioned earlier, not all debts qualify for debt settlement and for that reason you will not be able to enroll all of your debts into the program. Therefore, you won’t be able to reach complete debt freedom.
However, you should attempt to enroll any and all debts that you do have when seeking a debt settlement company, as each one varies in their ability to handle debt.
6. Debt settlement can hurt my credit score.
This is not necessarily true. The way a debt settlement program works is that you make monthly payments into an escrow account that will be used to payoff your debts when a settlement is reached with your creditors.
However, once you enroll into a debt settlement program, you will need to stop making payments on your debts because the debt settlement company will have to show that you are in a debt settlement program in order to open up negotiations with your creditors.
At this time, your credit score could take a hit and drop a couple of points. But once you complete the program, your credit score will instantly improve and be much higher and better than before.
Be sure when picking a debt settlement company
When it comes to settling your credit card debt or any debt for that matter, you should always do your research. Also make sure that you are not simply trying to get debt settled that you just don’t want to pay. Which is actually not ethical and never happens. Lastly, be looking for a reputable and accredited debt settlement company, that has proven results and track record.