Credit Card Debt Relief - When it Make Sense to Opt For Debt Settlement

April 29, 2010 - PRLog -- Credit card loans have a very high rate of interest because they are unsecured loans and have no collateral attached to them. At the same time a common debtor has many other loans to deal with like home loan, car loan, utility bills etc. On the other hand the market is in the grips of a serious recession. Due to the current market scenario, many people have ended up jobless due to lay offs. The ones who have managed to hold on to their jobs are facing serious salary cuts.

This has tilted the until now balanced financial situation of many common debtors. Many people are faced with huge unsecured debts like credit card debts and no financial means to repay them. This is when in desperation they start contemplating bankruptcy. However bankruptcy can ruin a person financially and socially. It becomes impossible for a bankrupt individual to get any kind of loan or credit in the market.

However, nowadays the credit card companies have realized that there is no point in pushing debtors towards bankruptcy. If the debtors file for bankruptcy the credit card companies lose all their money as they are unsecured loans. This is the reason that they offer huge relief to debtors in the form of debt settlement programs. However these debt settlement programs affect your credit scores adversely and it may take 2-3 to rebuild them.

Rebuilding credit scores requires a lot of time and effort. Hence you should opt for debt settlement only if you are burdened with huge loans and have no means to repay them. You should try to repay your loans in full and opt for debt settlement only if bankruptcy is the only other alternative.

With the help of debt settlement programs you can negotiate with the credit card companies and reduce your debt by 40% to 60%. You can pay this settled amount in installments or as a lump sum. You can even persuade the credit card companies to reduce the interest on the negotiated amount payable. In this way you can reduce the burden of debt quite significantly.

If you are struggling with paying back your credit card debt or any other unsecured debts there is legitimate help out there. Debt settlement usually makes financial sense for consumers with over $10k in unsecured debt. There are also other options available.

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