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Debt Settlement Education

FAQ

How do I start the debt settlement process?
Contacting your credit card company to settle your debt can be done by anyone. The first step is to contact the credit card company explaining to them that you are in an unfortunate situtation and cannot repay the entire balance owed. Ask them for a form that you can fill out to get your situtation in writing. You'll likely need to attach bank statements as well proving financial hardship and that you still have a steady income.

Note, some people opt to let a professional debt settlement company handle the process for them. There is no cost to you, the consumer. The debt relief companies make their money from charging the credit card company a small percentage.
Is debt settlement/relief a good idea?
Debt settlement should only be considered as a last resort. Debt settlement is where you tell all the credit card companies that you can't pay them for all the money you charged up on their credit cards. Make no mistake, debt settlement will lower your credit score for at least a few years.

Admitting that you were not responsible in your spending habits or in some cases, unforseen events caused you to have to charge more than you could pay off is not taken lightly by the credit card companies. The chances of you being able to get another credit card company after your debt settlement will be very slim..
What happens when I miss a credit card payment?
What are the debt settlement tax consequences?
Creditors are required to report canceled debts to the IRS on Form 1099 as the canceled debt is counted as income. There are exceptions to having to count the forgiven debt as income, for individuals who are insolvent at the time of the settlement. Insolvent means you owed more than the fair market value of all of your assets which includes your bank accounts and all the items you own.
What happens if I default due to unemployment?
What happens if I only make a partial payment on my credit card?
Where can I find a sample debt settlement offer letter?
After a debt settlement, does your credit score go down?
Will the credit card company accept less than how much I owe?