Millions of Americans today struggle with overwhelming credit card debt. According to the Federal Reserve Bank of New York, the overall US total debt balance continues to rise and is now well over 13 trillion dollars. If you are dealing with bills from multiple accounts and they just keep adding up, know that you are not alone in wondering how to settle credit card debt. There are a variety of options available so you can get back on your feet and experience relief from credit card debt. Settlement could be a great option for you depending on your financial situation and overall financial goals.
Debt Settlement Options
It is essential to review all of the options available to you so that you can choose the best way to settle your credit card debt. There are three key ways to be aware of, including:
1. Handling the Negotiations on Your Own
Here, you alone sit down with your lender and negotiate the terms to determine the amount for which you can settle your outstanding debt. Your goal here is obviously to bring it down to a smaller amount than you previously owed, but it can be incredibly difficult to negotiate without the right level or experience and overall subject matter knowledge. This is an option, but negotiations are often more successful when you have the right expertise.
2. Getting a Lawyer
The next option is to hire a lawyer to negotiate your credit card debt settlement on your behalf. This is a good option for some depending on the amount of credit card debt that you owe and if you are concerned about potential legal ramifications. A lawyer will be more focused on the legal impact of your settlement instead of the potential financial impacts. The biggest downside of working with a lawyer is that they are often costly and charge by the hour. Debt settlements can take months or even years. The amount of credit card debt that you owe may determine if you can afford a lawyer and if this is the right option for you.
3. Finding the Right Debt Settlement Company
Working with a debt settlement company is an excellent option that many choose because these knowledgeable experts have years of experience working and negotiating with lenders. Over that time, they have developed working relationships with lenders. It is important to find the right debt settlement company for you and your specific needs, so be sure to solidify your financial goals. This will also help you communicate what you hope to gain from settling your credit card debt. Additionally, many debt settlement companies charge a fee, which is typically a percentage of your credit card debt settlement. This may be the most affordable option, depending on your needs.
The Impact of Debt Settlement
Whatever option you choose, debt relief will likely have a negative impact on your credit score. Depending on the outstanding amount you owe, debt settlement can stay on your credit report for several years.
In addition to impacting your credit score, settling your credit card debt will also have implications for your taxes. The IRS will consider any amount of debt that is forgiven or settled as income that you received. This means that you will owe personal income tax on the amount of debt that was forgiven. Be sure to meet with an accountant or with your debt settlement company to review the full terms of your agreement.
Experience Debt Relief
Settling your credit card debt can be a financial relief and can help you experience more financial freedom. It can give you the fresh start you need to regain control of your finances. Be sure to research all of the options available to you so that you can make the right choice for your circumstances. You don’t have to live with debt for the rest of your life. With credit card debt settlement you can get on track.
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