Credit Card Debt Settlement: Prevention Is Better Than Cure
It is often the case that your mailbox is filled with a number of credit card debt settlement notices, or you may be plagued by collection calls, and if such is the case with you then you must be having debts that you are finding difficult to pay off, and the problem has been going on for some time. However, if you are lucky enough and have found a creditor that will be willing to settle for less than the outstanding amount, especially if your credit card is badly out of whack or was written off, then you will have found a reasonable credit card debt settlement solution.
Settle For A Single Part Payment
Thus, you could be dealing with a creditor that is willing to settle for a single payment though such payment must be made in a short time period, and this is one option for credit card debt settlement that you may not be averse to either. If you are wondering why creditors are going to settle for less than the full amount, it is simple economics because rather than lose the entire outstanding amount, it is more prudent for the creditor to recover part of the losses.
However, to be sure, creditors will usually not enter into such credit card debt settlement if your account is ongoing, because the norm is that only when your account has gone delinquent for a period of more than ninety days that such credit card debt settlement is offered to you by the creditor. Still, as a debtor who is entering into such credit card debt settlement, you still need to know a few things and mind what you are getting into.
First off, you should be aware that such form of credit card debt settlement payment may not be able to fully clear off the entire outstanding amount, because the unpaid amount may be transferred to another collection agency, though it is not usual for such to happen. Second off, the Internal Revenue Service (IRS) will treat the unpaid amount of debt as your income and if it exceeds six hundred dollars, it will be reported by the creditor to the IRS on a 1099 and is thus taxable.
Finally, you need to know your own credit report, and if your debt is shown as "charged off" will be treated as a red mark on the credit report, though by settling the debt, it will be changed to "settled for a lesser amount" that is also considered a somewhat reddish mark though not as bad as not having done anything to pay off the debt.
Your best bet as far as credit card debt settlement goes is to make contact directly with your creditor, or deal with a collection agency and negotiate a plan for repaying the debts to the best of your ability. Having released your debt, you then need a "release of debt" notation which will prove that the company had agreed to have its debt settled by you. Also, you should take a close look at what got you into a position of having debts that you were not able to pay off, and then formulate a plan to prevent repeat occurrences, which would probably be the best credit card debt settlement solution for you.
