How to Avoid a Bad Credit Score if You Have Severe Credit Debt

The stronger the economy is the less people need to use their credit cards. One reality of the economic downturn is folks using them to cover basic necessities. Unexpected financial hardships occur when life throws a curveball. The good intention to maintain financial health slips out of reach as an individual is no longer able to pay even the minimum owed. The reality is the bank does not concern themselves with the human aspect of your inability to make good on your debt. You will find there is not that much compassion for your recent hard times. The following phase can be frightening. The bank raises their awareness of you by directing your delinquent account to their credit division. The representatives from the lending agency start to contact you.

Not being able to meet your very base minimum debt payments is a hard reality to face. The financial institution seems determined to make it even more painful. This is just one of many tactics and the sooner you come to an agreement with them to pay back a percentage on each dollar owed, the better. People call this a credit card debt settlement. Banks prefer to go this route with a debtor. They are guaranteed to get a percentage of the money back with this route. If you want to end the attention they have been focusing on you it is best to show your cooperation as soon as possible.

If maintaining a healthy credit rating is a priority of yours and you have had a valid financial hardship a credit card debt settlement is probably the best choice. If you file bankruptcy it will be a fact of public record. It will also appear on your credit report from anywhere from 7 to 10 years. It is not only your the economic area of your life you will notice change. If you have excessive debt of $20,000 or more and you do not want to declare bankruptcy the lending institution will want to find a resolution that is best for all.

The most important thing to remember going into credit card debt settlement is the collection department does want to work with you to find a solution. This may not always seem to the case because at times the bank may seem like they have a bad attitude. When you take a look at it from where they are sitting this is the most favorable outcome for them. The settlement will give the bank about the same or a little more than if they had to go the route of charging it off to a collection agency. If they send it to a collection agency they have to pay a commission to them, about 25%, and it is unlikely they will recover more than 70% of the amount owed. Therefore, when you break it all down at best 45% will be paid back. Manager of collections’ branches are happy to reach a recovery agreement at 50% on the dollar.

You have the right to negotiate a credit card debt settlement yourself. Use the above information to help you do so. Should you not wish to invest your energy there are quite a few professionals who are available to help. An individual who offers these kinds of services should come from a trustworthy source who endorses them. If you trust you negotiator you will likely get better results. A training that you learn on your own is a popular method. Sometimes these include optional coaching sessions for an additional fee. You can then get the advice of a professional without a steep price tag. It may all seem overwhelming at first, but take a deep breath, then get your financial health back on track.