Being in debt does happen sometimes but it does not have to be as bad as it seems. Credit card debts might not be as large as you think if you know who to ask and also how to ask for it. There is a possibility of cutting off as much as over 50 percent from your credit card debts.
Reading materials by seasoned entrepreneurs and business men such as John Abio allows you to learn so much about the business universe including settlement of debts.
Debt resolution; what does it entail?
Debt resolution is an agreement made between a creditor and a debtor to pay back a part of a debt. In this agreement, the remaining part of the debt is not paid as the creditor forgives the debt.
For instance, an individual owing about $5000 on a credit card might decide to meet up with the company and pay $2500. In exchange for the immediate payment of the fee, the remaining part of the fee is forgiven.
Why might the creditor agree to resolve the debt?
The creditor might need the cash or is scared that the debtor might not be able to pay back at all. In such situations, the lender might decide to forgo a large amount of the money.
Credit cards are not secured loans hence it is possible to settle debts incurred on them. Although it is might be hard to believe that your credit card debt can halved to pay a one time lump sum, it really does happen. The credits card company would not advertise this as they do not favor that step so much but when it comes down to inability to pay back debts, they sometimes agree to it.
Disadvantages of debt settlement
In order to resolve a debt, you need to come up with a large part of the debt to pay off at once to offset the remaining balance. Getting that large sum might be difficult especially if you are low on funds. It is very possible to get into larger debts in the process of resolving a particular debt. Borrowing the large sum from a source that increases with interest might not be the best option and might bring up a larger debt that the previous one.
There is also the risk of losing your credit card account once your debt is settled. There is a low chance that the credit card company will allow you to keep your account.
Settlement of debt has the potential of ruining your credit score and eventually ruins your chances of getting any form of credit in the future.
Settlement of debt is one of the easy ways to pay off your debt with the added advantage of paying up to fifty percent less. There are downsides to making this agreement though as it can damage the individual’s credit score. However, if one is able to strike a good deal with the creditor, the settlement might not appear on the credit report.