Consumer debt is at record levels, with billions of dollars being owed by individuals on credit cards alone. In the economic good times, this was sustainable, even if it was a drain on people's finances and in some cases led to personal financial disaster. In today's very different climate though, more and more people are having serious difficulties in meeting their repayments and getting into arrears.
For people with really serious credit card debt problems, bankruptcy may be the only option. This is a way to wipe your debt slate clean, albeit at the cost of the destruction of your future creditworthiness. For people whose problems are serious but quite at the level where insolvency is threatened, there may be a chance to legally only pay back a portion of your debt, however unlikely that may sound.
The reason that credit card companies may settle for less is that the debt is unsecured, meaning that your home can't be taken from you to clear the debt if you're a homeowner, and in any case many people with card debt problems don't have any such security. This means that when all's said and done the card issuer can't force you to repay what you owe without expensive court proceedings, and if these in fact force you into bankruptcy then the card company is likely to get only a tiny proportion of the debt paid off, if anything at all.
Because of this, most card companies are happy to come to some sort of arrangement if it means that they recoup more of the debt than they would during insolvency proceedings. You, or a debt advisor you employ, may be able to ask for interest charges to be frozen or even reversed, or you may be able to secure a nominal payment of a few dollars a month, which you will continue with until your financial situation improves, and you can then resume normal repayments.
There is another possibility: a full and final settlement. This is where you offer to clear a portion of your full debt in one go, after which the account will be closed and any remaining balance written off. This might be possible if you've come into some money somehow, such as with an inheritance or other windfall. While you may not be able to fully clear the debt, your creditors may well be happy to settle for less in order to get your troubling account off their books. Remember, a credit card company will always prefer to receive something rather than nothing, and with proper help and advice you can use this to your advantage.
Author Resource:-
Nicholas writes for a site offering advice on how to get debt free, and you can read more about debt settlement there.
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