In this guide, we're going to cover the essence of credit card settlement: what it is, why it matters, how it actually works, and why partnering with a good credit card settlement company can prove to be an intelligent financial choice.
What is Credit Card Settlement?
Credit card settlement is yet another debt relief method in which an individual surrenders his or her outstanding credit card debt and pays less than the whole amount owed. This usually entails negotiations with the credit card issuer or bank to agree on a reduced payoff amount of either a one-time lump sum or a structured settlement. It can be a lifeline when drowning in excessive interest rates that seem to kill people, making it impossible for them to make their minimum payments.
Though debt settlement might affect your credit score temporarily, it can even give you a new beginning by removing much of the weight on your debt burden to help you regain your financial stability.
Why to Get Credit Card Settlement?
Reasons why people make decisions to settle credits rather than paying it down the traditional way are numerous.
- High Interest Rates
Interest paid on credit cards is typically very steep. This is one of the areas where a borrower cannot pay enough to cover the interest, much less the principal amount and results in growing balances as well as long-term financial distress.
- Non Payment
Unforeseen financial changes, such as job loss, medical expenses, or economic recession, may make it impossible to pay credit card debts at the end of every month. Settlement serves as an exit from some of this pressure since it reduces the amount payable.
- Preventing Bankruptcy
There is long-term damage to one's creditworthiness and financial reputation once bankruptcy is filed. Credit card settlement is thought to have fewer adverse effects than bankruptcy.
- Alleviation of Stress
The outstanding balances of that significant amount of credit cards tend to weigh on someone's mind and health. An agreement can provide relief from the continuous stressing factor of growing debt and aggressive collection calls.
How Does Credit Card Settlement Work?
Credit card settlement involves a well-planned process often divided into the following stages:
- Initial Assessment
The first step of credit card settlement is an evaluation of your financial condition, including a review of total debt and monthly income and the expenses you incur, as well as any assets that you may own. A professional credit card settlement company such as LoanFree can be very useful in evaluating whether settlement is indeed the best alternative for the case at hand.
- Negotiation with Creditors
Once there has been a decision to settle, then the settlement company communicates directly with the credit card issuer on your behalf. Here, they negotiate and plead the case with the creditor in order to persuade the latter into agreeing to a reduced payment to settle the account in full.
- Lump-Sum Payment or Payment Plan
Once a creditor accepts any settlement offer, payment must then be made. Lumps sums are generally preferred, but it is possible that the creditors will agree to a structured payment schedule in certain circumstances.
- Settlement Agreement
Once the account is paid and terms are agreed upon, the creditor will close the account and report to the credit bureaus that the debt is "settled". This will harm your credit score but less severely than having this debt left unpaid or charged off.
Role of a Credit Card Settlement Company
Often, a professional settlement credit card company will be the best choice you have with settlement options. The following are some benefits that you can expect to have when dealing with an experienced company like LoanFree:
- Expert Negotiators
A genuine credit card settlement company uses experts who are fully conversant with the negotiation process and are well-acquainted with creditors. They would help you save the maximum amount possible on debt reduction.
- Debt Settlement Process
A company such as LoanFree will advise you on whether or not debt settlement shall be the appropriate course of action for relief. They weigh your total burden, your income, and any other commitments to design an appropriate plan suited for you.
- Legal and Financial Expertise
Debt settlement firms will usually be available with legal and financial experts to guide the way through this complex, stepped-by-step process of negotiation from creditors. They make sure all of the settlements received are legally binding and just; you don't have to worry about future claims from creditors.
- End of Collection Calls
When you hire a company specializing in debt settlement, they will take full responsibility for communicating with your creditors. For this reason, you will be saved from dealing with aggressive collection calls and harassment from collectors of debt.
- Improved Financial Health
The ultimate aim of credit card settlement is actually to give you financial freedom. These firms present such settlement services to reduce the total amount of debt, enabling you to pay manageable settlement amounts and thereby regain control of your finances.
Why choose LoanFree as Your Credit Card Settlement Company?
At LoanFree, we work with our clients for beating debt through customized credit card settlement solutions. Here's why LoanFree is the right deal to get credit card settlement for you:
Proven Track Record: We at LoanFree have helped multiple clients obtain massive debt reductions. With an excellent success record in negotiations of settlements, we ensure our clients walk away with significant debt reductions and a clearer path towards financial stability.
- Personalized Debt Solution
Each financial situation is different, and so are the solutions we provide. We study your financial status before devising a customized settlement plan for you which is in line with your goals and resources.
- Non-Deceptive Process
There is complete transparency in the settlement process. We tell you everything about what needs to be done from the first consultation to the final settlement agreement. This means we have no hidden fees and there will be no surprises.
- Holistic Support
LoanFree is not just a negotiation service, but holistic counselling on how to manage your money well. This way, you'll never fall into debt again.
- Hassle-Free Process
Debt settlement can be emotionally taxing. LoanFree will take debt settlement into our hands, solving for you the stress of negotiating with others and preparing all the paperwork, as well as simplifying the settlement process. Our clients can begin to rebuild their financial future while we learn how to navigate through debt settlement.
Credit Score Effects
One of the main concerns most people have when discussing credit card settlement is whether this will harm their credit score. While a settlement would surely lower your credit score temporarily, sometimes this may be the best choice over the alternative: having your debt default or file for bankruptcy. In addition, settling debts will serve to help prevent further damaging of your credit, and in that way, it can be of further help as you regain hold of your financial status.
Conclusion
Credit card debt often feels like that mountain which you cannot climb. Therefore, LoanFree is going to be a professional credit card settlement organization offering you the opportunity to cut your debt and regain financial freedom. Our negotiation experts will handle your case, so you will not have to compromise even with that much excess amount. We will try to reduce your credit card debt to less than what you actually owe.