How To Avoid Bankruptcy Through Direct Settlement Of Credit Card Debt

It's alarming but true: once consumers allow personal debt to accumulate beyond their ability to repay, the problem can quickly escalate into a serious financial crisis. And with credit card debt at record levels, and millions of new credit card accounts opened every year, it's no surprise that so many consumers find themselves in desperate circumstances, with little hope of repaying their obligations on their own.

When consumers are struggling with out-of-control debt and the stress it can create, many mistakenly believe that bankruptcy is their only available debt solution. But bankruptcy can severely damage your credit score for up to a decade, and should be considered only as a last resort, when all other options have been exhausted. In many cases, a bankruptcy alternative such as debt settlement is a better option.

If you currently have a large amount of outstanding debt and have considered filing bankruptcy, take a few minutes now to learn about how debt settlement can help you. It could save you thousands of dollars, and prevent unnecessary long-term damage to your credit.

One alternative to bankruptcy is to settle your credit card debts directly with your creditors. However, direct settlement of credit card debt is widely misunderstood, causing many people to fail to take advantage of this simple and effective bankruptcy alternative.

Through debt settlement, an agreement is negotiated with your creditors, so the amount you are required to pay back is reduced from the total amount of your outstanding debt. This allows the credit card company to receive partial payment of what you own them. Why would a credit card company agree to a debt settlement agreement? Because if you declare bankruptcy, it can be much more difficult for them to receive any payment at all. So they may be willing to work with you to help you avoid bankruptcy, and settle your debt.

Debt settlement is a win-win for both you and your creditors. Creditors agree to accept a reduced payment, and you get a chance to get out from under your credit card debt, while avoiding the long-term credit damage and hassle of declaring bankruptcy.

Hiring a debt settlement company to negotiate with credit card companies on your behalf eases your financial burden and reduces stress, and it can also directly improve your financial status. Debt settlement companies specialize in helping individual consumers like you work with creditors to come to a mutually beneficial agreement. A qualified debt settlement counselor can examine and analyze your your unique economic situation, design an effective plan to address your challenges, and then directly negotiate with your debt holders to reach an agreement that works for you.

You should be aware that debt settlement does carry certain downsides. It will not protect you from legal action, and creditors may still sue you for the entire amount that you owe. Additionally, you may still be liable for taxes on your debt settlement, and your credit score will be negatively impacted.

However, the credit damage caused by debt settlement is usually not as severe as the damage caused by bankruptcy, and once you've paid off the outstanding balance of your settlement, you will be well positioned to begin rebuilding your credit score immediately. Bankruptcy, on the other hand, can mar your credit score for up to ten years.

If you are having trouble managing excessive credit card debt, and you think you've exhausted all your alternatives, it may be time to call an ethical debt settlement company. It's the smart debt management solution, and it could settle your debt in just 1-3 years. Plus, it can help you avoid the hassle and greater negative credit effects of filing bankruptcy.