Article Resources

While debt settlement can be one of the more attractive avenues for debtors to take to get debt relief, just like any other debt relief process there are a few of negative aspects to it which someone needs to recognize before going through the debt settlement process. However just as with anything else there are pros and cons when regarding settling your credit card debt balances.

The cons seem like a good place to start.

1. In most cases your FICO credit score will go down. No original creditor will be willing to make a settlement until you have fallen behind for at least a couple of months. So when you are past due your credit rating will take a unfavorable hit. However the bad strikes from debt settlement are able to be corrected, a reputable credit corrections agency can get those negatives taken off your credit history.

2. The harassment you will be given when past due. As you can visualize you will get phone calls in an attempt to collect the money they feel they are owed. Depending on what organization you hire for credit card debt settlement, collection calls can be to a great extent reduced if not stopped altogether. But you will receive collections calls to some extent.

3. There are the potential for lawsuits. Lawsuits are always a possibility, while it does not occur anywhere near as much as one might think it does happen. Again with a decent establishment this process can be delayed so a settlement outside of court can be reached. When you are being sued the collector filing for suit often is aware that they will not collect the entire amount and the creditor is most often very willing to make a settlement.

Now for the pro's.

1. The great savings! You can reasonably look to save between 40-50% of the current balance. Not only will you save money off of your current balance, but you must take into consideration the amount of cash you would be losing through minimum payments and high interest.

2. Get out of debt much faster than otherwise possible. Of all the credit card debt relief systems, settlement will put you on the fasted route to becoming debt free. You can be looking to get out of debt within 3 years or less. This is a long shot away from how painfully long it would take to be out of debt through monthly minimum payments.

I personally think the pros do drastically outweigh the con's. Nothing is worse than losing hundreds if not thousands of dollars every month for what can be decades through minimum payments and high interest. Credit card debt is detrimental to your financial well being. How in the world can you save or invest for the future when you are barely making ends meet each month to stay up to date with your credit card debts.

Steve Bis is a debt analyst with the US Consumer Advocate, which practices debt settlement.