Addressing Credit Card Debt Settlements
As a well-established law firm, it frustrates us to see unreliable companies promising debt-burdened consumers help negotiating debt settlement agreements with their credit card companies.
Yes, some of these credit card debt settlement companies are reputable. But, it can be extremely difficult for a consumer to tell the difference between a trustworthy credit card debt settlement company and one that doesn’t tell the whole story. In addition, there are downsides to using credit card debt settlements no matter how reputable the company is.
“If you’re thinking about using a credit card debt settlement company to resolve overwhelming credit card bills, you should discuss your complete financial situation with an attorney who can show you the advantages and disadvantages of different debt relief methods.”
— Stratford and Bridgeport credit card debt settlement attorney Tim Pletter
The law firm of Ambrogio, Pletter & Associates, LLC, was established in 1982 and has been owned by attorney Tim Pletter since 2000. We devote a high percentage of our law practice to helping people from all walks of life find manageable solutions to overwhelming debt loads. We file bankruptcy petitions, help stop foreclosures, negotiate home loan modifications and provide advice on rebuilding credit after bankruptcy.
Credit Card Debt Settlement Agreements: Pros And Cons
When credit card debt becomes seriously delinquent, the credit card company may sell the debt to a collection agency at a discount. These collection companies are often interested in debt settlement negotiations, and consumers may be able to settle credit card debt for less than they owe.
What are the downsides?
- You usually have to pay the debt settlement amount in a lump sum.
- You may have to pay taxes on the amount of debt you don’t pay back, because IRS rules state that forgiven debt may be treated as income.
- Debt settlement is reported negatively on your credit report.
If the debt settlement company turns out to be disreputable, the risks are even higher:
- If you send the debt settlement company $400 per month, how much of that will be taken by the debt settlement company in fees?
- Even if you have an agreement with a debt settlement company, your credit card companies are not obligated to accept it and could still sue you.
Before you sign on with a credit card debt settlement company, talk to an experienced lawyer about Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, you still repay a portion of your debt. To your advantage, however, you make payments under the protection of the U.S. Trustee’s Office. And you make payments according to a schedule that you develop as manageable within your financial circumstances.