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Many people have seen commercials for companies advertising to cut their credit card debt in half, or other statements that claim they can get you out of paying the full value of your credit cards. Many of these companies are debt settlement companies, and it’s important to understand what debt settlement can and can’t do for you when it comes to handling credit card debt.

The first thing that’s important to keep in mind is that credit card companies are businesses, and exist for the purpose of making money. These means that they have an interest in making sure that you pay as much of what you owe as possible. As a result, they will not agree to settle your debt unless you can demonstrate that you won’t be able to pay back the full amount that you owe. Usually this means you’ve already missed a number of payments and have gone through different collection processes. As a result, debt settlement won’t be an option for someone who is meeting their payments and has the means to do so, but that doesn’t feel like paying their credit card bill anymore. There’s no such thing as free money, and this is certainly true when it comes to credit card companies.

Settling Debt with Credit Card Companies

Credit card companies are under no legal obligation to settle your debt, and it’s against their interest to do so in most cases. That’s why you need to demonstrate that accepting a settlement is going to be better for a credit card company than continuing to collect on the debt would be. There are a few different ways that you might do that, depending on how much of the debt you can pay off, how likely you are to overcome hardships, and if there’s another option aside from debt settlement that can allow you to make your regular payments.

Financial Hardships

In order to demonstrate to a credit card company that you won’t be able to pay back your balance in full, you’ll have to show some kind of financial hardship. Some legitimate hardships include medical expenses, a lost job, or spiraling debt. The more the hardship is out of your control and unlikely to be resolved, the better the chance that a credit card company will be willing to settle your debt for less. However, companies aren’t as likely to want to negotiate with someone who can’t make payments because of excessive spending, an inability to stick to a budget, or living beyond their means.

Negotiating with Credit Card Companies

Consumers have a few different options when it comes to negotiating with credit card companies. Some people might think that they have to hire a company or lawyer to help them, but that’s not the case. You can work directly with credit card companies yourself rather than hiring outside help. A debt settlement is essentially a business negotiation, and you are able to undertake these negotiations as a private individual.

However, many people do choose to seek help with their settlement. Debt settlement companies are one option for consumers. These companies are generally less expensive than a lawyer and offer professional advice and experience when working with credit card companies to sort out a settlement. However, they don’t have the same level of training as a lawyer, and you will have to pay them to perform debt settlement services for you. Furthermore, you’ll have to commit to putting a certain amount of money into a special account controlled by an independent third party to build up the money necessary to make a lump sum settlement offer.

Other people have had success using lawyers for their debt settlement, but lawyers are the most expensive option for debt settlement assistance. As a result, they might not be available to everyone. That’s why it’s so important to understand the total cost of your debt settlement before choosing any options for representation.

As you can see, working out a settlement with a credit card company isn’t easy, nor is it free. You’ll still have to pay a large amount of money, and you’ll also have to convince the credit card company that it’s in their best interest to accept a settlement. However, if no other options work for you, then debt settlement might be the best option.