In most situations it is the improper management and overuse of credit cards which leads most debtors into financially difficult situations. additionally card loans are unsecured loans and hence have a very high rate of interest. Most consumers also have other loans like home loans, car loans, consumer loans etc. to pay off. When they end up incurring large credit card debts, it becomes impossible for them to repay the loans. Earlier, the only option left for such debtors would be bankruptcy. But nowadays debt settlement is becoming a popular different.
Debt settlement programs are especially popular with card companies. This is because credit card debts do not have any collateral attached to them. If the debtor files for bankruptcy the card company will lose all its money. Hence these companies estimate the actual paying capacity of the debtor. They negotiate a settlement amount with the debtor which is usually much lower than the original amount payable. The debtor gets further benefits if he or she agrees to pay the amount as a lump sum. additionally the card companies re-age the accounts to save them from delinquency. They already waive off the non payment and late payment charges. This makes the total amount payable already lower.
The complete course of action of credit card debt settlement is completely legal. This is because the creditor agrees to ignore the agreement signed at the time when the loan was given. The credit card company enters into a new legal agreement with the debtor. additionally, they also provide a letter of complete and final settlement to the debtor. This letter states that the debtor does not owe the card company anything once the settlement amount is completely paid off. By following these methods a debtor can get rid of credit card debts in a legal manner.