Credit Card Debt Settlements - Why Credit Card Companies Are Making Debt Settlement Deals

Online, May 31, 2010 (Newswire.com) - With the massive amount of people struggling with credit card debt, the credit card companies are having no choice but to accept debt settlement deals. Credit card companies are the biggest creditors of unsecured debt and they fully understand that taking 50% of their money back is better than nothing. Hence, with the looming effects of the recession still very prevalent and many consumers on the verge of bankruptcy, credit card debt settlements are expected to continue to rise.

Credit card debt settlements allow creditors to collect at least some of their money back from debtors that would most likely never be able to pay back the balance in full anyway. Bankruptcy is always a bad news for the credit card companies. Since the loan given by them is unsecured, there is no security attached to the loan amount. Hence, if a customer goes and files for bankruptcy the full loan amount will be lost as the bank has no means of recovering it. The card companies are therefore more interested in settling the account of the customers who are on the verge of bankruptcy.

A customer can utilize this attitude to their advantage. A customer will need to convince their creditor that the recent economic crisis has left them unable to meet their obligations. If a customer has missed about 4 to 6 payments the plea becomes more convincing. Also if the debtor is accompanied by a debt settlement company the credit card companies will take them more seriously. A good credit card debt settlement can get a customer a debt elimination of about 40% to 60% of the total unsecured debt.

A top performing debt settlement company will be able to eliminate around 50% of the debtors unsecured debt on average. Consumers could attempt to negotiate with creditors buy themselves but a debt negotiation company will be able to almost always negotiate better credit card debt settlements. This is because they have established relationships with all the major creditors including banks, credit card companies, and medical institutions.

Credit Card Debt Settlements through a debt negotiation company will allow consumers to eliminate a percentage of their debt and either pay back the rest in one lump sum or through a payment plan. A debt settlement does not carry all of the negative consequences of bankruptcy either. Consumers will get a lower credit score but this seems minimal compared to eliminating unsecured debt by over 50%.

Ultimately debt settlements can make financial sense for consumers with at least $10k in credit card debt that are experiencing a legitimate financial hardship.

To locate experienced debt negotiation services in your state check out the following link:

Free Credit Card Debt Help