Debt Settlement Plan

Debt Settlement Plan

Debt Settlement Plans are popular these days. Turn on the radio or television and the ads for debt settlement companies are everywhere. It makes sense; the economy is tough and consumers have a great deal of debt. Settling credit card debt seems like a good idea.

Before making the call to a debt settlement company, make a debt settlement plan. Here's what to do:

- To settle an outstanding credit card debt, consumers need money. Like the chicken and the egg, it was a lack of sufficient money which put the credit card holder into hot water. If the problem is complete lack of money and the inability to bring in income, another option, like bankruptcy may be better. For debt settlement, the consumer needs a source of income and savings in available cash to pay an offered settlement.

- Is the account four or more months behind? Most credit card companies will not accept a settlement offer unless card payments are four or more months behind. Generally speaking, the account has to be in danger of going to charge off or to an outside collections agency. If current with credit card accounts, then asking for a lower interest rate or payment plan based upon lower income may be a better solution.

- Be ready for collections. To get a debt settlement offer accepted, it takes time. During this time the card may go to charge off and collections activity. Calls may come from a special department with the credit card company or worse, may come from an outside collection agency. Outside agencies are more likely to make a settlement with the card holder, however, many consumers don't like to deal with outside companies and would rather deal with the original creditor.

Before calling any advertised debt settlement company, have a debt settlement plan in place first.