If a person can’t cope with the debt, he will more likely face credit card debt settlement. It’s a kind of agreement that defines the lump-sum payment from the potential borrower for the most of what he owes. It also states that a lending side can forgive some kind of the current debt as well as certain fees in exchange for a company or other available collateral.
In simple words, you ask a lending side for a service (in this case to pay off the debt) for a smaller service. Experts recommend applying for this option when you are coming close to default (in the cases of the real financial difficulties).
Terms of the credit card debt settlement are strict and limit some benefits for borrows. For instance, lenders require a whole sum of money at one payment. Still, if you know that you will miss a payment you can contact your lender and he will definitely find the solution. It’s better to accept a smaller payment than not accept anything at all.
Credit card debt settlement is beneficial in one thing – it’s better for your credit than bankruptcy. On the other hand, it’s very risky, especially, when you use a company. So, think twice before applying for credit card debt settlement.