Credit Card Debt Myths – Top 8

Settle your debt for pennies on the dollar! Get rid of your debt quickly! These claims fill ads from debt settlement companies and guides that claim to teach you how to settle your debt. While settling your debt may be a way to get out of debt and pay less than you owe on your debts, do not buy into all of the claims and myths surrounding the debt settlement process.So here we are going to discuss about the top 8 Credit Card Debt Myths that is existing around us.

Credit Card Debt Myths – Top 8

On the process of debt settlement many of us are unaware about the pits and myths that is existing in this process .

You Should Hire a Professional 

Debt settlement companies advertise that they will negotiate with your creditors to reduce the amount of debt you owe. Often they charge hefty fees for this service and many require that you put money into a special account to pay off your debts as they are settled. While legitimate debt settlement companies have the time and experience needed to successfully negotiate debts, they do not do anything that you cannot do yourself. You can call your creditors yourself and attempt to negotiate with them. As long as you are patient, persistent and know what amount you are willing to pay, you can do the same job as a professional without paying any fees.

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This Debt Settlement Company is Legitimate

When you work with a debt settlement company, you risk becoming the victim of a scam. A significant number of debt settlement companies prey on those who are in debt by charging them upfront fees, requiring that they put money into an account each month and promising settlements more than 50 percent off their actual debt. Do not enter a lengthy contract with a debt settlement company and do your research before you sign any paperwork. Choose an established company that has low fees and a history of strong customer reviews.

It Does Not Cost A Lot

Worst Credit Card Debt Myths that exist is these sort of spam things in the market.Working with a debt settlement company costs money. If you only have one or two insignificant debts to settle, the amount that you pay the company may outweigh the money you save by settling. If you choose to settle your debts yourself, it costs a lot of time to get the results that you want. Most creditors will not agree to a settlement the first few times you call and it could take months of calls to come up with a solution you both agree on.

It Does Not Hurt Your Credit

One of the common Credit Card Debt Myths , when you settle a debt, the creditor reports to the major credit reporting agencies that your debt was settled for less than was owed. While settling your debt may not hurt your credit as much as filing for bankruptcy or not paying your debt at all, it will hurt your credit more than working with your creditor to develop a payment plan and paying the full amount that you owe.

It’s My Only Option

Even if your debt seems overwhelming, settling that debt is not your only option. Many creditors will work with you to develop a payment plan that allows you to pay off the full amount that you owe and reduce any late payment fees to make that debt more manageable. Instead of settling, you may also consolidate your debts into a larger loan with a lower interest rate to make the payments more manageable and give you more time to pay them off. Filing for bankruptcy may be another option if you have significant debts.

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You Only Pay Pennies on the Dollar

Most creditors will not settle with you for pennies on the dollar. Their goal is to get as much money from you as possible. Most creditors will settle for 20 percent off your debt, although experienced negotiators may be able to get as much as 40 or 50 percent off. The older your debt is and the fewer recent payments you have made, the more likely you are to settle for less. When you are regularly making payments on a debt, a creditor will not be motivated to settle with you.

Debt Settlement is Financially Beneficial

Settling your debt may not be financially beneficial. In addition to the fees that debt settlement companies charge, the hit that your credit takes after settling debt can end up costing you a lot of money. When your credit score takes a dive, it will increase the interest rates you pay when you take out new loans or open new credit cards. That increased interest will cost you more money. Taking out new loans and opening new credit cards will also require you to spend more money and take on more debt to help rebuild your credit.

I Won’t Go Into Debt Again

Settling your debts has nothing to do with going into debt again. In order to avoid going into debt again after you settle your debt, you must develop positive spending habits, such as creating and following a budget and limiting the amount of credit you use. Do not think that just because debt settlement worked once, it will work again. When it comes to settling your debts, nothing is guaranteed and debt settlement should not be used as a backup plan in case you fall into debt again.

These are the top 8 Credit Card Debt Myths that is existing which you need to be aware if you are in amid of debt .