?Prevention: The Most Effective Way to Heal Credit Card Debt

Being in debt, an already stressful condition to be in, can bring along with it a horde of other unpleasant side effects, like a phone ringing off the hook because of calls from collection agencies and a mailbox exploding with letters of credit card settlement notices. Even though these things can be miserable to experience, there is good news. These events mean that the creditor you are dealing with is showing that he is willing to accept less than the total amount of debt that you owe and is agreeable to allowing you to use a debt solution plan in order to get rid of your credit card debt.

Agree to a Single Part Payment

Some creditors will allow you to make a single part payment, but this must be done within a short amount of time. Creditors want to make as much as possible, so if they think that you may eventually not be able to pay them at all, it would be in their best interests to get as much as possible returned to them, even if it’s not the total that you owe. Fortunately, this could work well for you too.

Creditors typically opt for a single part payment only if your account has been delinquent for ninety days or more. If not, and your account has been active recently, they will not be open to this debt solution.

You should, though, understand as much as possible about credit card debt settlement to put yourself at an advantage before the process starts.

First off, you should be aware that such form of credit card debt settlement payment may not be able to fully clear off the entire outstanding amount, because the unpaid amount may be transferred to another collection agency, though it is not usual for such to happen.

Also, keep in mind that unpaid debt whose amount is six hundred dollars or more is considered by the IRS to be income earned and is thus taxable. This amount appears on the 1099 tax form.

Finally, you need to know your own credit report, and if your debt is shown as “charged off” will be treated as a red mark on the credit report, though by settling the debt, it will be changed to “settled for a lesser amount” that is also considered a somewhat reddish mark though not as bad as not having done anything to pay off the debt.